What is a heater chimney? you mean the chimney for a
furnace? Most metal chimneys are not zero clearance and
generally require a 3 inch clearance. You treat chimneys
just like you do sunken light fixtures (ones that protrude
above the ceiling). You build a ring of sheet metal around
the fixture to keep insulation or other material away from,
or in this, case the chimney to a height slight greater than
the depth of the insulation.

And no, you do not wrap any kind of insulation around the
chimney. There is no reason to and it would serve no
purpose (if it is a zero clearance chimney) and would be
dangerous if the chimney requires a 3 inch clearance.

Alexander Galkin wrote:

I am adding insulation to the attic that already has insulation. I have a
heater chimney that goes through the attic. Can I use John Manville Kraft
R-19 unfaced batts to add insulation to the attic? The package says its for
wall/floor/crawl spaces. I assume it can be used for attic too. Can batts
touch heater chimney? The chimney actually has two pipes, one inside
another. The inner pipe is very thin aluminum pipe while outer pipe is
regular duct metal pipe. If batts cannot touch chimney can I use thermofiber
insulation around the chimney and keep batts 3" away from it? I think
thermofiber insulation does not burn and can touch hot objects.