• Ciech Group prepares to halt production of soda ash at its Govora plant

    09 September 2019

    At the beginning of August, the second-largest European soda ash supplier, Ciech Group, began preparations to halt output at its Romanian soda ash subsidiary due to the lack of a cost-effective technological steam source. At its Govora plant in Romania, the company produces both light and dense soda ash; they are used as raw material and intermediate product in glass, detergent, textile, and paper production.

    In its August 9 press release, the Ciech Group indicated that it has been forced to begin preparations to cease production at its soda ash plant in Govora from September 18 onwards. This has been spurred by the termination of an existing contract for the supply of technological steam with CET Govora, Ciech’s only available steam supplier in Romania. Possible alternatives to steam supply are currently being negotiated.

    Plant closure due to supplier insolvency

    Being a crucial raw material in soda ash production, technological steam prices contribute significantly to the plant’s operating costs. According to sources, the industrial steam supplier CET Govora, insolvent since May 2016, offered Ciech a new price for industrial steam that was 135 percent higher than that in 2018. In recent years, Ciech has kept the CET plant from bankruptcy, made investments, and expanded production capacity.

    The plant in southern Romania was the first foreign subsidiary acquired by Ciech Group in December 2006 and has a capacity of 650,000 tonnes per year of soda ash production. Currently operating at 20 – 30 percent capacity, the plant produces soda ash, water glass, sodium silicate, and other soda derivates. Reports indicate that Ciech Soda Romania is open to talks with CET Govora and continues to examine the available options, but the proposed price for the raw material required is expected to impact the company’s profitability and is therefore considered infeasible.

    Impact on the industry

    Sodium Carbonate (Na2CO3), commonly known as ‘soda ash’, is a highly soluble inorganic chemical compound available in two different grades and used in various chemical reactions widely applied in the range industries. Differing in granule sizes, both Soda Ash Dense and Soda Ash Light, are most often used as one of the basic raw materials in glass melting processes; in production of dyes and pigments; and in production of adhesives and resins. Soda ash is also suitable as active filler in detergents and cleaning agents as well as an ingredient in mineral fertilizers among others. A wide range of products from the Romanian plant, which is one of four soda ash factories in the Ciech Group, is shipped to Europe, Asia or Africa for the manufacturing of intermediate- and end-products.

    According to sources, the production halt could last up to three years if no alternative technological steam supplier is found for the Govora plant. As the Ciech Group is a key player in the global soda ash market, the closure of one of its plants can impact global supplies. Some sources suggest that the overall impact of a supply shortage of 650,000 tonnes of soda per year also depends on how much of it will be used downstream in the production of automotive glass during the remaining months of 2019. The extent of the impact on European and global markets remains inconclusive as alternative soda ash suppliers – such as Eti Soda, Kazan Soda Elektrik, and Solvay – may be able to fill the gap. Customers with industrial interests in soda ash, water glass, and sodium silicate products, particularly in Europe, are advised to secure other supplies of these intermediates and raw materials well in advance to avoid any shortages.

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