Kemira Opens Joint Venture in China Focused on P&P Sector
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According to reports this past week by the NYC Nasdaq Center (New York, N.Y., USA) Kemira (Finland) has received final authority permits and closed the deal announced on September 29, 2017. Kemira has formed a joint venture with an AKD producer in China. Kemira forms a joint venture - Kemira TC Wanfeng Chemicals Yanzhou ("NewCo") - with Shandong Tiancheng Wanfeng Chemical Technology ("TC Wanfeng").
NewCo strengthens Kemira's position as a leading global supplier for the P&P industry. NewCo will mainly produce AKD wax and its key raw material fatty acid chloride (FACL). AKD wax, where the main component is based on renewable raw material, is a sizing chemical used in board and paper manufacturing to create resistance against liquid absorption. Kemira is the global market leader in sizing chemicals.
Through the backward integration, Kemira expands its position in the value chain. NewCo will provide a high-quality AKD wax and will be globally the largest AKD wax manufacturing unit significantly improving Kemira's AKD wax capacity. NewCo's site is located in the same chemical park with Kemira's first AKD wax plant in Yanzhou, China and the proximity of the two sites results in operational synergies. The NewCo site also offers growth opportunities for other relevant chemicals.
In addition, NewCo will produce polyaluminum chloride (PAC) which is a coagulant for water treatment. NewCo will start the production of chemicals in the second half of 2019 after necessary investments and the ramp-up phase are completed.
"The joint venture is a good strategic fit. We strengthen our position in the market with a quality asset and secure our supply of the key raw material for AKD wax. With the newly built site, we ensure our capacity utilization and support our customers better with our global delivery capability. At the same time, this enables us to grow even faster in APAC", said Kim Poulsen, president, Pulp & Paper.
Kemira has 80% and TC Wanfeng 20% of NewCo. Value of the investment for the 80% share is around EUR 55 million and Kemira has an option to acquire TC Wanfeng's 20% in the coming years with pre-defined conditions.
