Exhibit 99.1
Kerr-McGee Chemical Announces Plans to Shut Down
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Sulfate Pigment Production at Georgia, U.S. Facility
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Georgia Chloride Facility to Continue Operations
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Oklahoma City, Sept. 15, 2004 - Kerr-McGee Chemical LLC, a wholly owned
affiliate of Kerr-McGee Corp. (NYSE: KMG), announces plans to shut down its
titanium dioxide pigment sulfate production at the Savannah, Ga., U.S. facility,
by the end of September 2004. Kerr-McGee Chemical is the world's third-largest
producer and marketer of titanium dioxide pigment, an inorganic whitener and
opacifier for paints, plastics, paper, inks and hundreds of consumer products.
The Savannah sulfate production accounted for approximately 4% of the company's
total worldwide pigment production in the first half of 2004. The company
expects this decision to result in an improvement in Kerr-McGee Chemical's
operating profit of approximately $15 million annually.
"Production of titanium dioxide pigment remains a core business for
Kerr-McGee, and the Savannah chloride facility is an important part of our
global operations and will continue operations," said Tom Adams, Kerr-McGee
Chemical vice president and general manager of the Pigment Division. "However,
demand and prices for sulfate anatase pigments, particularly in the paper
market, has declined in North America consistently during the past several
years. The decreasing volumes, along with unanticipated environmental and
infrastructure issues discovered when Kerr-McGee acquired the facility in 2000,
contributed to the decision. These combined factors have created unacceptable
financial returns for the Savannah sulfate facility. Therefore, we will shut
down all sulfate production at our Savannah facility."
Titanium dioxide pigment is produced through either a chloride or sulfate
process. Chloride-process pigment accounts for approximately 60% of worldwide
consumption and is used in the manufacture of coatings, plastics and other
everyday consumer products. Sulfate-process grades are used in the manufacture
of paper, plastics and specialty products such as catalysts, cosmetics, food and
pharmaceuticals.
"Growth in the pigment industry is in the chloride-process grades, with
sulfate-process grades fulfilling specialty needs," Adams explained. "We are
focused on leveraging our expertise and proprietary chloride technology to
increase margins worldwide and enhance the profitability of our chemical
business."
The company also plans to end production at the Savannah gypsum plant that
uses by-product from the sulfate process to manufacture gypsum. Kerr-McGee will
continue sales and service of gypsum with current inventory.
Kerr-McGee expects to take an after-tax special charge of approximately $75
million to $85 million in the third quarter of 2004, primarily related to the
shutdowns.
The Savannah facility's workforce of 410 will be reduced by approximately
100 positions. In addition, the facility will decrease its daily contractor
workforce by approximately 40 positions.
"Kerr-McGee's sulfate strategy now centers around the Uerdingen, Germany
plant, which has the ability to make a variety of grades for different sulfate
applications," Adams said.
Kerr-McGee expects to fill North American sulfate paper customer
commitments with its current inventory. After the inventory is depleted,
Kerr-McGee will no longer provide sulfate-process pigment to the North American
paper market. The company will continue to serve other global sulfate
requirements from its Uerdingen plant, which has an annual capacity of 107,000
tonnes.
Provision for Noncash Environmental Charges
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Kerr-McGee Corp. announced that the company expects to record environmental
noncash provisions of approximately $45 million to $50 million after taxes in
the third quarter of 2004, for remediation of former sites. The environmental
provision incorporates new information into the company's analysis and review of
environmental remediation projects. These costs relate to activities at various
sites of former operations, including a closed chemical site in West Chicago,
Ill., an oil and gas field in Los Angeles County and two former refining
operations in Oklahoma.
Kerr-McGee Corp. is an Oklahoma City-based energy and inorganic chemical
company with worldwide operations and assets of more than $14 billion.
# # #
Statements in this news release regarding the company's or management's
intentions, beliefs or expectations, or that otherwise speak to future events,
including higher margins, production expectations and future increases in
profitability, are "forward-looking statements" within the meaning of the U.S.
Private Securities Litigation Reform Act of 1995. These forward-looking
statements include those statements preceded by, followed by or that otherwise
include the word "plans," "expects" or similar words. Future results and
developments discussed in these statements may be affected by numerous factors
and risks, such as the accuracy of the assumptions that underlie the statements,
the price of titanium dioxide pigment and other chemical products, uncertainties
in interpreting engineering data, demand for consumer products for which
Kerr-McGee's chemical businesses supply raw materials, the financial resources
of competitors, changes in laws and regulations, the ability to respond to
challenges in international markets (including changes in currency exchange
rates), political or economic conditions in areas where Kerr-McGee operates,
trade and regulatory matters, general economic conditions, and other factors and
risks identified in the Risk Factors section of the company's Annual Report on
Form 10-K and other U.S. Securities and Exchange Commission filings. Actual
results and developments may differ materially from those expressed or implied
in this news release.
Media Contacts: Debbie Schramm John Christiansen
Direct: 405-270-2877 Direct: 405-270-3995
Pager: 1-888-734-8294 Cell: 405-406-6574
dschramm@kmg.com jchristiansen@kmg.com
Investor Contact: Rick Buterbaugh
Direct: 405-270-3561