Clariant books CHF225 million impairment in sunliquid® plant
Swiss specialty chemical company has booked approximately CHF225 million (USD242 million) of impairment in its sunliquid® bioethanol plant in Podari, Romania.
Clariant’s sunliquid® technology offers a fully integrated process design built on established process technology. Its innovative technology features include chemical-free pre-treatment, the integrated production of feedstock- and process-specific enzymes and simultaneous C5 and C6 sugar fermentation.
Construction of the sunliquid® plant was completed in October 2021 and it began production in the second quarter of 2022. The cellulosic ethanol produced at this plant can be applied as a drop-in solution for fuel blending, but also offers further downstream application opportunities for sustainable aviation fuel and bio-based chemicals.
The flagship plant is designed to process approximately 250,000 tons of straw to produce approximately 50,000 tons of cellulosic ethanol per annum.
Clariant’s investment in the project was more than EUR100 million (USD106 million). It also received EUR40 million (USD42 million) in funding from the European Union.
The sunliquid® plant began production in the second quarter of 2022, but has not yet achieved the targeted yields and other operational parameters on an industrial scale. Clariant completed a financial assessment of the plant as part of the annual impairment testing in accordance with International Financial Reporting Standards (IFRS). As a result of this analysis, Clariant has concluded that an impairment to the current asset value of the Podari plant of approximately CHF 225 million is appropriate based on the delayed ramp up and the current financial performance.
Clariant said it has confirmed the unique value of the sunliquid® technology and will continue its commercialization. Clariant said it aims to address the operational challenges by continuously adjusting production processes with the target of achieving commercial viability of the new technology.
“Our sunliquid® technology, which converts agricultural waste into second generation bioethanol, represents a significant step in the development of sustainable renewable fuel. The industrialization of our new technology remains challenging, and therefore impacts underlying financial assumptions, giving rise to the impairment announced today. Nonetheless, we will continue our efforts to achieve commercial viability of the technology,” said Conrad Keijzer, chief executive officer of Clariant.
“While we are disappointed by this impairment, we are however pleased with our strong Group financial performance in the first three quarters of 2022. Consequently, we confirm our 2025 financial targets and continue to focus on the execution of our leading purpose-driven sustainability strategy,” said Keijzer.
The impairment has no impact on cash and will be booked in December 2022. It will be reflected in Clariant’s full year 2022 results, due to be announced on March 2, 2023.