The Dow Chemical Company and Crystalsev, one of Brazil's largest ethanol producers, have signed a memorandum of understanding for the establishment of a world-scale facility to manufacture polyethylene from sugar cane.

Under the terms of the agreement, Dow and Crystalsev will form a joint venture in Brazil to design and build what is said to be the first integrated facility of its scale in the world, which is expected to start production in 2011 with a capacity of 350,000 metric tons.

The new facility will use ethanol derived from sugar cane, an annually renewable resource, to produce ethylene—the raw material required to produce polyethylene.

"We are excited to partner with a great company like Crystalsev to build the first world-scale polyethylene facility that will use a renewable feedstock," said Andrew Liveris, chairman and CEO of Dow.