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Solvay to carve out soda ash business

February 28, 2021
Chemical Value Chain

Solvay says it has decided to organize its soda ash and derivatives business into a separate and fully controlled legal structure. Solvay CEO Ilham Kadri told a press briefing on Wednesday following the announcement of the company’s 2020 financial results that Solvay had not decided on the long-term future of the soda ash business. “All options are open, and nothing has been decided beyond the carve-out,” she said.

Under Solvay’s previously announced G.R.O.W. strategy, the company’s three segments—materials, chemicals, and solutions—have been given distinct mandates reflecting different paths to value creation. Carving out the soda ash and derivatives business, which forms part of the chemicals segment, will reinforce internal financial and operational transparency and accountability, in line with the business’s mandate to optimize cash-flow generation and returns, while “increasing future strategic flexibility,” Solvay says.

Soda ash is a historic business for Solvay that dates back more than 150 years to the company’s creation. Brothers Ernest and Alfred Solvay founded the company in 1863 after family members, led by Ernest, invented the ammonia soda production process, also known as the Solvay process. By 1900, about 90% of the soda ash consumed in the world was based on the Solvay process. The company remains the market leader in soda ash to this day.

Solvay today operates six soda ash plants in Europe based on the Solvay process. They are at Bernburg and Rheinberg, Germany; Devnya, Bulgaria; Dombasle, France; Rosignano, Italy; and Torrelavega, Spain. Solvay’s other plant, at Green River, Wyoming, is based on trona that the company mines there. Solvay does not provide capacity figures for its soda ash business, but IHS Markit estimates that the company has just under 3 million metric tons/year (MMt/y) of capacity at Green River, which is being expanded to 3.6 MMt/y under previously announced plans. Solvay says that Green River accounts for about 20% of the company’s soda ash capacity.

Solvay’s soda ash and derivatives business generated 2020 sales of €1.45 billion ($1.77 billion), down 12.7%. The business’s fourth-quarter revenue also declined 12.7% year on year, to €359 million, but improved sequentially by 2.6% versus the third quarter as demand for flat glass used in construction improved. Demand for container glass used in the hospitality industry remained weak, however, Solvay says.

The soda ash business is “primarily volume driven,” Solvay CFO Karim Hajjar told Wednesday’s press briefing. The business was nevertheless able to increase margins in 2020, he said.

Solvay, meanwhile, says that divestments of six commodity business lines that the company announced in 2020 are expected to be completed in the first half of 2021. The six businesses represent combined revenue of about €300 million/year, Solvay says.

The company says it will continue to explore other opportunities to simplify its portfolio further. Kadri told the press briefing that Solvay is “exploring options” for its oil and gas business. The business has two segments: oilfield chemicals, and equipment and parts. She did not provide further details.

Solvay says it is nearing completion of a project to install a biomass boiler at its Rheinberg soda ash plant. The biomass boiler will replace a coal-fired boiler. Switching from using coal to biomass should reduce the Rheinberg site’s CO2 emissions more than 30%, the company says. The biomass boiler is scheduled to be operational in the second quarter of 2021. Solvay has completed a similar move at its Bernburg soda ash plant and is discussing a switch to biomass at its Dombasle soda ash unit, Kadri told the briefing.

The Rheinberg plan is one of 27 emission-reduction projects at Solvay that represent an annual reduction of 1.8 million tons of CO2 , equivalent to taking 1 million cars off the road, the company says. Solvay says that 18 of these projects are already operational. The remaining nine will be implemented within three years.

By Ian Young

Source: chemweek.com

 

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