Major Contract with Shagang, Leading Steel Manufacturer in China

Air Liquide announces the signature of its largest long term contract in China with Shagang, which has decided to outsource its increasing industrial gases needs. Under the terms of this agreement, Air Liquide will invest about 90 million euros to install two large air separation units (ASU) of 2000 tonnes per day of gaseous oxygen each, to supply oxygen, nitrogen and argon to Shagang steel mills in Zhanjiagang, Jiangsu Province. The units, which will start in Q2 2009, will also supply other local industrial customers with gaseous or liquid products. It will have in particular, capacity of 600 tonnes per day of liquid nitrogen and oxygen to meet the demands of a fast growing market. The units, designed and manufactured by Air Liquide Hangzhou, the Air Liquide engineering centre in China, will use the latest technologies providing both high reliability and high-energy efficiency.

Jiangsu Shagang Group is located in Zhanjiagang, about 100 km west of Shanghai. It ranks number one among private steel companies in China, and number four in terms of steel production. It is one of the Top 25 most competitive steel mills worldwide. Its steel production reached 14.5 million tonnes in 2006 and will continue to increase on its site in the Zhanjiagang Yangzte Metallurgical Industrial Park (YMIP). It is an integrated steel plant. Its finished products include super wide and thick plates, hot roll coils and high quality bars and wires, 85% of which are for the domestic market.

Commenting on this new development, Jean-Pierre Duprieu, Senior Vice-President Asia-Pacific and member of Air Liquide's Executive Committee, said, "This very large contract represents a milestone in the development of Air Liquide in China not only by its size, but also by the choice of a leading company such as Shagang to outsource its industrial gases needs. We are happy to have convinced Shagang to make this decision in line with the trend in other countries. We want to thank them for their trust as well as the Zhanjiagang authorities for their continuous support.”

Mr. Shen WenRong, Chairman of Shagang, added, "After fruitful discussion we have decided to entrust Air Liquide with our industrial gases needs. It is a major change for us, being used to producing industrial gases ourselves. Air Liquide has understood our needs and shown competitiveness. We are happy to enter into a long term partnership with Air Liquide and benefit from its worldwide capabilities.”

Air Liquide has been steadily developing the Jiangsu market, which is the largest and fastest growing region in China, with a GDP growth of 15% in 2006. Main industries are high tech, metal and chemical manufacturing, requiring in particular large quantities of nitrogen for such needs as inerting or heat treatment. In 2006, Air Liquide commissioned three plants in Jiangsu Province: one in Wuxi to service Hynix-ST, a leading semiconductor manufacturer, with high purity gases, one in Changshu to supply metal fabricating customers with nitrogen and hydrogen, and one in the same industrial park where Shagang is located, to supply Zhanjiagang Posco Stainless Steel with oxygen, nitrogen and argon. Total investment of Air Liquide in Jiangsu Province is close to 200 million euros.

Established in China in 1916 and with an increased presence in the last 15 years, Air Liquide employs about 1,500 people with annual sales of more than 200 million euros. The Group has operations in the areas of Beijing/Tianjin/Shandong/Liaoning in the north, Shanghai/Jiangsu/Zhejiang in the east. Air Liquide plans to invest approximately 500 million euros in China over the period 2004-2008, to meet strong market demand and to seize growth opportunities. This new investment is the 5th announced in China during the last 12 months for industrial gas production