By Patrick Raleigh, ERJ On-line news editor
Cologne, Germany-Lanxess plans to build a halobutyl rubber plant in China, according to officials of the Bayer AG rubber, chemicals and plastics firm, which is due to separate from the group by early 2005. The fledgling firm is also looking to further rationalise its rubber and rubber chemicals operations, the officials indicated at a 15 June press event in Cologne.
A world-scale Chinese butyl rubber unit is on â€œa wish list for the long term of things we have to do,â€ explained Ulrich Koemm, a Lanxess board member designate.
However, Lanxess will have to reach a decision about the project within the next two years, added Koemm, who is also serving as president of Bayer Chemicals AG until Lanxess becomes an independent entity on 1 July.
â€œWe are interested in making inroads into making speciality halobutyl rubber [in China] because this raw material is not available there. This might lead to a major investment if we cannot answer the question when we have reached that stage,â€ Koemm commented.
The planned butyl rubber unit is an exception to Lanxess' strategy for Asia of seeking to optimise products to customer requirements rather than investing in major new production facilities.
â€œWe won't have three-digit million investments in China in order to produce basic polymers. Basic polymers are already available for our applications,â€ said Koemm.
â€œBut we have a specific know how, which has grown historically that enables us to produce specialities from the basic polymers. These are the products with which we want to go with to Asia,â€ he added.
Separately, Koemm emphasised Lanxess' commitment to a policy of adjusting capacities to fit market demand, noting, â€œSignificant overcapacities have already been axed in the rubber industry.â€
Lanxess, for example, is not happy with the returns from rubber chemicals. â€œWe are in a highly competitive field and rubber chemicals is not a highly profitable business â€¦There will be internal restructuringâ€ in this business, said Koemm.
However, all such â€œportfolio managementâ€ decisions will have to wait until Lanxess' separation from Bayer, either via a spin off or an IPO, according to Koemm.
â€œIt will be a lot of work to do an IPO or spin off. From a purely practical point of view it would be very difficult to change your financials or do any sort of transaction shortly before you go public,â€ Koemm said.
Lanxess, meanwhile, faces possible costs with regard to alleged price fixing in the EPDM, nitrile rubber and rubber chemicals industries in Europe and North America, Koemm saying that it â€œis not finally decidedâ€ who is to cover the potential fines resulting from these probes.
â€œThis is one of the points where we still have to find a solid base. It is clear that not all the charges can be with Lanxess as this would overload Lanxess financially,â€ said Koemm.