In a move it said is aimed at improving competitiveness, Germany specialty chemicals producer Lanxess is streamlining the chrome value chain of its leather business by concentrating production in South Africa, where chemicals for tanning agents are processed.

At the same time, the company will discontinue chrome production at its site in Zárate, Argentina, from the fourth quarter of this year. Along with the Argentine site, Lanxess currently produces sodium dichromate and chrome tanning salts at Newcastle and Merebank, South Africa.

Some 170 employees will be affected by the shutdown in Argentina. “It is our intention to enter into talks with employee representatives without delay in order to find responsible solutions for all affected employees,” said Luiz López-Remón, head of the company’s leather business.

In Argentina, Lanxess said it will continue operating production sites in Burzaco and Merlo, where it also offers comprehensive solutions for the rubber industry. Altogether, the company has some 400 employees in the Latin American country.

Streamlining the chrome value chain is expected to generate a positive EBITDA effect of around €10 million annually, to be realized by the end of 2018, as well as around €60 million in one-time-costs to be booked in 2017.

Regarded as a leading global supplier, Lanxess is the only leather chemicals producer active in both organic leather chemicals and chrome tanning salts. In chrome tanning salts, the company claims a unique position through its strategic backward integration into chrome ore.

The German chemical producer’s leather business unit currently employs 1,500 people worldwide. In addition to Newcastle, Merebank and Rustenberg in South Africa and Zárate in Argentina, the business unit also operates production sites at Filago, Italy and Changzhou, China.