BASF warns EU on tariffs or it will look elsewhere

07 October 2008 16:50  [Source: ICIS news]

LONDON (ICIS news)--BASF will consider shifting investment away from Europe if the EU fails to make a swift decision on protecting the continent’s chemical industry from cap and trade tariffs, a company executive said on Tuesday.

 

The company wanted to make its position clear within three months or face the possibility of the German chemicals giant taking its investments elsewhere, said Hans-Ulrich Engel, BASF board member with responsibility for Europe, at a lunch.

 

Western Europe’s chemical sector could face €5bn ($6.8bn) in extra costs at a time when Middle East production was coming on stream with an advantaged feedstock position, Engel said.

 

The industry was lobbying hard to have chemical production exempted from tariffs, arguing it would be placed at a competitive disadvantage to producers elsewhere and the EU said it would make its position clear on exemptions for heavy energy users in a 2009-11 timeframe.

 

That timeframe was much too long because the company needed certainty when making long-term investment decisions, Engel said.

 

“We will have to make investment decisions based on the worst-case scenario, assuming we will be hit with additional costs. Every day is critical - we would hope to have a clear understanding [of the EU’s position] within the next three months,” he added.

 

 “Look at BASF. We have capital expenditure of €2.5bn of which half is in western Europe. If there is the potential for a significant added levy, what do I do? Invest with risk or choose somewhere without that risk?” Engel said.

 

He thought the EU’s understanding of the issue was “clearly developing”.        

($1 = €0.74)

 

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By: Will Beacham
+44 20 8652 3214

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