Central Glass to Establish Joint Venture with Tokuyama, End Production of Soda Ash and Calcium Chloride

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Researched by Industrial Info Resources (Sugar Land, Texas)--Central Glass Company Limited (TSE:4044) (CGC) (Tokyo, Japan) has reached an agreement with Tokuyama Corporation (TSE:4043) (Tokyo) to establish a joint venture company. It also announced that it will discontinue its production of soda ash and calcium chloride.

Under this agreement, both companies will transfer and consolidate the sales business for soda ash and calcium chloride to the joint venture.

The soda ash market in Japan is struggling to recover from the economic crisis of 2008. Demand for glass and washing powder continues to decline, and end users are shifting production overseas.

Soda ash is made from sodium chloride (salt) and ammonia. More than 50% is used as a raw material for glass. In Japan, there used to be four companies, including Central Glass and Tokuyama, that manufactured soda ash.

Tosoh Corporation (TSE:4042) (Tokyo) and Asahi Glass Company Limited (TSE:5201) (AGC) (Tokyo) were the other two companies to manufacture soda ash. Due to the widespread use of PET bottles and weakened demand for glass, Tosoh ceased its production in 1996 and AGC ceased its production of soda ash in 2001.

In the 2000 fiscal year, demand for soda ash in Japan was 1.04 million tons; in the 2012 fiscal year, that demand fell to 590,000 tons, 270,000 of which was imported. The remaining 320,000 tons were manufactured domestically, about half of which was manufactured by Central Glass and Tokuyama.

Both companies have been manufacturing soda ash and calcium chlorides since they were formed. The establishment of the joint venture is scheduled to be in the spring of 2014. Central Glass manufactures soda ash and calcium chloride at its Ube Plant in Ube, Yamaguchi, Japan. The company will gradually reduce the production of soda ash and calcium chloride at Ube Plant, and withdraw completely from Soda Ash Business by the end of May 2015. Tokuyama then will be only company in Japan to produce and supply soda ash and calcium chloride.

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