LANXESS to streamline the chrome value chain of its leather business

As one of the world's leading suppliers of leather chemicals and chrome specialties, specialty chemicals company LANXESS is to further strengthen the competitiveness of its leather chemicals business. The core element is a shift from the international chrome value chain to centralization in South Africa, where chrome ore is processed into the intermediate sodium dichromate and ultimately to chrome specialties, predominantly chrome tanning salts for use in tanneries worldwide. In this context the company will discontinue production at the Zárate site in Argentina in the fourth quarter of 2017. LANXESS currently operates production facilities for sodium dichromate and chrome tanning salts in both countries: in Argentina at its site in Zárate, and in South Africa at its sites in Newcastle and Merebank.

"This strategic measure enables us to further strengthen our competitiveness in the chrome chemicals business. Moreover, it allows us to focus even more on our business with organic leather chemicals and thus bolster our leading position as a provider of innovative, service-intensive specialties for the leather production," says Luis López-Remón, head of the LANXESS leather business unit. LANXESS expects the streamlining of its chrome value chain to generate a positive EBITDA effect of around EUR 10 million annually, which will be realized by the end of 2018, as well as approximately EUR 60 million in one-time-costs in 2017.

The site closure in Zárate, Argentina, will affect 170 employees. "It is our intention to enter into talks with employee representatives without delay in order to find responsible solutions for all affected employees," explains López-Remón.

LANXESS will continue its other operations in Argentina at its production sites in Burzaco and Merlo (Province of San Luis), from where the company offers comprehensive solutions for the rubber industry. LANXESS currently has some 400 employees in Argentina.

Source : Equity Bulls

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