Registration Document 2005 - Total.com

2
Arkema
Business overview
Chemicals - Arkema
In 2004, TOTAL reorganized its Chemicals segment by placing its
chlorochemicals, intermediates and performance polymers activities
in a new entity, which was named Arkema effective October 1,
2004. Arkema has 14 business units organized into three sectors,
Vinyl Products, Industrial Chemicals, and Performance Products.
Each business unit has worldwide activities with industrial sites in
Europe, North America and Asia and commercial affiliates in over
40 countries.
Arkema operates six research and development centers; four in
France, one in the United States and one in Japan, and employs
approximately 1,400 researchers. Arkema allocates approximately
3% of its sales to research and development.
Arkema is preparing to become independent following TOTAL’s
shareholder meeting on May 12, 2006 which will vote on
resolutions to spin-off the business.
Arkema’s sales increased by nearly 8% in 2005 compared to 2004
and its 2005 adjusted operating income was almost twice that as
in 2004.
Vinyl Products
The Vinyl Products sector consists of a number of activities ranging
from the electrolysis of salt to PVC (Poly Vinyl Chloride) conversion.
It includes the manufacture of chlorine-soda, VCM (Vinyl Chloride
Monomer), chloromethanes, chlorine derivatives, PVC, a pipes and
profiles business (Alphacan), as well as PVC compounds. Its three
business units are Chlorochemicals and PVC, Vinyl Compounds
and Alphacan.
This sector is subject to fluctuating market conditions and intense
competition. Arkema intends to remain a major player in Europe
and launched a productivity plan in 2005 which would include
the shutdown of underperforming plants and the expansion of its
most competitive plants. Under this plan the Saint-Auban facility
will specialize in its more competitive activities (specialty PVC,
T111) and close its loss-making activities; the Saint-Fons facility
will refocus on PVC production; the Fos, Lavéra and Berre plants
will increase their production capacities; and the PVC production
units at the Balan site will be upgraded. The plan contemplates
eliminating more than 500 jobs and investing approximately
100 M€.
The Chlorochemicals and PVC business unit includes chlorinesoda
electrolysis (membrane, diaphragm and mercury processes),
the production of chemicals immediately downstream (VCM,
52 TOTAL - Registration Document 2005
chloromethanes and chlorine derivatives) and the manufacture of
PVC (PVC suspension, PVC paste and copolymers).
The Vinyl Compounds business unit offers an extensive range
of ready-to-use products manufactured by blending PVC with
additives (plasticizers, stabilizers, colorants). It uses a large number
of raw materials, some of which are produced by Arkema (PVC,
plasticizers, stabilizers, modifiers).
Alphacan’s activities lie downstream from PVC production. It
manufactures two major product lines, pipes and profiles, primarily
by extruding PVC compounds manufactured in its own facilities.
The Company primarily supplies the construction market with
a range of products for wastewater disposal, drinking water
transportation, sanitation, irrigation, heating systems, window
profiles.
Industrial Chemicals
The Industrial Chemicals sector groups several chemical
intermediates activities into five business units: Acrylics, PMMA
(polymethylethacrylate), Thiochemicals, Fluorochemicals and
Hydrogen Peroxide. These activities share a number of common
characteristics, including complex manufacturing processes
and the worldwide markets with significant potential for growth,
particularly in Asia.
Arkema has production plants in Europe and North America
for most of its key products (acrylic acid, methyl methacrylate,
PMMA, fluorochemicals, hydrogen peroxide, sulfur derivatives).
The business sector is also present in Asia, where it has local
production facilities in fluorochemicals, hydrogen peroxide and
PMMA.
Industrial Chemicals plans on developing its business through the
use of new facilities in Asia, debottlenecking projects in Europe and
the United States, implementing cooperative projects with its major
partners, and enhancing the reliability of its production plants.
The main products within the Acrylics business unit include acrylic
acid and its derivatives (acrylic esters, super-absorbents), methyl
methacrylate, oxo alcohols, phthalic anhydride and dioctylphthalate.
Its main markets include coatings (paints, UV curing), superabsorbents,
PMMA, plastic additives, water treatment, paper
manufacturing and adhesives.
The PMMA business unit conducts its worldwide activities
as Altuglas International, with the Altuglas® and Plexiglas®