Clariant announces closure of sunliquid® bioethanol plant in Romania
Swiss specialty chemicals company Clariant has decided to shut down its sunliquid® bioethanol production facility in Podari, Romania, and downsise related activities in Germany. This strategic move follows a comprehensive review by Clarian’ts Board of Directors.
The decision to close the Podari plant, which began producing bioethanol in the second quarter of 2022, came after a strategic evaluation initiated in July 2023. The evaluation revealed that the plant did not meet Clariant’s operational targets, leading to continued losses and the conclusion that further ramp-up would require significant additional capital expenditure.
Clariant announced in 2017 that it was investing in its first large-scale commercial sunliquid plant for the production of cellulosic ethanol made from agricultural residues. 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.
At full capacity, the plant could process approximately 250,000 tons of wheat straw and other cereal straw annually, which will be sourced from local farmers. Co-products from the process will be used for the generation of renewable energy with the goal of making the plant independent from fossil energy sources. Construction was completed in October 2021 and commercial production began in the second quarter of 2022. The entire offtake from the plant was contracted with a multi-year agreement to Shell.
In December 2022, Clariant announced that it has booked approximately CHF225 million (USD242 million) of impairment in its sunliquid® bioethanol plant in Podari, because of the delayed ramp up and its current financial performance.
Financial impact
Clariant anticipates asset impairments of approximately CHF110 million (USD125.7 million) and provisions related to the closure of around CHF60-90 million (USD68.5-102.8 million) in the fourth quarter of 2023. The anticipated cash impact is expected to be CHF110-140 million (USD125.7-160.0 million) in 2024. Additionally, costs of maintaining required capabilities related to technology licenses are estimated at CHF10-15 million (USD11.4-17.1 million) in 2024.
The financial implications of the closure will be reflected in Clariant’s full-year 2023 results, set to be announced on February 29, 2024. The decision encompasses both restructuring costs and provisions impacting EBITDA, as well as non-cash impairment to the current asset value of the Podari plant and other remaining assets.
Conrad Keijzer, chief executive officer of Clariant, commented on the closure, stating, “After a careful review of all the strategic options, we have decided to close the Podari operation. We are committed to finding socially responsible solutions for our employees in Romania and Germany. It is imperative for a company focused on innovation like ours to make firm decisions when a project does not fulfill expectations.”
Continued focus on sustainable growth
Despite the closure, Clariant said it remains dedicated to executing its sustainable growth strategy. The company will maintain the necessary capabilities to fulfill existing contractual obligations and preserve its technology.
