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PPG Industries Inc. (PPG - Analyst Report) and Argex Titanium Inc. entered into a long-term supply agreement involving pigment grade titanium dioxide (TiO2). Per the agreement, PPG will provide continued research and development support to develop and optimize TiO2 for paints and coatings.

The companies will combine PPG’s coatings technology and expertise with Argex’s TiO2 proprietary processing technology.  TiO2 is a raw material widely used in the paint and coatings industry as pigment for its hiding, durability and whiteness characteristics.

PPG Industries will be Agrex’s first customer for TiO2 pigment suitable for use in its architectural paint production. The TiO2 is intended to be compatible with various end-use applications for PPG Industries.
The current agreement replaces the previous collaboration agreement that was entered in Apr 2012 between the two companies to utilize PPG’s existing technology and know-how relating to the manufacture of TiO2 pigment for paints and coatings applications.

Argex Titanium Inc. has recently transitioned from a mining exploration company to a near-term producer of commodities: Titanium Dioxide (TiO2), Iron and Vanadium Pentoxide (V2O5). With the primary goal of advancing rapidly towards production, Argex has adopted a simple and low risk strategy for the scale-up of its proprietary process that allows it to produce high purity TiO2 directly from its 100% owned deposit.

PPG Industries has a diversified business both in terms of products offered and geographical presence. It has a leading position in several paints and coatings end markets.

PPG Industries released its first quarter 2013 results in Apr 2013. The company beat earnings expectations in the quarter buoyed by continued momentum across automotive OEM and aerospace markets. It posted earnings from continuing operations (excluding one-time items) of $1.58 a share in the quarter, which beat the Zacks Consensus Estimate of $1.56. The adjusted earnings exclude pension and environmental costs, acquisition expenses and tax-related gains.

Consolidated profit, as reported, zoomed to around $2.4 billion or $16.31 per share from $13 million or $0.08 earned in the prior-year quarter. The bottom line was boosted by a one-time gain on sale of the commodity chemicals business.

Reported profit from continued operation was $219 million or $1.48 a share versus a loss of $50 million or $0.32 a year ago. Revenues were essentially flat year over year at $3,331 million, missing the Zacks Consensus Estimate of $3,424 million.

PPG Industries, carries a Zacks Rank #2 (Buy). Other companies in the chemical space that are worth considering include Arkema S.A. (ARKAY) and Cytec Industries Inc. (CYT - Snapshot Report) and FMC Corp. (FMC - Analyst Report). All the companies retain a Zacks Rank #2 (Buy).

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