Neville Prior

Huntsman Fire Hits European White Ink supplies

Neville Prior  17 February 2017 09:34:17 AM
Image:Huntsman Fire Hits European White Ink supplies
A fire at Huntsman Corporation’s titanium dioxide manufacturing facility at Pori in Finland could have severe ramifications for white pigment ink supplies to Europe. The fire, which broke out on 30 January, has stopped production at the site until repairs can be completed. The manufacturer said emergency services had responded quickly and that and no one had been injured.  According to Huntsman, the Pori plant has a capacity of 130,000 tonnes, representing approximately 15% of Huntsman’s total titanium dioxide capacity and 10% of total European demand. The site is insured for property damage as well as loss of earnings.

The European Printing Ink Association (EuPIA) said the fire had caused "severe and immediate" pressure on inward costs for the ink manufacturing supply chain. EuPIA executive manager Martin Kanert said: “Huntsman has cut down the supplies to individual suppliers. I don’t know how the current supply is limited, but certainly if suppliers were not able to find alternative grades it would become problematic. Titanium dioxide is used throughout the industry.” Double-digit price increases have already been announced by certain pigment suppliers as a direct consequence of shortages in the market.  Huntsman is yet to announce a date it will be returning to full production but has said that it is committed to repairing the site as quickly as possible. It said serious shortages in the supply of graphic arts grade pigments should be expected throughout 2017. Suppliers have been working to find alternative grades, with China being one potential source. However, the Chinese government has recently implemented mandatory production cuts as a result of increasing pollution levels. This has affected a number of titanium dioxide production plants in China. “In the interim, my members will try to find alternative grades from somewhere else in the world but they report that there are difficulties in doing that,” added Kanert.

Jack, Our Shining Star

Neville Prior  16 February 2017 12:07:54 PM
A lady who works with me, shared an article she had written about her son Jack, in the Down's Syndrome Association Journal. It is a lovely article, and I was kindly given permission to add it to my blog.


REACH Impacts Europe’s Security

Neville Prior  13 February 2017 11:28:17 AM
Image:REACH Impacts Europe’s Security
The delayed effect of the European Union's sprawling 10-year old law to control the environmental impact of all chemicals produced or imported within EU territory is now being felt across Europe's militaries. It threatens security of supply lines while upping the research cost of chemical substitution by military forces and the defence industry, according to officials at the European Defence Agency, who will submit mitigating recommendations to the European Commission as it reviews the legislation in 2017. "Our militaries are just now starting to understand the implications of REACH," an EDA expert told Jane's on 7 February, referring to the EU's 2007 Registration, Evaluation, Authorisation, and Restriction of Chemicals directive.

Elementis Acquires (See Announcement Below)

Neville Prior  10 February 2017 11:23:38 AM
Image:Elementis Acquires (See Announcement Below)

10 February 2017

Elementis significantly increases the scale of its personal care business with US$360 million acquisition of SummitReheis

Acquisition adds a high quality business with significant potential for further growth in the attractive personal care segment

Elementis plc (“Elementis” or the “Group”) today announces that it has entered into an agreement to acquire SRLH Holdings, Inc. (“SummitReheis”) from an affiliate of One Rock Capital Partners, LLC (“One Rock”) for an enterprise value of US$360 million, (the “Acquisition”). SummitReheis will become part of an enlarged personal care business within Elementis. For the year ended 31 December 2016, SummitReheis is expected to report revenue of US$134 million and underlying EBITDA of approximately US$28 million. The acquisition enterprise value is equivalent to approximately 11.8x SummitReheis expected underlying EBITDA for 2016 (including run rate cost synergies).

SummitReheis is a high quality, high margin specialty chemicals platform that produces a range of critical active ingredients and materials tailored for use in personal care, pharmaceutical and dental products. SummitReheis' anti-perspirant actives business (more than 60 per cent. of its sales) is the global leader in the manufacture and sale of active ingredients for anti-perspirants and has long standing relationships with key consumer product companies across the Americas, Europe and Asia.

Transaction highlights:
  Acquisition creates an enlarged personal care business with annual sales of approximately US$200 million, significantly increasing the Group’s presence in this important end market
  Enhanced growth potential driven by the combination of complementary products, customers and a broader geographic presence which together offer cross-selling opportunities
  Critical components for the US$13 billion anti-perspirant market with growth driven by increasing penetration in emerging markets and demand for premium and higher efficacy products in established geographies
  Acquisition will be funded from cash resources and new debt facilities of US$475 million which will be supported by the cash generation characteristics of the enlarged Group
  Expected to deliver material earnings accretion and substantial free cash flow accretion in the current financial year
  Return on invested capital (“ROIC”) expected to be in line with Elementis’ cost of capital in the first full year of ownership

Notification of Results and Special Dividend:
  Elementis will report its Full Year Results for the year ended 31 December 2016 on 1 March 2017
  The Board of Elementis can confirm that it expects earnings per share for the year to 31 December

2016 to be in line with current market expectations
  The Board confirms that its consideration of special dividends in respect of 2016 will not be impacted by

the Acquisition

Paul Waterman, CEO of Elementis plc, said:

“At our recent Capital Markets Day presentation, we highlighted the growth prospects in personal care as a key opportunity for Elementis, driven by long term positive demographic trends and an increasingly sophisticated consumer. Our leading position with proprietary hectorite and RheoluxeR rheology modifiers will be augmented by SummitReheis’ complementary position in specialty additives for anti-perspirants, pharmaceuticals and dental products.


“The Group is well positioned to capitalise on this acquisition through the enhanced geographic footprint and strong customer relationships that it brings. Together with our existing business, the acquisition of SummitReheis is transformative for our personal care business, creating a substantial, high return platform that will help accelerate our Reignite Growth strategy.”

Strategic rationale
  Personal care market is a significant growth opportunity for Elementis
  Anti-perspirants is a highly attractive, growing segment of the personal care market
  Acquisition creates a ~US$200 million personal care business of Elementis with critical mass and

significant growth prospects

o Combines SummitReheis’ key active ingredients for anti-perspirants with Elementis’ enabling

technology of hectorites and synthetic polymers
  Accelerates growth for both SummitReheis and Elementis as a result of the expanded footprint with key

customers and broader geographical reach
  Combined business has strong relationships with key consumer products companies
  SummitReheis products differentiated by their superior quality and certifications (for example, FDA

requirements in the US and ECHA requirements in Europe)
  Benefits expected from the realisation of additional growth opportunities

Financial highlights
  Enterprise value of US$360 million on a cash free, debt free basis
  Immediate adjusted earnings per share accretion expected in the current financial year and double digit

adjusted earnings per share accretion in 2018
  Expected to enhance Elementis’ group margin in the current financial year
  Run rate cost synergies of up to US$3 million per annum identified
  ROIC expected to be in line with Elementis’ cost of capital in the first full year of ownership
  Funded through Elementis’ existing cash resources and US$475 million of new debt facilities
  Elementis to remain prudently financed post acquisition

SummitReheis and Elementis

SummitReheis operates in a highly attractive, growing segment of the personal care market. Anti-perspirant products are experiencing growing demand in developed markets, particularly the US, driven by demand for premium and higher efficacy products. In emerging markets, particularly Latin America, India and South East Asia, anti-perspirant products are benefitting from increasing market penetration driven by changing lifestyle trends and increased discretionary income. SummitReheis’ primary manufacturing operations are in North America and Europe with approximately 70% of revenue from these markets. The combination of SummitReheis with Elementis’ global distribution networks creates the opportunity to drive growth in emerging markets.

As the leading global producer of active ingredients for anti-perspirants, SummitReheis has built long-term relationships with key consumer product companies. Elementis’ existing personal care business is part of its Specialty Products division and supplies hectorite and RheoluxeR rheology modifiers that enhance the effectiveness of SummitReheis’ products. SummitReheis will be merged with Elementis’ existing personal care activities, creating a business with approximately US$200 million of annual sales, representing approximately 25 per cent. of Elementis’ pro forma combined sales and in excess of 30 per cent. of Elementis’ pro forma combined operating profit before amortisation.


Information regarding SummitReheis

SummitReheis’ primary focus is the manufacture and sale of aluminium and zirconium based active ingredients for anti-perspirant products to global consumer products companies. It is the global leader in the fast growing anti-perspirant actives (“AP actives”) market with locations in the US, Europe and Asia. Its technologies provide the base ingredients providing sweat-blocking characteristics in all types of anti-perspirant products such as aerosols, sticks and roll-ons. Over 60 per cent. of SummitReheis’ sales are from its AP actives business.

SummitReheis’ Pharma Actives business is a leading European producer of the active ingredients for indigestion and heartburn remedies. These products have similar chemistry and manufacturing processes to the core business and long-term customer relationships in the pharmaceutical industry. SummitReheis’ Specialty Dental business manufactures dental plasters, alloys, discs and moulding materials that are used to make dental crowns, bridges, replacement teeth and in other applications and has a leading position in Germany.

SummitReheis is headquartered in Huguenot, New York. In June 2015, SummitReheis acquired the European AP actives, pharma and dental businesses of B.K. Giulini.

SummitReheis’ financial profile

For the year ended 31 December 2015, SummitReheis reported revenue of US$103 million, EBITDA of US$15 million and operating income of US$8 million. Pro forma for a full year contribution from the acquired B.K. Giulini businesses, SummitReheis would have reported underlying EBITDA of approximately US$25 million in the year ended 31 December 2015. As at 31 December 2015, SummitReheis had total assets of US$208 million and net assets of US$12 million.

For the year ended 31 December 2016, SummitReheis is expected to report revenue of US$134 million and underlying EBITDA of approximately US$28 million.

Transaction details and timing

Completion of the acquisition is expected to take place in the second quarter of 2017 following receipt of anti- trust clearances in the US and Germany.

Elementis intends to fund the acquisition through existing cash resources and US$475 million of new debt facilities which will also be used to refinance Elementis’ existing debt facilities. The new debt will be provided through a new fully underwritten US$275 million revolving credit facility and US$200 million term loan facility. The new debt facilities have a 5 year term and are on terms in line with the Group’s existing facilities. Elementis will remain prudently financed post acquisition.

Market Freeze at Time of Brexit?

Neville Prior  9 February 2017 02:24:39 PM
Image:Market Freeze at Time of Brexit?
A transitional period is needed from the day the UK leaves the EU in order to prevent a chemicals ‘market freeze’, Elizabeth Shepherd, from law firm Eversheds Sutherland, says. “Unless we have some sort of transitional arrangement that will kick in when we leave the EU, I think there is a very real risk of a market freeze on product supply,” Ms Shepherd says. And if the UK does not have its own chemicals regulation system in place then, she said, it could find that there is no system that is ready to take national registrations or administer them.

Her perspectives were offered when speaking yesterday as a witness at the first oral evidence session for the House of Commons committee inquiry into the future of the UK's chemical regulations. She gave the example of a company, which has applied for an authorisation under EU REACH that has not been finalised at the time the UK leaves the EU. “Is that application then in limbo? Can that company not supply? And if we’re not ready at the moment we leave the EU, how can UK companies who find their existing REACH registrations invalid supply into the EU?” She would welcome “some sort of transition arrangement, albeit at a cost”, which would give the UK access to the European institutions, she said.

Such a transitional arrangement could include ‘mutual recognition’, Ms Shepherd said. This relies on the idea that the regulation applied by trade partners offers a similar protection to one’s own. But Michael Warhurst, executive director of NGO CHEM Trust, told the committee that this “isn’t going to work” for REACH registration. Ms Shepherd said she agreed, but that a practical arrangement could be made going forward which means “the status quo is almost preserved – you’re minimising disruption to business and minimising cost until the point where we’ve built up our UK REACH.” A mutual recognition arrangement could be in place for existing REACH registrants from the UK, Ms Shepherd said, such that, on the day the UK leaves, the registrant in the 'new EU' could be treated as a downstream user and not as a new importer, which would have to make a new registration in the EU. This would allow that company to continue to supply its product into Europe. And the same could apply for an EU manufacturer exporting its product to the UK, she said. Under the agreement, a new registration would not be needed in the UK, which could avoid the double compliance cost and the worry about market freeze when the UK leaves. Dr Apolline Roger, from the University of Sheffield Law School, said the “tricky part” with mutual recognition and registration is that it means the information that the UK authorities require from registrants has to be exactly the same as that demanded by the EU. If the same information would be required for each regime, it could be “some kind of redundancy, which maybe should be avoided", she said. Perhaps it would be preferable for the UK to negotiate continuation of substance registration under EU REACH, she added. “We will need to have some exchange agreement between Echa and the UK authorities, which is not a problem - it is allowed by REACH.” Mr Warhurst said that the EU would not “break away from the idea” that there is only one REACH database, and “there would not be a situation where you could say ‘we’ve just registered [a substance] over here in the UK’ - you would have to register it in the EU in the same way.”

A date is yet to be set for the inquiry's next Environmental Audit Committee oral evidence session, but it is expected to take place later this month, inquiry chair Mary Creagh said.

Join Us at In-Cosmetics

Neville Prior  9 February 2017 11:43:19 AM
Image:Join Us at In-Cosmetics
Cornelius will be at In-Cosmetics 2017............

Will L’Oréal Sell The Body Shop?

Neville Prior  8 February 2017 02:46:34 PM
Image:Will L’Oréal Sell The Body Shop?
The global beauty giant is said to be considering a £1bn sale of the ethical British skin care business, as the retail unit continues to slump in contrast with L’Oréal’s wider performance.

Chemours Announces Titanium Dioxide Price Increase

Neville Prior  7 February 2017 09:24:41 PM
Image:Chemours Announces Titanium Dioxide Price Increase
The Chemours Company, has announced a price increase on all Ti-Pure™ titanium dioxide grades sold in North America, Canada, Asia- Pacific, Latin America, Europe, the Middle East and Africa regions.

Effective March 1, 2017 or as contracts and law allow, a net price increase of $.06/pound (USD) will apply for all Ti-Pure™ titanium dioxide grades sold in North America and Canada.

Effective March 1, 2017 or as contracts and law allow, a net price increase of $150 (USD) per tonne will apply for all Ti-Pure™ titanium dioxide grades sold in Asia Pacific.

Effective March 1, 2017 or as contracts and law allow, a net price increase of $200 (USD) per tonne will apply for all Ti-Pure™ titanium dioxide grades sold in Latin America, the Middle East, Eastern Europe and Sub-Saharan Africa.

Effective March 1, 2017 or as contracts and law allow, a net price increase of €200 (Euros) per tonne will apply for all Ti-Pure™ titanium dioxide grades sold in Western and Central Europe, Turkey and North Africa.

Three of the Team Have Retired

Neville Prior  7 February 2017 04:38:13 PM
Image:Three of the Team Have Retired
I want to say a huge thank you to three members of my Board, who have retired this month. Between them they had 103 years of service, and I have worked with them for 29 years. Over those years we have had some great times, some hard times, some fun times, but what we can be proud of, is what we achieved. We built a growing business, with quality products, fantastic people and a vision for the future.

All three will be hugely missed, even though we have created a new team to take their efforts forward. So again, thank you gentlemen, and enjoy all those things in the future you now have time to do.

This Is a Big Potential Issue for Chemicals..........

Neville Prior  6 February 2017 01:50:06 PM
Image:This Is a Big Potential Issue for Chemicals..........
Trade bodies have expressed concern over access and ownership of REACH data once Britain exits the single market – something that was confirmed today in a UK government White Paper. On 1 February MPs voted by a large majority to allow prime minister Theresa May to get Brexit negotiations under way. The bill now faces further scrutiny in the Commons and the House of Lords before it can become law. This is expected to happen before 31 March.

But now that the UK has sealed its exit, "the question is who owns this REACH data and the registration dossiers?" asks trade body techUK. "What status, if any, will the data owner have in the UK? We would be concerned about any impact on the functioning of supply chains if this issue is not resolved." Its comments, and those of other organisations, have been submitted to an inquiry into the future of the UK's chemical regulations by the House of Commons' Environmental Audit Committee.

The Chemical Industries Association (CIA) says that existing agreements may not allow the use of data for UK REACH compliance purposes. This would result in "businesses having to pay twice (for EU REACH and UK REACH) unless a mutual recognition system is agreed". The UK may need to negotiate a deal which allows its businesses to retain ownership of the dossiers, techUK says. Although this would necessitate access to the single market and "naturally implies a continued relationship of some kind with Echa with which registrations are filed". In its White Paper the government says it will pursue an "ambitious and comprehensive" free trade agreement (FTA) and a new customs agreement.

Aerospace, defence and security group ADS says when seeking to negotiate a new long-term FTA, it is essential the government takes into account the "significant levels" of trade, knowledge sharing and regulatory convergence the UK is involved in at a European level.

In its comments to the inquiry, the Department for Environment, Food and Rural Affairs (Defra) says that once the UK leaves the single market, stakeholders' "primary concern" is to ensure that equivalent standards are maintained to facilitate trade and market access. And some businesses see an opportunity for the UK to be able to achieve "better regulatory outcomes" in developing a tailored UK regulatory regime.

Trade bodies have also questioned what Brexit will mean for UK businesses, which have made over 5,000 registrations under REACH. The CIA says Britain will need to consider the status of existing REACH registrations during the negotiations and before exiting "to ensure that they do not become invalid". It adds that a process will need to be established to facilitate continued access to the EU market without the need to re-register substances.

A recent Chemical Business Association (CBA) survey revealed that a sample of 55 member companies had registered 75 substances as an importer and 61 substances as a manufacturer. This data applies to the first two REACH deadlines covering high volume substances. "The commercial viability of lower volume substances to be registered in 2018 is now in even more doubt given the range of post-Brexit uncertainties," the CBA says.

The UK government has said it will convert the body of EU law into British law once it leaves the EU under a 'Great Repeal Bill'. "We are preparing to make sure we use 'the Repeal Bill' to translate chemical legislation into UK law and see that how that works in Brexit," Gabrielle Edwards, deputy director of EU Environment at Defra told the UK Chemicals Stakeholder Forum on 31 January. "More detailed discussion will come over next few months." While most trade bodies are in favour of the UK remaining part of REACH, the CIA says it is now "clearly recognised by government that many aspects of REACH are inoperable once the UK exits the EU". "Effective transposition of REACH into UK law to ensure regulation does not create barriers to access and supply of chemicals is also likely to be of interest to other member states,” " it says.
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