Chemical Islands
Sustainability - Brazil is continuously becoming more important in the world economy and it is the most important emerging market after China. The Brazilian market is becoming more and more important for AkzoNobel. In the last two years the company has announced investments in Brazil of over € 170 million. The focus is on the pulp industry - one of the most important Brazilian industries- and AkzoNobel's innovative Chemical Island concept for sustainable pulp production. CHEManager interviewed Werner Fuhrmann, Executive Committee member responsible for the areas "Supply Chain" and "Specialty Chemicals", and André Veneman, Corporate Director Sustainability at AkzoNobel, on this topic.
CHEManager Europe: The buzzword "Sustainability" is an indispensable part of the corporate guidelines or strategies of chemical corporations. What does sustainability mean to AkzoNobel?
Andre Veneman: The world is facing a growing population, scarcity of natural resources and climate change. To be able to continue delivering products and solutions to our customers we need to adapt to this reality and change the way we do things. We need to do more with less. In fact it is an opportunity to do this better and faster than our competitors and it will also help us to grow our business.
Werner Fuhrmann: Sustainability is fully embedded in our company strategy. All sustainability targets are derived from the overall company Value and Values strategy, but tailored to fit the specific conditions and markets in which we operate.
We strive to deliver sustainable profitable growth by:
• Reducing the negative impact from our own operations and those of our suppliers.
• Innovating: offering our customers new technologies, products and services with a better environmental performance.
One aspect of sustainability is the responsible exposure to natural resources and the minimization of environmental impacts of production processes. For the pulp and paper industry, a resource-intensive sector and important market for AkzoNobel, you have developed the concept of "Chemical Islands". What is it based on, how does it work and where do you apply it?
Andre Veneman: The Forest Products industry is considered by many as one of the most sustainable industries of the modern era. When people use more paper, landowners plant more trees; moreover the Pulp & Paper industry is a recognized leader in Renewable Energy Production and Use; energy produced by the industry is carbon neutral, sustainable and renewable unlike coal, oil or natural gas. On average, paper and wood products mills generate 65 % of their energy needs from waste biomass. Their increasing use of renewable energy has allowed the industry to reduce its use of carbon-intensive fossil fuels and purchased energy by 19 % since 2000.
Werner Fuhrmann: Modern pulp mills, like those being built in Brazil, normally generate excess utilities - such as steam and electricity - that can be used to fuel other manufacturing processes. To make use of this excess energy, our Pulp and Performance Chemicals division developed a concept whereby it installs its sodium chlorate and chlorine dioxide plants inside or adjacent to a pulp mill. This way AkzoNobel is able to produce sodium chlorate using the excess electricity generated by the pulp mill. The use of sodium chlorate to generate chlorine dioxide is the best available technology (BAT) globally; pulp mills use chlorine dioxide to bleach pulp.
A "Chemical Island" provides a comprehensive, state-of-the-art chemicals management system for the safe, reliable and cost-efficient production of chemicals such as sodium chlorate, chlorine dioxide, and hydrogen peroxide. It also enables the handling of other pulp and papermaking chemicals - always with the environment in focus. This includes round-the-clock staffing by trained AkzoNobel professionals who manage and operate the facility on-site to produce and deliver the chemicals that pulp and paper mills need. Effectively reducing transportation and energy costs and thereby minimizing the environmental footprint.
This solution has proven highly successful in Brazil, where the AkzoNobel Bahia plant at Veracel was the first fully operational unit to apply the "Chemical Island" concept. The plant was brought on line in 2005. Since then, several other customers have chosen this more environmentally sustainable partnership to safeguard their chemical production needs. To date we have six operational "Chemical Islands", all in Brazil.
What distinguishes the "Chemical Island" concept from other material- and energy-integrated concepts?
Werner Fuhrmann: The unique thing is that the energy is based on biomass. The concept and business model was new to the pulp industry when first introduced by AkzoNobel, with us as chemical supplier establishing a plant at the customer site.
What are the key investments you have made in Brazil in the last years, which are based on the "Chemical Island" concept?
Werner Fuhrmann: Jupiá facility close to €90 million to supply the Eldorado pulp mill. Imperatriz €80 million to supply the Suzano Maranhão pulp mill.
Do you implement the concept of "Chemical Islands" also in other countries or regions?
Werner Fuhrmann: Although our current Chemical Islands are all located in Brazil, this is a concept ready to be implemented in any region of the world and we are always looking into options to further expand this innovative way of helping our customers improve their business.
Can the "Chemical Island" concept be applied also to other manufacturing processes?
Werner Fuhrmann: The idea of integrated concepts, where you work very closely with your customers, can of course be implemented in other manufacturing processes. The "Chemical Island" concept, however, was specifically designed for the pulp and paper industry and is dependent on things like the excess availability of bio-based energy produced by a pulp mill.
What other investments in energy-efficient production processes are you making or planning at the moment?
Werner Fuhrmann: We are always making investments to make production more efficient and less energy consuming. One example is our investment of €140 million to convert the Frankfurt-based chlorine electrolysis into a more modern and effective technology.
Back to sustainability: You as a chemicals company, that works in a global economy together with various industries and customers, don´t you have to inevitably make compromises?
Andre Veneman: Sustainability is not an option; it's a crucial element for long-term business success and it will help us deliver more competitive products and solutions to our customers.Our aim is to create value for both AkzoNobel's businesses and for our customers. Our Eco-premium solutions, for example help to achieve this goal. These solutions provide top line growth opportunities, because of their improved performance in areas such as raw material use, manufacturing processes and product innovation. Eco-efficiency is about creating more value with less environmental impact.
What problems and dilemmas do you encounter therewith and how do you handle these? Can you give examples?
Andre Veneman: Sustainability requires a change in thinking from a short-term to a long-term view. We used to think that one day we would be a sustainable company. We now know that it is an ongoing journey. Some of the challenges we encountered along this journey are the same for our internal as well as our external stakeholders. For example, how to get the management, employees but also customers, on board to implement those changes needed to become more sustainable. For that, it is important to show that it's not about ‘going green'. Instead we should look at sustainability from a business perspective. Look into how you can create added value for your customers while ensuring the continuance of your own business and working with fewer resources. For example, we initiate discussions regarding the availability, price structure and manufacturing logistics for renewable raw material options. Sustainability is truly a combination of people, planet and profit. In short: Sustainability is business and business is sustainability.
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- Jaap de Jong, Regional Director Latam and Country Director Brazil, AkzoNobel
"Latin America represents an important growth market for us. There are big opportunities in pulp and paper, mining, oil & gas, agriculture, transportation, consumer goods and infrastructure. AkzoNobel is well positioned each of these market segments, which tend to have above GDP-growth rates.
AkzoNobel Brazil is already the 4th largest market for AkzoNobel worldwide. Last year it was one of our fastest growing regions worldwide to achieve our overall growth target of 1.5 B Euro by 2015. Recently, AkzoNobel secured several high profile contracts for 5 of the 12 stadiums for the 2014 games. We are also discussing important projects related to the Olympics in Rio. Another example is our significant investments in chemical islands, a concept which was developed in Brazil. These dedicated plants provide chemicals to the pulp industry in a sustainable way, for the environment, but also for the local communities.
Apart from Brazil we have important operations in Argentina and Uruguay and we are building our positions in Chile and in the Andean region, where we see further potential for growth."
- Antonio Francisco, President Director, SBU Pulp and Paper Chemicals Americas, AkzoNobel
"Through the participation in the production chain of the pulp industry we can address the sustainability, innovation and long term thinking challenges. When AkzoNobel created the concept of Chemical Island in Brazil, we reinforced our values and answer these challenges. The relationship with the existing customers in our Chemical Islands, and the fact we are building other two units, shows we are in the right path. "
