When the European Commission finally put pen to paper earlier this year on a plan agreed between Akzo Nobel and the Dutch government to cease the transportation of chlorine in the Netherlands, it brought the curtain down on an issue that’s scarcely been off the pages of the Dutch press for the last 25 years.
For René Scheffers, Base Chemicals general manager, the agreement not only closes a chapter in which his business was under the microscope day-in, day-out, but it also opens the door to a return to “normality”.
“Chlorine transports have always been an issue in the Netherlands, one which intensified enormously three years ago following the disaster at a firework plant in Enschede,” explains Scheffers.
“Over the last few years, we’ve been featured in around 100 periodicals, about 25 times on local and national radio and TV, and we’ve had to contend with demonstrations. So yes, I’m relieved it’s over.”
Under the agreed deal, the EU will subsidize the relocation of the company’s chlorine and monochloracetic acid (MCA) plants from Hengelo in the east of the Netherlands to Delfzijl 180 kilometers to the north. Akzo Nobel will invest EUR 160 million in expanding its chlorine activities in Delfzijl, while a further EUR 65 million for the whole project will come from the Dutch government.
“We pondered about the best way to present the decision,” says Scheffers. “Was it something we wanted to do strategically? Ultimately, I believe it was the best we could achieve, although I can imagine other people feel differently.” Nonetheless, he firmly believes that, given the circumstances, the company was able to strike a deal that was the best possible for all concerned.
“I think we struck a perfect balance. Akzo Nobel received financial support and is now able to concentrate its production facilities, the Dutch Government got what they wanted on chlorine transports and new and sustainable jobs were created in the industry. In the long run the position of the Hengelo plant was untenable anyhow, given the encroaching urban development in the city.”
For Functional Chemicals manager Jon Meijnen (pictured), it’s a major issue off the table. Although the MCA business was a virtual bystander in the chlorine debate, MCA production depends on the close proximity of chlorine as a raw material. Wherever chlorine goes, MCA follows.
“Base Chemicals took the lead,” says Meijnen, “and the flak regarding image, safety and environmental issues. For Akzo Nobel it was crucial the Dutch government allocated subsidies, otherwise it would not have been economically viable as a business proposition. Once that was in place, we’d build new plants.
"Waiting for the decision was hard, particularly for our Hengelo employees. As management, it’s your task to take hard-nosed decisions, but for the employees involved it’s a life-changing issue as to whether to move with the business or not.”
For MCA, Meijnen admits the biggest headache is having an unsettled chlorine supplier. Because once a raw material supplier of chlorine says it’s relocating, it becomes an issue for the manufacturers further up the chain.
“Strategy regarding location is set by the supplier,“ says Meijnen. “Luckily, distances in the Netherlands are relatively short. Relocating from Hengelo to Delfzijl is a far better prospect than say from the middle of China to Inner Mongolia. Even so, given the circumstances, I want to emphasize just how loyal and positive our employees have been, because Hengelo was a very productive and profitable plant.”
Both men believe the agreement was nothing more than a blip on the business landscape in the Netherlands.
“The big changes in the industrial landscape in the Netherlands came between the 1970s and the 1990s,” says Meijnen. “But people will always be worried about the transportation of toxic materials through densely populated areas, whatever perfect safety measures one takes.”
Adds Scheffers: "In many ways this entire episode was peculiar to the Netherlands because chorine was rarely an issue in the rest of the world. I once said in a television interview that we have helped create this monster.
“Chlorine transports were an easy target. Only one company was involved on a dedicated line, moving from A to B along a 60 kilometer route at night. Maybe all those precautions worked against us.”
Now that the chlorine transport debate has effectively been resolved, both managers can look forward to a future which is unclouded by high octane public issues.
Meijnen is upbeat about the market for MCA—which is worth several hundred million euros to Functional Chemicals. An intermediate for pharmaceuticals, agrochemicals, carboxymethylcellose (CMC), which itself is an ingredient of toothpaste, oil drilling muds, cosmetics and many other products.
But it is particularly in the agrochemical sector that the strongest growth is being booked, and especially in China, where sales of MCA are helping to fuel the huge surge in Chinese economic activity.
“Our main markets are still Europe and North America, but China is growing very fast. The plant we built in Taixing in China a couple of years ago is running at full steam. We simply can’t produce enough,” says Meijnen.
“We’re moving towards becoming the leading producer of MCA in the world. And that’s very positive for the Delfzijl plant, because Delfzijl can play a prominent role. We have the strongest worldwide presence—a joint venture in Japan, a plant in China, a plant in Sweden, and one in the Netherlands,” he adds.
“With that network I think we can grow to become the leading producer. What is particularly encouraging is that our plant in China has a completely Chinese crew with a Chinese manager and is posting an excellent HSE and financial performance.”
Scheffers, too, is positive that Base Chemicals’ share of the 40 million ton global chlorine market will continue to grow. He points out that more than 60 percent of the chemical industry depends on chlorine as a raw material, or as an auxiliary material and that there’s very little in daily life that has not been in contact with chlorine at some time.
“We’re the fourth largest producer in Europe, although size is unimportant because unlike the MCA business, which is global, chlorine is very much a local business. It is not something you transport,” says Scheffers.
“A chlorine plant is always the nucleus of a chemical park because it’s a key raw material. Admittedly, chlorine remains a big energy consumer, but it’s something we’re working on. For instance, our cost effectiveness will improve once the new zero-gap technology is installed in Delfzijl.”
He adds: “Our strategy has always been to develop stable one-to-one relationships with leading global companies. It’s like a good marriage. There’s a lot of growth in our business precisely for that reason. If our customers do well, so do we. In that respect, we’ve done well. And that’s very positive news for our chlorine business.”