Kemira to form new joint venture with fatty acid chloride producer Shandong Tiancheng in China

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Kemira to form new joint venture with fatty acid chloride producer Shandong Tiancheng in China

September 29, 2017 - 13:05

HELSINKI, Sept. 29, 2017 (Press Release) -Kemira has signed an agreement to form a joint venture - Kemira TC Wanfeng Chemicals Yanzhou ("NewCo") - with Shandong Tiancheng Wanfeng Chemical Technology ("Tiancheng"). NewCo will strengthen Kemira's position as the global leader in Pulp & Paper industry and supports the growth of water treatment.

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. In addition, NewCo plans to produce polyaluminum chloride (PAC) which is a coagulant for water treatment.

Through the backward integration Kemira expands its position in the value chain. NewCo will provide a high-quality wax in the market at cost leadership position. NewCo creates globally the largest and most integrated AKD wax manufacturing unit and almost doubles Kemira's AKD wax capacity. NewCo's site is located in the same chemical park with Kemira's plant in Yanzhou, China and the proximity of the two sites results in savings from logistics costs. NewCo site also offers growth opportunities for other relevant chemicals.

"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", says Kim Poulsen, President, Pulp & Paper.

Kemira will have 80% and Tiancheng 20% of NewCo. Value of the investment for the 80% share is around EUR 55 million and Kemira will have an option to acquire Tiancheng's 20% in the coming years with pre-defined conditions.

The deal is subject to certain closing conditions and is expected to close in the first half of 2018.