On the way to Evonik Industries

Early in the year, Degussa-Hüls AG and SKW Trostberg AG merge to form the new Degussa AG, creating the third-largest German chemical company and the worldwide leader in specialty chemicals. The business is based in Düsseldorf. After the merger and the alignment toward specialty chemicals, the group employs some 48,000 people worldwide.

In the years to follow, the new company divests all non-core parts of its portfolio. This includes Asta Medica AG and dmc², which are based in today’s Wolfgang Industrial Park (IPW). The new owners of dmc², Umicore AG and Ferro GmbH, remain in the Industrial Park. Degussa Dental GmbH & Co.KG, which is hived off to the U.S.-based company Dentsply in October, also continues to reside at IPW. The divestment program also affects TFL Ledertechnik GmbH & Co.KG and Phenolchemie GmbH, which were originally part of Hüls AG. Other divestments affect Degussa Bank GmbH and SKW Piesteritz Holding GmbH, along with Methanova GmbH and Polymer Latex GmbH & Co.KG. In August 2004, the divestment process will be nearly completed with the sale of the steel business, which has been part of the metallurgy activities of SKW Trostberg.

To offset these divestments, the new Degussa AG acquires the British company Laporte plc. to strengthen its global position in specialty chemicals. Laporte plc. is among the world's largest producers of hydrogen peroxide, which is supplied primarily to the textile industry as a bleaching agent and is a part of Degussa’s core business.

On January 1, Industriepark Wolfgang GmbH is established as a professional service provider for the eleven high-tech companies doing business at the site. Industriepark Wolfgang GmbH is a subsidiary of Degussa AG.

Degussa AG forms a joint venture with SolarWorld AG of Bonn to extract and market polycrystalline silicon (PCS) from silane. This solar silicon is used as a starting material in the photovoltaic industry, which uses it to manufacture energy-generating solar modules in several work steps.

The Antwerp and Marl sites open up new facilities for isononanol (INA) production, which increase the annual capacity from 140,000 metric tons to 340,000 metric tons. Isononanol is a plasticizer alcohol based on crack-C4.

Degussa AG acquires 70 percent of the largest Chinese persulfates manufacturer, Shanghai AJ Reagents Co. Ltd., Shanghai. The new company, Degussa-AJ (Shanghai) Initiators Co., employs some 120 people and has projected annual revenues of €10 million. This acquisition makes Degussa the largest global manufacturer of persulfates.

CyPlus GmbH is established in January as a spinoff of the former Mining Chemicals Product Line of Degussa AG. CyPlus focuses on the cyanide business and supplies customers in the mining, chemicals,-pharmaceuticals, and surface treatment industries.

One month later, RAG AG of Essen acquires 46.48 percent of Degussa's shares from EON AG; by mid-2004, this share is to increase to 50.1 percent. This step establishes the company as the new majority shareholder of Degussa AG. As part of RAG’s transition from a coal mining corporation to an industrial group, the Essen-based company is to take over all shares of Degussa AG by May 2006.

The new Functional Polymers@Interfaces and Surfaces Project House starts at the Wolfgang Industrial Park. Some twenty scientists use the center to research functional polymers, synthetic materials that are not exclusively intended for conventional use as a structural material, but have additional functions because of their specific properties.

Degussa AG acquires the concrete additive business of Schwenk Zement AG in Ulm. The transaction includes the acquisition of the activities of Woermann Betonchemie, which is part of Schwenk Zement KG and maintains foreign subsidiaries in Poland and the Czech Republic. The Woermann business is a boost to Degussa's construction chemicals business, a vital core business area of the company.

The new Degussa (China) Holding opens in Beijing as the Group's regional umbrella organization in China. Degussa has been producing specialty chemicals in China since 1988 and maintains over fifteen companies with production sites in Beijing, Guangzhou, Nanning, Qingdao, Shanghai, and Hong Kong.

In November, a groundbreaking ceremony is held at the Antwerp site for the construction of the world’s largest methionine plant, which will have an annual output of 120,000 metric tons. The facility will become operational in October 2006.

The new Proferm Project House is established at the Wolfgang Industrial Park in March. Fermentation is an important sub-segment of biotechnology. It produces the desired substances as a metabolic byproduct of microorganisms. Using state-of-the-art methods, the project house's staff develops new bacteria strains and fermentation processes.

One month later, Degussa AG opens a research and development center in Shanghai. The company also enters into a cooperation agreement with the Chinese company Changchun Jida High Performance Materials Co. Ltd. (Jida New Materials) of Changchun to jointly develop high-temperature polymers.

In May, Degussa AG acquires full ownership of Agroferm Hungarian-Japanese Fermentation Industry Ltd. (Agroferm) for the distribution of tryptophan.

Effective June 1, Stockhausen GmbH & Co.KG of Krefeld turns into a GmbH.

A new polyether facility with an annual output capacity of 14,000 metric tons becomes operational at the Hopewell, Virginia, site in the United States. This strengthens the activities of several business lines of Degussa AG, including Polyurethane Additives, Coatings and Colorants, and Care Products.

In Marl, Degussa begins constructing a new Future Center. In the Nanotronics Center, also called "Science-to-Business,” the company cooperates with universities and industrial partners to develop innovative system solutions for electronic applications.

Production of extruded solid PLEXIGLAS^® sheets (PMMA) begins in Russia. The facility is operated by Destek in Podolsk, a joint venture of Röhm GmbH & Co. KG, the Unichem Group, and ZAO Orgsteklo JSC of Moscow.

Effective January 1, Th. Goldschmidt AG of Essen turns into a GmbH.

The start-up company Perma Protect begins doing business at the Trostberg site. Perma Protect markets durable coating systems for a variety of dirt-and-water-repelling substrates.

In a partnership with the Northern Chinese Jilin University, Degussa AG establishes JIDA Degussa High Performance Polymers Changchun Co. Ltd. (JIDA Degussa), a joint venture for the production of polyether ether ketone (PEEK) and polyether sulfone (PES).

Additionally, Degussa Construction Chemicals (Beijing) Ltd. acquires Beijing Xinzhuang Huiqang Admixture Company Ltd., an important local producer of concrete additives. This acquisition boosts the presence of Construction Chemicals Business Unit in the important Beijing market and allows it to offer customers in Beijing state-of-the-art technology from a local production site.

A formal ceremony is held in Taichung (Taiwan) for the groundbreaking of the production facility for polymethyl methacrylate (PMMA) molding compounds of Degussa Forhouse Optical Polymers Corporation. The molding compounds are primarily intended for use in TFT LCD flat-screen monitors.

Degussa AG and Fujian Nanping Xinyuan Investment Co., Ltd. (Wellink) of Nanping, Fujian Province, China establish the joint venture Degussa Wellink Silica (Nanping) Co. Ltd. (DWS). It will produce and market precipitated silica and silicates.

In Marl, a groundbreaking ceremony is held for a new research center. The new Bio Science-to-Business Center will provide space for shared corporate and scientific research and development activities in the area of "white biotechnology," or industrial biotechnology.

Degussa AG and Lynchem Co. Ltd. establish the joint venture Degussa Lynchem Co. Ltd. in Dalian, Liaoning Province, China. The new company produces active pharmaceutical principles and other specialty chemicals.

Effective June 8, Röhm GmbH & Co.KG of Darmstadt turns into a GmbH.

As part of the acquisition by the RAG Group, Degussa AG divests its construction chemicals business to the BASF Corporation by July. Degussa's NCN business, which is also located in Trostberg and manufactures chemicals for herbicides, growth regulation, pharmaceutical compounds, and nutrition, is consolidated within a separate subsidiary, Alzchem Trostberg GmbH. The new group employs some 1,500 people at the Trostberg, Schalchen, Hart, and Waldkraiburg sites.

RAG-Beteiligungs-AG is established on September 14. It covers the so-called white division of RAG AG, consisting of Degussa AG, STEAG AG, and RAG Immobilien AG.

The main shareholders’ meeting in late 2006 resolves to change the organizational form of Degussa AG effective January 2. From that date on, the company is to do business as a GmbH within RAG Beteiligungs-AG.

RAG Foundation is established in July. Its purpose is to secure the development of RAG Beteiligungs-AG, which is divided into the Chemicals, Energy, and Real Estate Business Areas.

At the Wolfgang Industrial Park, Degussa GmbH launches its new Functional Films and Surfaces Project House. Some twenty employees will be working for three years to improve polymer foils and semifinished materials with nano-scale and micro-scale surface coatings.

Degussa GmbH and PV Silicon Forschungs- und Produktions-AG of Erfurt sign a supplier agreement for chlorosilanes. PV Silicon is building a production facility for photovoltaic silicon at the Bitterfeld Chemical Park, which is used for the production of polycrystalline wafers for solar cells. Degussa GmbH will supply the new production facility with its Siridion^® chlorosilanes from its Bitterfeld plant.

Degussa GmbH doubles the capacity of its carbon black plant in Paulinia, Brazil, to 100,000 metric tons a year. With the capacity expansion, the company establishes itself as the world’s second-largest manufacturer of carbon black with an annual output of approx. 1.4 million metric tons.

In August, an official ceremony is held on the commissioning of the new production site Degussa Lanxing (Rizhao) Chemical Industrial Co. Ltd. in the Chinese province of Shandong. The new silane plant provides the third starting material for the tire industry, in addition to carbon black and silica.

The fourth isophorone production line goes on stream at the Herne site. Isophorone chemicals are used in the manufacture of automotive paint, flooring, and anticorrosive coatings.

On September 12, RAG-Beteiligungs-AG becomes Evonik Industries AG, with headquarters in Essen. Degussa constitutes the Chemicals Business Area of the new creative industrial group.

Shortly thereafter, the Chemicals Business Area holds a groundbreaking ceremony for a new integrated production facility for methyl methacrylates (MMA) and methacrylate specialty products at the Shanghai Chemical Industry Park (SCIP). The facility will be operational in mid-2009 after two years of construction. The integrated methacrylate production facility, with an annual capacity of 100 metric tons of MMA, also includes facilities for producing methacrylic acid, butyl methacrylate, specialty methacrylates, and PMMA molding compounds.

Since March, the new logo, four meters high and fifteen meters wide, has been shining out from the top of the Group headquarters of Evonik in Essen. The letters of this sign consists of PLEXIGLAS^®, a product from the Performance Polymers Business Unit of Evonik.

Under a strategic cooperation agreement with Microsoft Corporation, the Performance Polymers Business Unit will supply the projection tabletop for Microsoft Surface™ beginning in July. This is the surface computing device, which enables users to interact easily with digital content on the tabletop through touch, gesture, or objects placed on the tabletop. The projection hardware is composed of several optical function layers based on PLEXIGLAS^®.

In August Evonik Degussa Japan Co. Ltd. opens the Japan Coatings Lab in Tsukuba Plant & Research Center. The laboratory provides tailored solutions to the Japanese customers in the paints and coatings industry, with combined technology and inno-vation capabilities from the Group worldwide.

With AVENEER, Evonik develops a new manufacturing process for Methyl Methacrylate (MMA). AVENEER is based on the ACH sulfur process that uses—in addition to ammonia—methane, acetone, and methanol, but no sulfuric acid. The omission of the reprocessing of sulfuric acid, which has now become unnecessary, both saves costs and conserves resources.

Evonik Degussa GmbH and Netherlands-based The Silicon Mine (TSM) sign a contract to build the integrated production facility for solar silicon in the Nether-lands. Production is scheduled to start in 2009.

RAG-Stiftung sells a 25.1-percent stake in Evonik Industries to the British private equity firm CVC Capital Partners.

Evonik Degussa GmbH and SolarWorld AG officially open their new solar silicon plant at the Rheinfelden site. As part of the joint venture Joint Solar Silicon (JSSI), the two companies are using an innovative process in the new plant that enables energy savings of up to 90 percent compared to conventional solar silicon production.

The chemist Dr. Klaus Engel is appointed chairman of the Executive Board and CEO of Evonik Industries. He succeeds Dr. Werner Müller.

The new Eco² Science-to-Business Center (S2B Eco²) is under construction in Marl Chemical Park. The new research center will pool the energy efficiency and climate protection expertise of the Group.

Evonik Industries AG and Daimler AG enter into a strategic alliance for the development and production of lithium ion batteries. Both groups will promote research, development and production of battery cells and battery systems in Germany.