KMG-Bernuth, Inc., a subsidiary of KMG Chemicals, Inc. (NYSE:KMG), is disappointed to report that the Persistent Organic Pollutants Review Committee of the Stockholm Convention at its Eighth Meeting in Geneva this week ignored sound science by recommending the listing of pentachlorophenol (penta) as a Persistent Organic Pollutant (POP). The review committee comprises representatives from countries that have ratified the treaty known as the Stockholm Convention. This listing is the initial step in restricting or prohibiting uses of penta in countries that have approved the treaty. We firmly believe that the committee was incorrect in its decision to recommend listing penta as a POP, and we will continue to make that case with good science before the full Conference of the Parties. Because the United States has not ratified the Stockholm Convention, the action taken by the review committee has no regulatory effect in this country, the principal market for KMG-Bernuth’s penta products. In fact, the U.S. Environmental Protection Agency recently favorably reevaluated penta, again re-approving it for use in pressure treating utility poles and cross-arms in the United States. KMG-Bernuth also sells penta products in Canada. That country has ratified the Stockholm Convention and will be bound by the POP listing process. However, the action taken this week by the review committee is only the initial step in the listing process. The full Conference of the Parties of the Stockholm Convention must approve the listing, and if approved, a decision must be made on whether to merely restrict the uses of penta or prohibit its use entirely. This is a multi-year process, and there is every reason to believe that the use of penta on utility poles and cross-arms will be allowed to continue in Canada, because Canada has also recently reevaluated penta and approved its use in pressure treating utility poles and cross-arms. We will fully support Canada in its effort to retain the current uses of penta.
The review committee concluded, in the face of contrary, credible science, that the presence in the Arctic Circle of pentachloroanisole, a chemical to which penta and many other chemicals degrade in the environment, was attributable to penta and justified the decision. We believe the committee was wrong in that conclusion, and believe other chemical precursors are the source of the pentachloroanisole found in remote regions. We further believe that neither penta nor pentachloroanisole meet the bioaccumulation criterion established under the Stockholm Convention. The U.S. Environmental Protection Agency voiced concerns about the decision taken at the Geneva meeting, but because the United States has not ratified treaty it has only observer status and cannot vote.As the process continues, we will give our full support for penta in Canada and before the Conference of the Parties of the Stockholm Convention. About KMG KMG Chemicals (NYSE:KMG) produces and distributes specialty chemicals in select markets globally. The company currently operates in two business segments: Electronic Chemicals and Wood Treating Chemicals. KMG is the leading U.S. supplier of high purity electronic chemicals, serving major semiconductor manufacturers in the U.S., Europe and Asia. KMG is also the leading U.S. supplier of wood treating chemicals for the electric power, communications and railroad industries.