Ciech needs concessions to keep open Romanian soda ash unit: bank

16 August 2013 15:32  [Source: ICIS news]

LONDON (ICIS)--Poland's Ciech will not be able to justify keeping open lossmaking Romanian synthetic soda ash unit Uzinele Sodice Govora Ciech unless it obtains concessions from the local authorities and the trade unions, a bank said on Friday.

“I think that they need some concessions from local authorities, for instance in regard to the treatment of waste from the factory, plus some agreement with local employees, otherwise it would be unjustified to keep the unit working and making losses,” said Dominik Niszcz, an analyst at Raiffeisen Centrobank (RCB).

In April, Ciech - Europe's second largest soda ash producer - said it was ready to sell or liquidate both Govora and German soda ash unit Sodawerk Stassfurt Deutschland Ciech if it could not sufficiently improve their profitability.

Govora suffers from high production costs and intensifying competition from Turkish producers of natural soda ash made from trona deposits, Niszcz said.

In July, RCB noted that the potential for these Turkish producers to make incursions into the European soda ash market has been demonstrated by the success of US counterparts in flooding South America and east Asia with trona-based soda ash exports.

Since the Polish treasury ministry – which controls Ciech through a 38.7% stake – last year installed new management at the company to freshly address losses, Ciech has introduced a divestment policy that could lead to it selling all of its businesses apart from its soda ash production division in Poland.

Ciech bought control of Govora in 2006, paying €9.2m ($12.3m).

It has since invested €40m in the subsidiary, according to investment bank WOOD & Company.

Govora has a soda ash capacity of 430,000 tonnes/year, accounting for 19.5% of Ciech’s total soda ash capacity.

The soda ash capacity of Sodawerk Stassfurt is 580,000 tonnes/year.

($1 = €0.75)

By: Will Conroy
+44 20 8652 3214

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