Prospects for Romania soda ash producer Govora improving - bank

09 September 2013 15:41  [Source: ICIS news]

LONDON (ICIS)--Prospects have brightened for closure-threatened Romanian soda ash producer Uzinele Sodice Govora Ciech with some success in cutting costs and hopes that delays may hit the arrival of new market competition from Turkey, Raiffeisen Centrobank (RCB) said on Monday.

Govora's owner, Poland's Ciech group, which has warned trade unions at the subsidiary that it may be forced to close the loss-making unit if operating costs cannot be lowered, is making headway in shrinking the workforce, RCB analyst Dominik Niszcz said.

He added that an unspecified number of workers have been laid off, with possibly more to follow later this year and the company now “sounded optimistic on cost savings and regarding the soda market in the mid-term”.

Another positive development for Govora could stem from a possible delay in the launch-date of an installation that is expected to be the world's largest soda ash plant, Ciner's planned 2.5m tonne/year facility in Kazan, Turkey.

Ciech said its information was that the natural soda trona deposits at the Kazan site are of lower quality than other such deposits, meaning the cost of production may increase for the investors and the plant, scheduled to be launched at some point between 2016 and 2018, may come on stream later rather than sooner.

Analysts expect that major European producers of synthetic soda ash, such as the Ciech group, will face increasing competition from Turkish producers of natural soda, based on trona deposits, in coming years.

Ciech bought control of Govora in 2006, paying €9.2m ($12.1m). 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.

($1 = €0.76)

By: Will Conroy
+44 20 8652 3214

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