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Solvay will sell its stake in Russian vinyl venture

Companies are still sorting out their Russia stance a year after the invasion of Ukraine

by Alexander H. Tullo
March 9, 2023 | A version of this story appeared in Volume 101, Issue 9


Vladimir Putin at the opening of the RusVinyl chemical complex.
Credit: RusVinyl
Vladimir Putin attended RusVinyl's opening in 2014.

A year after Russia’s invasion of Ukraine, Solvay has inked a deal to sell its 50% interest in the RusVinyl polyvinyl chloride joint venture to its partner for $450 million. The venture had been one of the most prominent investments in Russia by a Western chemical maker.

The partnership, in Kstovo, was completed in 2014 at a cost of $1.6 billion. RusVinyl generated sales of $580 million in 2021 and a hefty $235 million in profits.

In the wake of the invasion, many chemical firms announced they were pulling out of Russia. At the time, Solvay pledged to suspend operations in the country, and it halted dividend payments from the joint venture. It announced earlier this year that it was in negotiations to sell the unit to its partner, the Russian chemical maker Sibur. Solvay will register a $185 million loss when the deal is completed.

The company at least recovered some value from the venture’s operations. BASF’s experience in Russia has been far more bruising. The Germany chemical firm’s decision to pull its Wintershall Dea energy affiliate out of Russia resulted in a $6.7 billion write-down for BASF in 2022. In remarks to investors late last month, BASF chief financial officer Hans-Ulrich Engel said the environment in Russia had grown increasingly hostile. The Russian government has frozen dividend payments from joint ventures, imposed a price cap for natural gas, and restricted board members’ voting rights. It even transferred the cash holdings of the joint ventures to Wintershall’s partner, Gazprom.

“In practical terms, Wintershall Dea no longer has any means of exerting influence on its holdings,” Engel said. “De facto, Wintershall Dea has been expropriated in Russia.”

Some Western chemical companies continue to operate in Russia. The Yale Sonnenfeld Executive Leadership Institute keeps a list that includes the specialty chemical maker Huntsman, the engineering polymer supplier EMS-Chemie, and the oil field chemical provider ChampionX.

Huntsman has a joint venture in Russia that makes polyurethane formulations, and EMS has two facilities there. Neither firm responded to C&EN’s query by press time. ChampionX says it is trying to sell its Russian assets.



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