Solvay says it has begun carving out its soda ash and derivatives business into a separate legal entity, a step companies typically undertake before selling a business.
Solvay says the new legal structure will enable it to optimize the soda ash business’s cash flow generation and profit while increasing its “future strategic flexibility.” The company is the world’s largest producer of soda ash (sodium carbonate), a white mineral used to make a range of products, including glass and detergents.
For Solvay, soda ash is not just any business but the one the Belgium company was founded on in 1863, when Ernest Solvay discovered the ammonia-soda process. Solvay’s process uses brine and limestone as raw materials and ammonia as a catalyst. The process replaced the extraction of the mineral from the ashes of plants growing in sodium-rich soils.
The business now generates annual sales of $1.75 billion and has 3,100 employees, 11 production sites, and three research facilities. Solvay does not share its soda ash production capacity. But in 2019, the company disclosed it was increasing capacity at its plants by 500,000 metric tons per year and that it would ramp up production of natural sodium bicarbonate deposits it mines in Green River, Wyoming, for conversion into soda ash.
Despite its historical significance to Solvay, the business doesn’t fit with the focus on performance materials chosen by Ilham Kadri, its CEO of 2 years.
Soda ash is “no longer a sacred cow” at Solvay, Rob Hales, an analyst with the investment firm Morningstar, tells clients in a research note. “The business doesn’t really fit with the company’s strategic aspirations focused on specialty materials.”
The separation of the soda ash business follows Solvay’s agreement to sell six other commodity chemical businesses with combined annual sales of about $360 million. Completion of these transactions, which include Solvay’s European sodium percarbonate business, is set for the first half of this year, the company states.
In an indication of Solvay’s desired direction, the firm has agreed to buy a seed-coating technology for its agrochemical business.