Westaim's Surface Engineered Products operation begins commercialization process

FORT SASKATCHEWAN, ALBERTA, CANADA - The Westaim Corporation announced today that its Board of Directors has approved a plan to construct an $18.2-million coatings application plant in Alberta that will initially provide anti-coking products and solutions to the ethylene industry.

This is the first full-scale commercialization of one of Westaim’s new business opportunities,” said President and CEO Kevin Jenkins. “Our Surface Engineered Products division is currently in trial manufacturing and its coated products are being qualified by major ethylene producers. The first product line, called CoatAlloy-I, is expected to be launched in the fourth quarter of 1998.”

Westaim has developed proprietary coating technologies that have been shown to reduce the rate of coking or carbon build-up in ethylene furnace tubes by up to 90%, leading to longer and more economical ethylene production runs. The build-up of carbon in furnaces is a major problem for ethylene producers because it leads to costly decoking steps, reduces efficiency of operation and increases the rate of metal corrosion and erosion. The coking problem is estimated to cost the worldwide ethylene industry more than $2 billion annually in lost production alone.

The Technology
Westaim has developed two groups of proprietary technologies: engineered coating systems (surface alloys) that are capable of providing unique surface properties in severe operating environments, and enabling coating application methods for processing commercial products previously considered uncoatable due to their complex shape or geometry.

The Product
The first product line, called CoatAlloy-I, will consist of standard commercial alloy steel tubes and fittings whose inner walls will be coated using Westaim’s technology. The selected tubes and fittings, which will be sourced from major producers in Japan, Europe, Canada and the United States, have an established performance record in an uncoated condition. When coated, they provide significant value-added performance to the end user. CoatAlloy-I can increase the capacity of ethylene plants by 2% to 8%, and lead to lower unit production costs and increased profitability for ethylene producers.

Trials
Westaim has completed three commercial furnace retubes in two different furnace types. By the end of 1997, the product is expected to be in qualifying trials with a total of three ethylene producers and four furnace types.

The Market
Ethylene is the single most important hydrocarbon in the world today as it serves as a basic building block of compounds used in the manufacture of plastics. Ethylene demand is growing rapidly as products derived from ethylene are displacing conventional materials in packaging, building materials, automotive and other applications. World production of ethylene is forecast to grow from 71 million tonnes in 1995 to more than 100 million tonnes by 2005.

Ethylene producers currently consume $400 million per year of tubular products worldwide and are projected to consume $600 million per year by 2005. The market is typically 80% for maintenance or retubing of existing furnaces and 20% for new installations.

The Plant
The new plant will employ 75 workers initially, with plans to expand to more than 300 employees during the next five years. Westaim is currently considering a limited number of sites in Alberta and will announce the location by year-end. Construction for the plant is expected to begin in January 1998 with production slated for fall 1998.

The new plant will have a capacity to process 10,000 metres per year of 150-millimetre diameter tubes. When fully operational, the plant capacity can service approximately 9% of the North American ethylene industry.

Other Markets
Other potential markets for Westaim’s coated products and technologies include severe or critical service applications in the petrochemical, aerospace and defense industries.

Westaim has a portfolio of new business opportunities which consists of surface engineered products, electroluminescent flat panel displays and biomedical coatings. In addition, Westaim manufactures a wide range of other products based on its advanced industrial materials expertise.

Westaim is a TSE 300 company whose common shares are listed on The Toronto Stock Exchange, The Alberta Stock Exchange and the Montreal Exchange under the trading symbol "WED".

For more information, contact:

Tony Johnston,
Senior Vice President, Corporate Affairs,
(403) 234-3103
Website: www.westaim.com