CIECH Soda Romania A player on the European soda market and contributor to the economy of Romania and Vâlcea County - EY
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CIECH Soda Romania
A player on the European
soda market and contributor
to the economy of Romania
and Vâlcea County
11 September 2019
Confidential – All Rights Reserved – EY Poland The Corporate Report CIECH 0 Confidential – All Rights Reserved – EY Poland The Corporate Report CIECH 1
Table of contents
01 Executive summary 4
02 CSR as a unique soda production facility in Romania 8
03 Perspectives on further business performance at CSR 18
04 Impact of the CIECH Group on the Romanian economy
in 2018
26
05 Impact of the CIECH Group on the economy and
community of Vâlcea county
36
06 Appendices 44
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01
Executive summary
CIECH Soda Romania (CSR) is a manufacturing company located in the Vâlcea region in Romania.
01 For 60 years it has carried out its soda manufacturing operations and now supplies the Romanian
market as the only domestic producer. CSR exports its soda products to over 70 countries.
Rooted deeply in the region, CSR supplies local value chains including glass bottle and window
02 manufacturers, sourcing inputs from Romanian Treasury-owned companies. The factory is also
the fifth largest private employer in the region with over 600 full-time employees.
Executive summary
CIECH Group is the majority shareholder of CSR. CIECH Group is an international chemistry holding
03 with a presence in over 100 countries and 2018 revenue equal to nearly USD 1.0 billion. In 2014
the majority of CIECH’s stock was acquired by KI Chemistry, a company belonging to the largest
Polish private investment firm, Kulczyk Investments.
The acquisition of CIECH by KI Holding resulted in substantial reorganization of CSR. An injection
04 of funding of EUR 140 million into the business removed the liabilities and allowed for asset
modernization. New strategy and business organization followed to further enhance operations.
05 Owing to the transformation, the revenues of CSR increased by 50% over the 2014-18 period to
reach a net value of RON 443.7 million.
06 Production volume growth over the last 5 years has been substantial. In 2017 the Company
produced an all-time-high 540,000 tonnes of soda products – a 30% increase over 2014 figures.
With stable domestic sales, CSR has greatly increased its international market with a more than
30% increase in countries served and improving its position in direct sales by over 80%, recapturing
volumes sold previously by third party dealers.
There are four critical cost drivers for the CSR operations: steam, electricity, limestone and brine.
07 Steam, limestone and brine are sourced from exclusive suppliers with no immediate replacements
apparent (or possible).
The steam supplier, CET Govora, suffered a serious damage due to accident in the first half of
08 2019 thus limiting the supply of steam by a substantial margin. Starting from 18 September 2019,
proposed prices of steam will rise sharply by 135% compared with the 2018 level.
09 The proposed prices of steam deeply impact CSR operations as steam constitutes over 40% of the
Company’s total costs, making production non-economical.
10 CSR has announced to cease operations at the plant starting from 18th September 2019, while
negotiating steam prices with the supplier.
11 As CSR is a major company in the Romanian Vâlcea Region, it is anticipated that potential
discontinuance of its business operations will have substantial economic and social consequences.
12 The impact of the operational activity of the CIECH Group on the economy of Romania and Vâlcea
county in 2018, taking into account the links of the CIECH Group to the rest of the Romanian
economy, was as follows:
► RON 445 m of value added (~GDP) was generated in Romania, of which
RON 260 m was generated in Vâlcea county
► RON 1.3 bn of global output (~revenues) was generated in Romania of which RON 869 million
was generated in Vâlcea county
► More than 4,400 jobs were created in Romania of which more than 2,160 jobs were created in
Vâlcea county
► RON 98 million of government revenues were generated in Romania of which RON 4.5 million
were received by local government units in Vâlcea county.
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Economic impact summary
COUNTRY LEVEL VÂLCEA COUNTY
LEVEL
RON 445 mn RON 260 mn
(EUR 96 mn) (EUR 56 mn)
of value added (~GDP) generated in of value added generated in
Romania the Vâlcea county
RON 1 mn RON 3.3 mn
generated directly by in the rest of the
the CIECH Group economy
RON 1.3 bn RON 869 mn
(EUR 279 mn) (EUR 187 mn)
of global output (~revenues) of global output generated in
generated in Romania the Vâlcea county
ca. 4,400 ca. 2,160
jobs created in Romania jobs created in the Vâlcea county
1 job 5.9 jobs
created directly in the rest of the
by the CIECH Group economy
RON 98 mn RON 4.5 mn
(EUR 21 mn) (EUR 967 thous.)
of government revenues generated of government revenues received
in Romania by the local government units in
the Vâlcea county
RON 1 mn RON 3.1 mn
generated directly by in the rest of the
the CIECH Group economy
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02 CSR as a unique soda production
In this chapter we present a general business
overview of CIECH Soda Romania and the
competitive environment in which it operates.
facility in Romania CIECH Soda Romania is the only
Romanian soda producer
60 years
of continuous operations
more than
600 employees
►(2018)
part of the
2nd largest soda
company in EU
Top 5
privately owned company in the Vâlcea
region in terms of revenue and
employment (2nd largest by revenue)
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02 | CSR as a unique soda production facility in Romania 02 | CSR as a unique soda production facility in Romania
CIECH Soda Romania (CSR) is a major Being part of the larger CIECH
company in the Vâlcea region and part of the Group, CSR vastly benefits from
international CIECH Group the ownership
OVERVIEW OF CIECH SODA ROMANIA CIECH IS AN INTERNATIONAL COMPANY WITH DIVERSIFIED PRODUCT PORTFOLIO
CIECH Soda Romania (CSR), formerly known as
Uzinele Sodice Govora, is located in the 2nd 4
southern part of Romania, in the town of The second largest producer Operating segments incl. soda,
Rumnicu Vâlcea. CSR is the sole soda producer of soda ash in Europe glass and silicates as well
on the economic map of Romania and one of as organics
the most important factories in the country. As
a strategic supplier to glass and detergent
producers, CSR plays an important role in
1st 100
The largest producer CIECH Group products are
establishment of robust industrial supply of evaporated salt in Poland sold to 100 countries
chains in Romania. (55% of market share) worldwide
The Romanian soda factory was the first
foreign company acquired by the international
CIECH Group (in December 2006).
8 3.9k
Production facilities in Europe There are a total of 3,871 FTEs
(6 in Poland, 1 in Germany, in the CIECH Group
COMPANY INFORMATION (2018) KEY INPUTS 1 in Romania)
Production of soda is a commodity industry
focused on cost base. The key cost drivers are: CIECH GROUP SODA BUSINESS VALUE CHAINS
Thousand RON USD 70% INPUT OUTPUT APPLICATIONS
Total operating Steam ~35% Materials (Synthetic Soda Application
443,700 112,614 Contribution Production Method) products products
revenue Electricity to cost of ~9%
Sodium segment Panes, packaging glass, flat glass
Limestone goods sold ~16% Steam
(COGS) Soda ash
USD/RON 3.94 Brine ~10% Cleaning agents, disinfectants
Electricity Sodium bicarbonate
Steam, limestone and brine are sourced by CSR Flux, smelting agents
Annual capacity 540,000 tonnes via a single and exclusive supplier. Limestone Calcium chloride
Reagents, depressants, flue gas absorbers
Brine Evaporated salt
Employment over 600 FTE
KEY OUTPUTS Food additives
The key products of CIECH Soda Romania are: CIECH GROUP PRESENCE HAS A SUBSTANTIAL IMPACT ON CSR
Ownership CIECH Group, 98.7% ► Soda ash ► Dense soda ash with COMPETITIVENESS
► Sodium silicates application in the
► Water glass glass industry, which INJECTION KNOWLEDGE OPERATIONAL
Location Govora, Vâlcea County is the flagship
► Soda derivatives OF FUNDS TRANSFER SYNERGY
product.
Total investment in the company in The modernization of the plant was By being a part of the larger CIECH
VALUE CHAIN PRESENCE the last 5 years amounts to EUR followed with new management group CSR has gained more
140 million or an approximate principles resulting in redefinition reliable facility output. Its
Local glass and detergents companies are the key local customers for CSR products. Internationally 120% of annual revenue. The fund of go-to-market strategy, creation production output has grown by
CSR serves a large base of international clients with more than 140 customers in more than 70 injection both cleared the liabilities of a reshaped business model and double digit numbers. This can be
countries in Europe, Africa, North and South America as well as Asia. A detailed analysis of the soda and allowed the company to restructuring of the sales team attributed to the shift in perception
value chain is presented on pages 46-47. modernize the production facilities that already ships the product to of CSR in the market and ability to
to almost double the capacity from 72 countries around the globe. diversify the sales portfolio.
Source: CSR financial statements and data 2009 volumes.
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02 | CSR as a unique soda production facility in Romania 02 | CSR as a unique soda production facility in Romania
With a performance history of 60 Since 2014 CSR has achieved
years, Govora is a well established, significant improvements in major
continuously growing plant KPIs
OWNER EVENT IMPACT KEY INDICATORS
1959 Launch of modern soda industry in Romania 2018 CHANGE FROM ‘14
The Company is founded as provides strong basis for development of multiple
Romanian industries including glass and detergents.
Uzinele Sodice Govora
State
Treasury,
then private From 1959 to 2006 the Company growth is 540,000 tonnes
Annual capacity
Romanian 1959-2006 synchronized in accordance with the demand from
investors The Company is owned by Romanian customer markets. After 1990 the Owing to profound modernization of the plant, CSR was able to +30%
the Romanian state Company must adapt to the rules of the increase production capacity by 30% from 2014 to 2018,
competitive European soda market. reaching the amount of 540,000 tonnes per annum.
Uzinele Sodice Govora enters one of the largest
2006 and strongest soda companies in Europe. It gains
CIECH Group purchases the access to know-how, distribution channels as well
CIECH S.A. RON 443.7 million
(Polish
Company as capital. Sales revenues
State
Treasury Net sales revenues increased substantially between 2014 and +50%
holding) 2006-2014 CIECH Group provides multiple loans which are 2018, with a CAGR approximate of near 10% and cumulative
invested in facility modernization and upscale as increase of 50% in total.
Over EUR 140 million
invested in the Company well as performance improvement initiatives.
Majority of shares in CIECH Group are purchased
2014 by KI Chemistry from Kulczyk Investments, the
KI Chemistry acquires the largest private owned investment house in Poland
Long-term liabilities RON 4.1 million
controlling stake in the with strategic positions in the infrastructure, - RON
While in 2014 CSR’s long-term liabilities exceeded RON 480
CIECH Group power & utilities, oil & gas or mining sectors. million, the long-term debt towards CIECH Group has been paid 476m
after equity increase done by CIECH. In result long term
KI Group brings new vision and direction to the
2014-2016 CIECH Group. The Company records both capacity
liabilities declined to the marginal level of RON 4.0 million as per
Restructuring process 2018.
and productions growth. It remains profitable,
under new investor’s despite steam supply issues, including a brief halt
strategy in production.
Current liabilities RON 63.1 million
CIECH S.A.
(Kulczyk 2015 As production capacity exceeds 540 KTA, owing to Over the last five years CSR has significantly improved its -75%
Production capacity scale the economics of the facility is further management of current liabilities, reducing them by 75%.
Investments
as a strategic exceeds 540 KTA optimized.
investor)
The dynamic sales team at CSR introduces FROM ’14 TO ’18 (5 YEARS)
2018 a number of reforms including expansion into new
Company sells over 80% of overseas markets as well as substitution of direct
production overseas sales to end-users over sales to third party
wholesalers.
CAPEX RON 150.0 million
2019 CIECH Group communicates situation of steam
From 2014 to 2018 CSR invested nearly RON 150 million in plant optimization,
Unsustainable steam supplies. The steep hike price for this essential input
for manufacturing processes and a key cost modernization and replacements as well as building consolidation and other investments
supply and price puts CSR such as IT.
at risk component makes production non-viable.
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02 | CSR as a unique soda production facility in Romania 02 | CSR as a unique soda production facility in Romania
CSR’s plant is one of a few soda CIECH Soda Romania has remained
ash production facilities in Europe competitive under constant
pressure from local peers
SODA ASH PRODUCTION PLANTS IN EUROPE (2018) SODA ASH PRODUCTION PLANTS IN THE BALKANS REGION (2018)
Facilities: Soda ash top three producers in Europe CIECH Soda Romania is the only
producer of soda ash located in
Solvay (BE) Romania. With capacity reaching
6
Million 540,000 tonnes per annum, it
Tata Chemicals (UK)
tonnes 4 serves local customers from
5.0
CIECH (PL) various industries, including glass
2 producers, but exports contribute
Sisecam (TR) 2,6
0,9 to more than 80% of sales
0 ROMANIA volumes.
Solvay Ciech Sisecam
CIECH Soda Romania Besides CSR five other production
► BOSNIA & Râmnicu Vâlcea facilities impact the supply
Northwich HERZEGOVINA Capacity: 540 KTA dynamics of soda ash in the
Stassfurt Inowrocław Crim Soda Balkans region. Solvay / Sisecam,
Krasnoperekopsk a joint venture company located
Rheinberg Sisecam Capacity: in Devnya in Northern Bulgaria,
Bernburg with a production capacity almost
Janikowo 800 KTA
Lukavac Solvay / three times as high as that of
Capacity: 500 KTA Sisecam CSR, is its key competitor.
BULGARIA
Dombasle
Govora Devnya The other competitors include
Capacity: 1,500 KTA Sisecam facilities located in
► TURKEY
Torrelavuga Balikesir in mainland Turkey and
Ciner Lukavac in Bosnia & Herzegovina,
Lukavac Kazan Ciner facility in Kazan in Turkey as
Rosignano Devnya Sisecam Capacity: well as CrimSoda facility located
Balikesir 2,600 KTA Krasnoperekopsk in the Crimean
Capacity: 1,300 KTA Peninsula.
Source: EY Analysis based on companies’ reports
DOING SODA BUSINESS IN ROMANIA AND THE BALKANS REGION
Due to intense local competition focused on exports,
Source: EY Analysis based on companies’ reports Competitive production scale and the cost benefits of raw materials
1
Competitive edge drivers and energy are even more critical to remain profitable
position of CSR in than in the rest of Europe.
DEMAND SUPPLY SITUATION IN EUROPE
the regional CSR is the only facility in the region which is not vertically
European demand for soda ash depends mainly on the demand for resources (e.g. brine, limestone) Buyer integrated with electricity and steam sources as well as
including Western, Central and packaging and flat glass. In Central vastly determine the market market 2
power brine/limestone reservoirs. These resources are supplied via
Southeast Europe as well as the CIS Europe, the share of the detergent supply that can be created by companies controlled by central or municipal authorities.
(Commonwealth of Independent segment is also quite important, European producers.
States) Region is estimated at over while in Eastern Europe the Supplier It is reported that large Romanian end-users of soda ash
As for 2018, European demand
11 million tonnes per year. metallurgy industry matters more. 3 in the region started to diversify their supplier base to
exceeded the supply by over power
benefit from the proximity of multiple producers.
Market reports put annual growth The geography situates soda as 1.0 million tonnes. The difference
rates at sustainable levels of 1-2 a unique resource: only 9 countries was satisfied with imports mainly The launch of the largest natural soda ash production
percent with usually 1 p.p. higher in Europe are active soda from North America and the Threat of facility in Turkish Kazan exceeding the capacity of
Growing 4
growth dynamics in the CEE than in producers. Europe is a mature soda Middle East. In particular, limited new entry 2.6 million tonnes per annum could significantly change
European supply may allow the
competitiveness can be
Western Europe. market with nearly balanced the fields of play in the Balkans region and Europe.
demand and supply volumes which Middle East players, e.g. Turkey, addressed
The structure of soda ash
have not undergone rapid changes. to start disrupting the current mainly by optimization Threat of There is no significant threat of substitution of soda ash in
consumption in Europe has not 5
Nevertheless, availability of key market demand supply structure. of cost structure substitution the end-user industries as well as in the rest of Europe.
changed much for many years. The
demand for this soda Source: EY Analysis based on companies’ reports
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02 | CSR as a unique soda production facility in Romania
CIECH is one of the most important
private entities in the local economy
in terms of total operating revenue
and employment
IMPORTANCE OF CIECH IN THE VÂLCEA REGION1
The CIECH Group is ranked fourth in terms of total Moreover, the CIECH Group is the eight largest
operating revenue in Vâlcea County. At the same time, employer in Vâlcea County and the fifth largest
It is ranked second among private entities in the city, private employer (as Apavil SA is a municipal
as Oitchim and CET Govora are state-owned companies. company).
TOP 10 COMPANIES IN VÂLCEA TOP 10 COMPANIES IN VÂLCEA
COUNTY BY TOTAL OPERATING COUNTY BY NUMBER OF EMPLOYEES
REVENUE (ILLUSTRATIVE, 2018) (2018)
Oltchim SA Vel Pitar SA 2 748
(Chemicomplex
►
) Govora SA
C.E.T. Oltchim SA 1 964
► (Chemicomplex)
Vel Pitar SA C.E.T. Govora SA 1 864
► CIECH Soda
The Romania
Ciech Group Annabella SRL 976
Diana SRL Boromir Ind SRL 843
Annabella SRL Apavil SA 811
Nurvil SRL Diana SRL 707
Boromir Ind SRL TheSoda
► CIECH Ciech Group
Romania 637
Sapte Spice SA Sapte Spice SA 486
Topanel Production… Diana Com SRL 390
State-owned Private
Source: EMIS. The ranking is based on latest available data.
1 Statistics represent both CIECH Group’s companies in Romania: CIECH Soda Romania and CIECH Spólka Akcyjna Varsovia Sucursala Ramnicu Valcea
ACTIVITIES OF THE CIECH GROUP SUPPORTING THE LOCAL COMMUNITY
IN VÂLCEA COUNTY
COOPERATION WITH SUPPORTING THE PARTNERSHIP WITH
THE LOCAL LOCAL “CASA LYCEUM ENERGETIC:
INSTITUTE OF PINOCHIO” SCHOLARSHIPS AND
CULTURE ORPHANAGE INTERNSHIPS
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03 Perspectives on further
In this chapter we present the competitive
advantages, as well as evaluation of revenue and
costs along with the next steps for CIECH Soda
Romania.
The key values describing the
business performance at CSR
financial position of CIECH Soda
Romania are:
RON 443.7 m
of revenue in 2018, up 50% since 2014
>500,000 tonnes
of production volumes in 2018, almost
doubled over last 10 years
44%
share of steam in total operating costs in
1H 2019
135%
increase in steam prices, hampering
operations, starting in September 2019
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CSR sales drivers are sound, Substantial growth of sales
but a few risks need to be is a result of successful
overcome in the future reorganization of sales operations
KEY COMPETITIVE ADVANTAGES SALES DYNAMICS
STRONG EXPORTS ’18 RESULT COMPARED TO ‘14
Expansion into new profitable overseas markets
makes up for stagnation of demand from local
customers
Sales revenue RON 443.7 million +50%
SKILLED WORKFORCE DIRECT SALES
Highly skilled workforce Expansion of direct sales to end-
helps continuously modernize users replacing sales to dealers Sales revenues increased substantially between 2014 and 2018, with an approximate CAGR of
and improve effectiveness of improves operating margins 10%. Owing to efficient sales operations and international expansion, the number is
technical facilities attributable to the improvements in management and operations.
COMPETITIVE
ADVANTAGES
RELIABILITY AND BRAND LONG DISTANCE SHIPPING
Leveraging the CIECH brand, CSR ships their products to
CSR is considered as a reliable locations as distant as South East Production volume > 500,000 tones +30%
and trusted commercial partner Asia, Oceania or South America
Production volumes have steadily risen due to the modernization of the equipment and
SMALL LOTS improvements to production technology. Over the last ten years the volumes have increased
by almost 100%, with potential room to grow further in the future.
Small sales lots (50% direct sales +20pp.
COMPETITION
STEAM SUPPLY IN SHORT Due to tough competition from
TERM nearby soda ash plants in The last 5 years of activity have realized a strategy focused on strengthening CSR’s own
Uncertain, with adverse impact Bulgaria, Bosnia & Herzegovina salesforce. The dominant ~70% share of third party traders in sales in 2014 was captured by
already on the current
KEY RISK as well as Turkey, maintaining the dedicated CSR team. The total number of direct sale customers has grown by over 60%
operations of the Company FACTORS production costs at low levels over the 2014-2018 period.
remains critical to continue the
business Source: EY Analysis based on CIECH Group data
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The cost structure at CSR remained Cost of energy incl. steam
stable from 2014 to 2018, while is the top cost factor that
there are risks reported for 2019 impacts CSR’s bottom line
COST STRUCTURE DYNAMICS IMPACT OF SELECTED COST FACTORS ON CSR’S PROFITABILITY IN THE CASE OF
ANNUAL
CHANGE
+20% PRICE INCREASE SCENARIO (SENSITIVITY ANALYSIS)
FROM ’14 CHANGE
’14 RESULT TO ’18 ’20 FORECAST
VARIABLE COSTS FIXED COSTS
!
VARIABLE COST (PER OUTPUT TONNE)
Steam and electricity ca. RON 110 m +5%
The cost of energy, including steam as a key ingredient of the cost of energy, steadily rose
+135%
Below
break even
Under
between 2014 and 2018, with an approximate CAGR of 5%. As the price negotiations with CET point control
Govora continue, the cost of energy in 2020 is expected by CSR to skyrocket by 135%.
Steam and electricity Employee compensation
Limestone and brine ca. RON 60 m +7% +5%
Over the 2014-2018 period the cost of raw materials was growing by a high single digit
number and is expected to increase significantly also in 2019.
Other materials ca. RON 20 m +1% +1%
?
Matter to be
Under
addressed control
The cost of other materials including packaging remained stable from 2014 to 2019 without Limestone and brine Other costs
a significant impact on CSR’s bottom line measures.
Energy including steam and raw materials are
FIXED COST (TOTAL) two critical cost factors which together account
for around 70% of the Company’s total operating
expenses. Changes in the price of either of these
Employee compensation ca. RON 35 m +1.5% +5% factors result in a significant impact on CSR
profitability measured by EBIT or net income.
Under According to our analysis, based on CSR's data,
The cost of payroll from 2014 to 2018 remained under control, but growing salaries in the
control it takes merely a 20% increase in the price of
public sector in Romania will put pressure on for a payroll increase from 2019 onwards.
energy per unit production to bring the
company's EBIT to zero. For comparison, the
Other cost ca. RON 20 m +6% +5% Other materials same 20% increase in the cost of key raw
materials such as limestone and brine would lead
to a decline in CSR’s EBIT by around 65%.
Other costs, including purchases of external services such as maintenance, have steadily risen
Potential scarcity of steam supply and other
with an approximate CAGR of 6%. They are also expected to continue to grow along this trend
resources provided by exclusive suppliers
in 2019.
limiting production volumes may also impact
Source: EY Analysis based on CIECH Group data
Source: EY Analysis based on CIECH Group data CSR’s bottom line.
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Price of steam proposed by the Nevertheless, future options for
supplier – CET Govora - adversely business development in CSR
affects business profitability at CSR remain open
PRICES OF TECHNOLOGICAL STEAM FOR CSR
1 April 2019
STRATEGIC OPTIONS FOR STEAM SUPPLY CONSIDERED BY CSR IN THE FACE
A
OF NEGOTIATIONS WITH CET GOVORA
The price was negotiated to last
Steam price evolution (illustrative) High impact Critical until the end of 2020. CSR SELECTED SCENARIOS:
impact
agrees to pay for CO2 certificates
B 23-24 May 2019 1 STEAM SUPPLY SOLUTIONS NEGOTIATIONS WITH CET ABOUT FURTHER
COOPERATION
Ceased supply of lignite out of
+135% price which steam boilers for CSR In the face of potential expiration of valid contract for
increase were fed. Reduction of steam supply of the steam after 18 September 2019, CIECH CREATION OF A NEW SOURCE OF STEAM AT
starting from
supply for CSR by 20% Soda Romania considers selected scenarios to resolve A REASONABLE COST AND LONG-TERM
18 Sept. the steam challenge. Nevertheless, access to any of
2019 as CONTRACT FOR OTHER RAW MATERIALS
presented options requires a certain level of
compared to C 18 June 2019 cooperation with public authorities in Romania and
2018 prices the Vâlcea County in order to develop long term
CET terminates the contract USE OF AVAILABLE RESOURCES TO START
sustainable solution. PRODUCTION WITH A DIFFERENT PROFILE
from 1 April with 3 months
A D notice. Contract expires on
18 Sept. 2019
REVIEW OF STRATEGIC OPTIONS
Jan April Sept. Jan. D 18 Sept. 2019
2008
2019 2019 2019 2020
135% price increase comparing to
Price of steam Theoretical price of steam
with CO2 certificates without certificates
2018 will adversely affect CSR's
net income
Source: CIECH Group data
FUTURE DEVELOPMENT SCENARIOS FOR CSR PROVIDED THE STEAM ISSUE
IS FIXED
COMPARISON OF SHARE OF STEAM IN TOTAL OPERATING COSTS
Although since 2008 CET Govora
has systematically raised steam 1 VOLUME EXPANSION SODA ASH CAPACITY EXTENSION
prices for CSR, the management
51% of the cost structure remained With a significant share of sales on international markets, Approach to the production upscaling can
a challenge. Nevertheless, it production volume expansion is a viable option. The be done with relative ease as an estimated 20%
+21pp. remained under control until macroeconomic data supports this, with 5% of expected growth in volume can be done without significant
recently as the price proposed by CAGR and expected demand coming from the glass and capital investment.
34% Benchmark CET Govora after 18.09.2019 is aluminium industries.
135% higher than 2018 price
~30% levels.
NEW PRODUCT LINE FACILITIES – SALT
With prices of steam up by 135%,
its cost will exceed 50%
2 CORE DIVERSIFICATION
PRODUCTS
of forecasted total cost structure,
which is 17 pp. above 2018 levels In order to diversify the soda business, it is possible to deploy The introduction of sodium bicarbonate is a
CSR CSR after CIECH Group (34%) and 7 pp. above 1H 2019 new facilities extending the presence of CSR within the soda moderate investment option as it directly extends
in 2018 September average levels (44%) as well as and more value chain. Stable forecasts for both markets can leverage production facilities while additionally consuming
2019* CSR’s position as entering the consumer market is possible. CO2, offsetting energy related emissions.
than 20 pp. above CIECH Group
benchmarks (ca.30%).
*) Assuming the production is continued at the price of steam proposed by the supplier
Source: CIECH Group data Source: EY Analysis based on CIECH Group data
24 The Corporate Report CIECH Confidential – All Rights Reserved – EY Confidential – All Rights Reserved – EY Poland The Corporate Report CIECH 2504 Impact of the CIECH Group on
In this chapter we present the economic impact of
operating activities of The CIECH Group in
Romania in 2018.
the Romanian economy The CIECH Group generated the
following effects in the Romanian
economy in 2018:
RON 445 million
of value added
ca. RON 1.3 billion
of global output
more than
4,400 jobs
RON 98.4 milion
of government revenues
RON 286 million
of trade surplus resulting from the net
exports of the CIECH Group
Confidential – All Rights Reserved – EY Poland The Corporate Report CIECH 26 Confidential – All Rights Reserved – EY Poland The Corporate Report CIECH 2704 | Impact of the CIECH Group on the Romanian economy 04 | Impact of the CIECH Group on the Romanian economy
Impact of the CIECH Group on the Economic Impact Assessment
Romanian economy in 2018 –
executive summary
KEY FINDINGS TYPES OF EFFECTS AND MEASURES OF IMPACT
The CIECH Group affects the ► Electricity, gas, steam, water, The CIECH Group impacts the The application of the EY Spectrum
Taking into account the direct, The quantitative analysis in this
economy of Romania not only by: waste and recycling Romanian economy through its model allows us to take into report accounts for the total
indirect and induced effects,
Finance, insurance and real own output (expressed as account so-called demand effects, impact of operating activities of
► Directly generated - gross the CIECH Group generated the ►
estate services revenue excluding indirect taxes), which result from CIECH’s demand two enterprises from the CIECH
value added (≈GDP), global following effects in the
value added (which is an for goods and services generated in Group located in Romania:
output (≈revenue), Romanian economy in 2018: ► Mining and quarrying
approximation of impact on GDP), the supply chain (indirect effects) CIECH Soda Romania and CIRO
employment and government RON 445 million of value Warehousing, transport
► ► employment as well as taxes and and consumer demand reported by (referred to as ”The CIECH
revenues – but also through added and telecommunication social security contributions paid. the CIECH Group’s and its suppliers' Group”). The intercompany
► Demand in the supply chain ca. RON 1.3 billion of global The CIECH Group generated the These are direct effects of the employees (induced effects).
► transactions of these two
(indirect effects) and output highest numbers of jobs in CIECH Group’s activity. The mechanism of demand effects entities have been excluded in
► Increased consumer spending ► more than 4,400 jobs agriculture, hunting, fishing In order to evaluate the total generation is illustrated below. the calculation of the effects.
of households (induced effects) forestry and trade. impact of the CIECH Group on the In our analysis, we measure the The analysis accounts for the
► RON 98.4 million of
Of the total amount Romanian economy, we used the direct, indirect and induced impact effects on the Romanian
government revenues economy in 2018.
of government revenues EY Spectrum model. It is of the CIECH Group on the
generated by the CIECH Group in a combination of input-output following variables: value added,
Sectors benefiting most from the The EY Spectrum model allows us to
Romania, the social security model, which is commonly used in global output, employment and
CIECH Group’s operational distinguish in our analysis also the
sector received RON 46.5 million, Economic Impact Assessment, government tax revenues.
activity in terms of value added regional economic effects, which
the central budget RON 42.5 and spatial econometrics tools. Definitions of these variables
(and global output) are: can be attributed to the Vâlcea
million and local government units are provided in the corresponding
county. Description of the approach
RON 9.4 million. sections.
for calculating the regional effects
is provided in the Appendix B.
SUMMARY OF EFFECTS IN ROMANIA IN 2018
Value added (basic prices, mRON) Global output (basic prices, mRON)
DEMAND EFFECTS OF THE CIECH GROUP
surplus of companies’ revenues over the value of produced / offered goods and Sector A CIECH Group Indirect effects
expenses incurred on goods and services services (≈revenues)
that are necessary to conduct current Induced effects
operations (≈GDP) Employment, Value added Taxes
wages
118 254
533
222 445 1280 Sector B Sector C Consumer goods suppliers
Sector …
492
104
Employment (persons) Government revenues (mRON) Sector …
annual number of persons whose arising from corporate income taxes (CIT), Sector D
employment is dependent upon the personal income taxes (PIT), indirect taxes
company's activity (VAT and excise), social security
contributions and property tax
Indirect effects Induced effects
1827 34 In order to generate direct effects, the CIECH Group Persons employed in the CIECH Group, as well as those
cooperates with other companies by purchasing, i.a., working in companies belonging to its supply chain
4413 40 98 energy, industrial materials, machines etc. These receive wages. A part of them is spent on consumption of
1949 supplying companies produce a part of their production goods and services, and thus stimulates the economy –
24 in order to satisfy the demand reported by the CIECH both local and national.
637
Group. Each of them uses products and services of other
companies and so on. In result, the initial demand
Direct effects Indirect effects Induced effects Total effects Total effects
reported by the CIECH Group "spills over" the entire
economy. Sum of direct, indirect and induced effects.
Source: EY calculation with the use of the EY Spectrum model, based on the CIECH Group data.
¹ In order to evaluate the impact of the CIECH Group on the Romanian economy, we used the EY Spectrum model.
The description of our approach to the analysis can be found in Appendix B.
28 The Corporate Report CIECH Confidential – All Rights Reserved – EY Confidential – All Rights Reserved – EY Poland The Corporate Report CIECH 2904 | Impact of the CIECH Group on the Romanian economy 04 | Impact of the CIECH Group on the Romanian economy
Impact on value added in Impact on global output in
Romania in 2018 – sectorial Romania in 2018 – sectorial
breakdown breakdown
AS A RESULT OF THE OPERATIONAL ACTIVITY OF THE CIECH GROUP, CA. RON AS A RESULT OF THE OPERATIONAL ACTIVITIES OF THE CIECH GROUP, CA. RON
445 MILLION OF VALUE ADDED WAS GENERATED IN ROMANIA IN 2018. 1.3 BILLION OF GLOBAL OUTPUT WAS GENERATED IN ROMANIA IN 2018.
Of the total impact, RON 104 and quarrying, (4) warehousing, Of the total impact, RON 492 added: (1) electricity, gas,
Value added can be defined as Global output is the value of
the surplus of company's million (23%) are a direct effect of transport and telecommunication. million (38%) are the direct steam, water, waste
produced / offered goods and
revenues over the expenses the operational activity of the Those four sectors accounted for effects of the operational activity and recycling, (2) trade, (3)
services. It can be
incurred on goods and services CIECH Group, RON 222 million 44% (RON 150 million) of total of the CIECH Group, RON 533 warehousing, transport
approximated by company's
that are necessary to conduct (50%) are the indirect effects and demand effects for value added million (42%) are the indirect and telecommunication and (4)
revenue. When calculating
current operations. Value added RON 119 million (27%) are the generated by the CIECH Group in effects and RON 254 million mining and quarrying.
global output, the value of
indicates how a company, induced effects. 2018. (20%) are the induced effects. Those four sectors accounted for
intermediate goods generated
through the transformation of Sectors benefiting most from the Relatively high indirect effects on at earlier stages of the supply Sectors benefiting most from the 52% (RON 408 million) of total
goods and services of other CIECH Group’s operational value added in the "Electricity, chain is not excluded. Global CIECH Group’s operational demand effects (indirect and
companies into a new product activity in terms of value added gas, steam, water, waste and output is useful as a measure of activity in terms of global output induced) for global output
or service, generates a new are: (1) electricity, gas, steam, recycling" sector result from are analogous to those which generated by the CIECH Group in
the size of a market.
value in the economy. That water, waste and recycling, (2) significant costs incurred by benefit most in terms of value Romania in 2018.
is why it is an approximation of finance, insurance and real companies from the CIECH Group
company’s impact on GDP1. estate services, (3) mining on process steam and electricity.
EFFECTS FOR GLOBAL OUTPUT (BASIC PRICES, mRON)
EFFECTS FOR VALUE ADDED (BASIC PRICES, mRON) Ciech Romania 492.3
Ciech Romania 104.3 Electricity, gas, steam, water, waste and recycling 218.0
Electricity, gas, steam, water, waste and recycling 74.8 Trade 64.8
Finance, insurance and real estate (services) 35.9 Warehousing, transport and telecommunication 64.5
Mining and quarrying 27.4 Mining and quarrying 60.3
Warehousing, transport and telecommunication 26.3 Finance, insurance and real estate (services) 46.2
Trade 22.3 Chemical industry 40.8
Business support services 18.9 Business support services 37.6
Education, research and development 14.2 Food instustry 36.8
Food instustry 13.0
Construction 29.3
Chemical industry 12.2
Agriculture, hunting, fishing, forestry 24.2
Agriculture, hunting, fishing, forestry 11.1
Education, research and development 22.6
Construction 10.9
Light industry 18.8
Light industry 8.1
Accommodation, catering, entertainment and culture 14.7
Accommodation, catering, entertainment and culture 6.7
Repair and installation of machinery and equipment 6.6 Repair and installation of machinery and equipment 10.9
Metals industry 3.4 Metals industry 9.9
Other services 48.8 Other services 88.1
Total 104.3 222.1 118.5 444.8 Total 492.3 533.2 254.2 1,279.8
Direct effects Indirect effects Induced effects Direct effects Indirect effects Induced effects
Source: EY calculation with the use of the EY Spectrum model, based on the CIECH Group data.
¹ Detailed explanation in Appendix E. Value added presented in this report is gross value added expressed in basic
prices (and thus does not include production taxes, mainly VAT and excise duties). Source: EY calculation with the use of the EY Spectrum model, based on the CIECH Group data
30 The Corporate Report CIECH Confidential – All Rights Reserved – EY Confidential – All Rights Reserved – EY Poland The Corporate Report CIECH 3104 | Impact of the CIECH Group on the Romanian economy 04 | Impact of the CIECH Group on the Romanian economy
Impact on employment in Impact on government revenues
Romania in 2018 – sectorial in Romania in 2018
breakdown
AS A RESULT OF THE OPERATIONAL ACTIVITY OF THE CIECH GROUP, MORE THROUGH DIRECT, INDIRECT AND INDUCED EFFECTS, THE CIECH GROUP
THAN 4,400 JOBS WERE CREATED IN ROMANIA IN 2018. GENERATED RON 98.4 MILLION OF GOVERNMENT TAX REVENUES IN 2018.
Sectors benefiting most from the low labor productivity The main source of tax revenues RON 46.5 million (47%) and the
The estimated effects account The estimated effects account
CIECH Group’s operational in agriculture in Romania were social security central budget received RON 42.5
for the average annual number for the direct, indirect and
activity in terms of employment compared to other sectors of the contributions, which reached RON million (43%). Revenues of local
of persons whose employment induced effects for government
are: (1) agriculture, hunting, economy. 46.5 million, followed by PIT government units amounted
is dependent upon the company's revenues arising from corporate
fishing forestry, (2) trade, The low labor productivity (RON 14.8 million) and CIT (RON to RON 9.4 million (10%).¹
activity through direct, indirect income taxes (CIT), personal
(3) electricity, gas, steam, water, (high labor intensity) in the 14.4 million). Excise duty
and induced effects. income taxes (PIT), indirect
waste and recycling and (4) agricultural sector means that amounted to RON 12.4 million
taxes (VAT and excise), and
mining and quarrying. in order to increase production and VAT to RON 9.7 million.
Of the total number of jobs, 637 social security contributions.
(14%) were created directly by the Relatively high induced effects for in agriculture to meet additional We account also for the direct Of the total RON 98.4 million, the
two companies from the CIECH the labor market in the demand (reported e.g. by the effect from the property tax paid. social security sector received
Group, 1,949 jobs (44%) were agricultural sector result from: food industry), it is necessary
created through the indirect (1) a relatively high share of to increase employment more
effects and 1,827 (41%) through expenses on food in employees’ than in many other industries.
the induced effects. expenditure and (2) a relatively GOVERNMENT REVENUES GOVERNMENT REVENUES
BY SOURCE (mRON) BY BENEFICIARY
EFFECTS FOR EMPLOYMENT (PERSONS)
9.7 0.6 98.4
Ciech Romania 637 12.4 47%
Agriculture, hunting, fishing, forestry 858 14.4 Social
Security
Trade 610 14.8 Sector
Electricity, gas, steam, water, waste and recycling 396 46.5
Mining and quarrying 308 43%
Light industry 191 Central
budget
Warehousing, transport and telecommunication 173
Business support services 149
Property Tax
Total
Social Security Contribution
Value Added Tax (VAT)
Excise
Personal Income Tax (PIT)
Corporate Income Tax (CIT) + MET
Construction 138
Education, research and development 123 10%
Chemical industry 83 Local
government
Accommodation, catering, entertainment and culture 76 budgets
Repair and installation of machinery and equipment 73
Food instustry 72
Finance, insurance and real estate (services) 69
RON 98.4 mn
Metals industry 47
(EUR 21 mn)
of government revenues
Other services 410 generated in Romania in 2018
Total 637 1,949 1,827 4,413
Direct effects Indirect effects Induced effects Direct effects Indirect effects and induced effects
Source: EY calculation with the use of the EY Spectrum model, based on the CIECH Group data.
¹ This value includes algorithmic distribution of part of PIT and VAT revenues to local governments of counties
Source: EY calculation with the use of the EY Spectrum model, based on the CIECH Group data and municipalities/communes, as well as direct effect in property tax.
32 The Corporate Report CIECH Confidential – All Rights Reserved – EY Confidential – All Rights Reserved – EY Poland The Corporate Report CIECH 3304 | Impact of the CIECH Group on the Romanian economy 04 | Impact of the CIECH Group on the Romanian economy
Impact on balance of payments in Summary of estimated effects on value added,
Romania in 2018 employment and government revenues - multipliers
THE IMPACT OF THE CIECH GROUP ON THE TRADE BALANCE OF ROMANIA THE CIECH GROUP (DIRECT EFFECTS) THE REST OF THE ECONOMY
IN 2018 AMOUNTED TO RON 286 MILLION. (INDIRECT AND INDUCED EFFECTS)
The CIECH Group in Romania
The Balance of Payments (BOP)
generated direct impact on the
is a macro-economic indicator
balance of trade in 2018 resulting
used to assess the position of
from the value of net exports of
an economy towards the
goods and services (the difference
external world.
between the value of exports and
It summarizes all economic
transactions between the
imports).
The impact of the CIECH Group
RON 1 mn RON 3.3 mn
residents and the non-residents of the value added generated by of the value added generated in the
on the balance of trade in
of a country during a given the CIECH Group rest of the economy
Romania in 2018 amounted to
period.
RON 286 million (EUR
61 million).
EFFECTS FOR BALANCE OF PAYMENTS OF ROMANIA IN 2018 (mRON)
79 1 job 5.9 jobs
in the CIECH Group in the rest of the economy
365
RON 1 mn RON 3.1 mn
286 of government revenues of government revenues generated in
generated by the CIECH Group the rest of the economy
RON 286 mn
(EUR 61 mn)
of trade surplus in 2018 resulting from
the net exports of the CIECH Group
Impact on the balance of trade
Exports Imports
of Romania
Source: EY calculation with the use of the EY Spectrum model, based on the CIECH Group data.
Source: EY calculation based on the CIECH Group data
34 The Corporate Report CIECH Confidential – All Rights Reserved – EY Confidential – All Rights Reserved – EY Poland The Corporate Report CIECH 3505 Impact of the CIECH Group on
In this chapter we present the impact of the CIECH
Group on the economy of the Vâlcea county.
the economy and community of The CIECH Group generated the
the Vâlcea county following effects in the Vâlcea
county in 2018:
RON 260 million
of value added
ca. RON 869 million
of global output
above
2,160 jobs
RON 4.5 million
of local government revenues
Confidential – All Rights Reserved – EY Poland The Corporate Report CIECH 36 Confidential – All Rights Reserved – EY Poland The Corporate Report CIECH 3705| Impact of the CIECH Group on the economy and community of the Vâlcea county 05| Impact of the CIECH Group on the economy and community of the Vâlcea county
Impact of the CIECH Group on the Impact on value added in Romania
economy of the Vâlcea county in in 2018 – regional effects
2018 – executive summary
KEY FINDINGS THE CIECH GROUP GENERATED RON 260 MILLION OF VALUE ADDED IN THE
VÂLCEA COUNTY IN 2018.
from the CIECH Group’s operating
A significant share of the Taking into account the direct,
activity in terms of value added:
effects generated by the CIECH indirect and induced effects, The effects generated in Vâlcea With regard to sectorial and (3) finance, insurance and
Group in Romania can be the CIECH Group generated the ► Electricity, gas, steam, water,
constitute 58% of the overall distribution of the demand effects real estate services (RON
attributed to the Vâlcea following effects in the Vâlcea waste and recycling,
value added generated by the on value added in the Vâlcea 15 million).
county1. The CIECH Group is county in 2018: ► Mining and quarrying, CIECH Group in Romania. county, the largest effects were
one of the biggest companies The effects for value added
► RON 260 million of value ► Warehousing, transport and Of the total impact in Vâlcea in generated in (1) electricity, gas, generated by the CIECH Group
and one of the biggest added telecommunication. steam, water, waste and recycling
employers in Râmnicu Vâlcea, 2018, RON 104 million (40%) can in the Vâlcea county accounted
► ca. RON 869 million of The CIECH Group generated RON be attributed to direct effects, (RON 57 million); (2) mining and for 2.7% of value added created in
the capital of the region. quarrying (RON 16 million)
global output 4.5 million of local government RON 111 million (43%) to indirect the region in 20161.
► above 2,160 jobs revenues in the Vâlcea county, effects and RON 44 million (17%)
which constitutes 44% of the total to induced effects.
► RON 4.5 million of local
tax revenues of communes,
government revenues
municipalities and counties
generated by the CIECH Group in
The following sectors in the Romania. REGIONAL STRUCTURE OF TOTAL EFFECTS FOR VALUE ADDED
Vâlcea county benefited most (BASIC PRICES, mRON)
260 Vâlcea
SUMMARY OF EFFECTS THE VÂLCEA COUNTY IN 2018 51-168
(Definitions of the presented effects are provided in the previous chapter) 19-51
8-19
Value added (basic prices, mRON) Global output (basic prices, mRON) Employment (persons) 2.5-8
58%
Rest05| Impact of the CIECH Group on the economy and community of the Vâlcea county 05| Impact of the CIECH Group on the economy and community of the Vâlcea county
Impact on global output in Impact on employment
Romania in 2018 – regional in Romania in 2018
effects – regional effects
THE CIECH GROUP GENERATED RON 869 MILLION OF GLOBAL OUTPUT IN THE THE CIECH GROUP SUPPORTED 2,162 JOBS IN THE VÂLCEA COUNTY IN 2018.
VÂLCEA COUNTY IN 2018.
The effects generated in Vâlcea With regard to sectorial (RON 167 million); (2) mining The effects generated in Vâlcea With regard to sectorial The effects for employment
constitute 68% of the overall distribution of the demand effects and quarrying (RON 35 million) constitute 49% of the overall distribution of the demand effects generated by the CIECH Group in
global output generated by the on global output in the Vâlcea and (3) trade (RON 29 million). employment created by the CIECH on employment in the Vâlcea the Vâlcea county accounted for
CIECH Group in Romania. county, the largest effects were Group in Romania. county, the highest number of jobs 1.5% of employment in the region
Of the total annual impact in generated in the following Of the total annual impact in were created in (1) electricity, in 20161.
Vâlcea, RON 492 million (57%) sectors: (1) electricity, gas, Vâlcea, 637 jobs (29%) can be gas, steam, water, waste and
can be attributed to direct steam, water, waste and recycling attributed to direct effects, 948 recycling (306); (2) trade (277);
effects, RON 286 million (33%) (44%) to indirect effects and 577 (3) mining and quarrying (179)
to indirect effects and RON 91 (27%) to induced effects. and (4) agriculture, hunting,
million (10%) to induced effects. fishing, forestry (171).
REGIONAL STRUCTURE OF TOTAL EFFECTS FOR GLOBAL OUTPUT REGIONAL STRUCTURE OF TOTAL EFFECTS FOR EMPLOYMENT
(BASIC PRICES, mRON) (PERSONS)
869 Vâlcea 2162 Vâlcea
112-512 470-1400
39-112 200-470
17-39 100-200
5.6-17 38-100
68% 49%
Rest Rest05| Impact of the CIECH Group on the economy and community of the Vâlcea county
Impact on local government
revenues in Romania in 2018
THROUGH DIRECT, INDIRECT AND INDUCED EFFECTS, IN 2018, THE CIECH GROUP
GENERATED RON 4.5 MILLION OF TAX REVENUES IN THE VÂLCEA COUNTY.
The effects generated in Vâlcea Group activity in terms of tax 0.4% of the total tax revenues
constitute 44% of the total tax revenues are Arges (RON 1.4 received by the region in 20171.
revenues of communes, million), Gorj (RON 595 thous.)
municipalities and counties and Dâmbovița county
generated by the CIECH Group (RON 131 thous.).
in Romania. The effects for tax revenues
Besides the Vâlcea county, the generated by the CIECH Group in
main beneficiaries of the CIECH the Vâlcea county account for
TAX REVENUES OF COMMUNES, MUNICIPALITIES AND COUNTIES (mRON)
4.5 Vâlcea
1-3
0.5-1
0.3-0.5
0.1-0.3
44%
Rest06 Appendices Confidential – All Rights Reserved – EY Poland The Corporate Report CIECH 44 Confidential – All Rights Reserved – EY Poland The Corporate Report CIECH 45
06 | Appendix 06 | Appendix
Appendix A: Soda is critical for production of
Soda is critical for production of industrial, industrial, household and
household and agricultural products (1/2) agricultural products (2/2)
WHAT IS SODA? SODA VALUE CHAINS
Materials (Synthetic ►Soda Application Application
Production Method) products industries products
Soda is a family of chemical Primary types of
compounds containing sodium, soda include: Sodium segment
a soft, silvery-white, reactive Panes, Packaging Glass,
Limestone Glass
metal. Flat Glass
Soda ash
The wide spectrum of applications Salt/brine Washing and Cleaning Soaps and Detergents
Products
for sodium compounds makes
Soda ash Caustic soda
soda a high-demand and Na2CO3
(Sodium carbonate) Ammonia Chemicals Dyes, Synthetic Fibres
commonly used base chemical. It
is a critical resource for various Baking soda
Paper (Soda as a Bleaching
industries including glass, Stove fuel Pulp and Paper
Agent)
detergent, pharmaceutical, food
Evaporated salt
and metallurgy. Energy Food & Feed,
Additives, Fertilizers
Agrochemicals
Baking soda
NaHCO3
Soda ash is the name for (Sodium bicarbonate)
commercially manufactured KEY SODA MARKET VOLUMES (2017) DEMAND FOR SODA ASH BY SEGMENT (2017)
anhydrous sodium carbonate, also
known as soda crystals. It is made Market Volume, Mt/year
from reaction of sodium and 90 82 Pulp & Paper; Others; 16%
carbonic acid. Sodium carbonate has Sources: CIECH Group; www.chemiaibiznes.com; 80 1%
68 Flat Glass; 27%
great disinfecting ability as well as Caustic soda www.study.com; www.id.ditaichemical.com 70
NaOH
the capability to decompose silicates (Sodium hydroxide) Aluminium &
in quartz sand. These unique 60
Metals/Mining ;
properties make soda ash 50 6%
a commonly used raw material in the 40 Glass total:
production of glass, paper, soaps 53%
30 Chemicals; 9%
and detergents as well as fibres.
About 50% of soda ash produced Evaporated salt 20
NaCL
worldwide is used for the (Sodium chloride ) 10 4
manufacture of glass. Moreover, it is Soap & Container
0
also used as a water softener. Detergent ; Glass; 20%
Caustic Soda Soda Ash Baking Soda
15% Other Glass;
6%
The wide range of applications of Caustic soda is available in solid, Key applications for evaporated CIECH Group manufactures soda ash, baking soda and evaporated salt; CIECH Soda Romania (CSR) is a producer
baking soda is due to its anti-caking, flake, or powder form as well as salt include the kitchen and of soda ash only.
cleaning and acid neutralizing water solution. Caustic soda has cooking, food production, livestock
properties. It is used primarily for applications in the manufacturing feed, snow and ice melting as well
the production of food (e.g. as a of glass, plastics and soaps as well as water conditioning. Due to the SODA ASH PRODUCTION PROCESS
component of baking powders and as synthetic fibres including rayon quality parameters (higher purity)
There are two methods to obtain Currently, two developed production The principal product of the Solvay
effervescent beverages), feed (e.g. and polyester. It is also used in the the chemical industry abandoned
soda ash – from natural resources or methods of soda ash are commonly process is sodium bicarbonate
as an acidity regulator), detergents pulp & paper industry to process rock salt in favour of evaporated
synthetic production. In the natural used – the Leblanc process and (baking soda). After heating at
and cosmetics, pharmaceuticals, wood fibres as well as to make salt.
environment it occurs in particular Ernest Solvay process (also called 300oC sodium carbonate (soda ash)
as well as for flue gas purification wood pulp. It is also used as a
mineral waters and in mineral the ammonia-soda process). is formed. The byproduct of this
(mainly for desulphurization). It is bleaching agent for neutralizing
deposits of certain springs (e.g. Invented in 1861, Solvay’s method chemical reaction is calcium
also used in the chemical industry bleached pulp and paper, as well as
Wyoming’s Green River Basin – the proved to be more ecological and chloride which is also widely used in
for the production of dyes and for de-inking of waste papers.
world’s purest, largest deposit of nowadays is the world’s major the pharmaceutical and food
explosives and as a basic component
trona). However, most global soda industrial process for the production industry as well as in construction
of fire extinguishers.
ash is produced in chemical facilities of soda ash (about 70% of global of buildings and road maintenance.
from several raw materials. soda ash production).
46 The Corporate Report CIECH Confidential – All Rights Reserved – EY Confidential – All Rights Reserved – EY Poland The Corporate Report CIECH 47You can also read
