UpdateEU coal proposal could hit Evonik - German chem union boss

22 July 2010 18:49  [Source: ICIS news]

(updates with comment from Evonik in paragraphs 8-10)

TORONTO (ICIS news)--An EU Commission proposal that Germany end its subsidised hard-coal production by 2014  four years earlier than planned  could affect strategies at specialty chemicals major Evonik, a German chemical union leader said on Thursday.

Germany’s plan to phase out subsidised coal production by 2018 is directly linked to Evonik and its majority owner, RAG-Stiftung, a coal foundation charged with overseeing the phase-out.

Proceeds from an eventual initial public offering of Evonik were meant to help pay for environmental costs associated with the phase-out.

Michael Vassiliadis, head of Germany’s chemical and energy union, IG BCE, said ending subsidised coal production by 2014, instead of 2018, could precipitate divestments and hit employment at Evonik, which has a staff of some 40,000.

A phase-out by 2014 meant that the associated costs would have to be financed four years earlier than planned, and this could only be achieved by selling parts of Evonik, he said.

Vassiliadis also criticised Germany’s economic minister, Rainer Bruderle, who had welcomed the Commission’s move, he said. 

“I just cannot understand why the minister concedes the German position [of a phase-out by 2018] without further ado,” Vassiliadis said in an interview with daily Westdeutsche Zeitung. The paper issued a separate press release on the interview.

Evonik spokesperson Barbara Muller told ICIS news her company supported the existing legal arrangements that provided for a phase-out by 2018.

The existing law to finance the phase-out, the German "Steinkohlefinanzierungsgesetz", was good legislation, she said.

"Evonik is well-positioned for the future, and it is on a clear course for an initial public offering on stock markets," she added. 

RAG-Stiftung had been looking to list Evonik and use the proceeds to pay for environmental and related expenses as mines are closed for the phase-out programme running to 2018. 

In 2008, RAG sold a 25.01% stake in Evonik to private equity firm CVC and shelved plans to list Evonik because of unfavourable capital market conditions. However, it remained committed to eventually listing Evonik and raising additional funds, it said at the time.

The European Commission said this week that its proposal was aimed at a “definite closure” of uncompetitive mines by 1 October 2014. “There should be no doubt about this. Companies need to be viable without subsidies,” it said in a statement.

In related news, Evonik earlier this month aligned management teams of its large German apartment rental apartment business.

The chemicals major plans to focus on its core specialty chemicals business, while its real estate business, as well as its energy business, are to be managed as independent units.

For more on Evonik and other producers, visit ICIS company intelligence
To discuss issues facing the chemical industry go to ICIS connect

By: Stefan Baumgarten
+1 713 525 2653

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