CIECH Group improves the efficiency of soda ash production, apperceives higher CO2 certificate prices and raw materials

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WARSAW, Poland, Sept. 23, 2020 /PRNewswire/ -- Over the last 1.5 years, the CIECH Group implemented a series of improvements in the production of soda ash in the Group's Polish plants, which account for the annual production of soda of nearly 1.5 million tons. The activities resulted in smoother production, a more efficient exploitation of raw materials in technological processes and a reduced rate of CO2 emissions per ton of soda ash produced. The Group will continue its activities aimed at reducing CO2 emissions by around 30 percent in the period of the next five years vs year 2019, which in the face of rising CO2 certificate prices remains the main challenge for soda manufacturers. Combined with the growing CAPEX aimed at reducing emissions, this may lead to pressure on increasing soda prices on the European market.

Soda ash production is energy-consuming – in both Polish plants of the Group there are dedicated heat and power plants supplying process steam necessary for soda ash production. Energy efficiency is one of the key determinants in terms of production expenses and the competitiveness of soda production.

"Coherently with our strategy, over the last 1.5 years we have been working intensively to improve the efficiency of soda production. The discernible reduction of unscheduled production outages, the increase of the actual levels of soda production and the decrease of CO2 per ton of soda ash produced are amongst the results of our work, which translate into real savings," says Dawid Jakubowicz, President of the Management Board of CIECH S.A.

Over the last year, the CO2 emission rate per ton of soda in the Polish plants has seen a reduction by approx. 2%, which enables savings of several million zlotys a year, while the effective production capacity[1] has already increased by approx. 1.5%. CIECH is taking advantage of the growing competitiveness achieved as a result of the activities in the Sales & Operations Planning area. This allowed CIECH to use the production capacity and simultaneously optimize the amount of raw materials in the soda production process. The result is a smooth production process and an appropriate level of stocks.

"This is just the beginning, as we are in the process of implementing a plan to increase the efficiency of soda production. We plan further initiatives, including significant ventures such as the partial transition to gas in our Inowrocław plant, as well as the development of 150 initiatives related to increasing the efficiency of our heat and power plants. These efforts have an ample impact on the level of our competitiveness and reflect our determination to emphasize our position on the CEE soda ash market," says Dawid Jakubowicz.

After stopping the plant in Romania, which produced over 500,000 tonnes of soda per year, CIECH focuses on the maximum use of the potential of the plants in Poland and Germany and supplying customers in Europe with soda ash. The possible scenario of a further increases in the prices of CO2 certificates (which have tripled since the beginning of 2018), raw materials or capital expenditures for the "green energy transformation" may translate into an increase in soda prices on the European market.

"Theentire soda production industry based in Europe operates under the same conditions and everyone is aware of the obligation to meet the ambitious objectives defined by the European Union. However, higher CO2 certificates and raw material prices, combined with investments related with decarbonization, and a limited supply of soda, especially in Central and Eastern Europe, may be reflected in the prices this resource in Europe," emphasises Dawid Jakubowicz.

In order to reduce the level of CO2 emissions, the CIECH Group is implementing a multi-faceted decarbonisation strategy which assumes, among others, partial transition to gas, modernisation of combined heat and power plants in Poland, as well as the use of photovoltaics as a source of electricity and heat in the Group's plants. In total, in the next five years, CO2 emissions could be reduced by 30 per cent vs year 2019.

"Althoughthese initiatives differ in scale and implementation horizon, they have one common denominator - reducing CO2 emissions, and thus improving CIECH's competitiveness and implementing the idea of sustainable development of the entire Group as part of our strategy," sums up Dawid Jakubowicz.

Apart from issues related to the reduction of CO2 emissions, in the soda area, CIECH is intensively implementing solutions involving the optimization of the production process through digitization, in order to increase efficiency through Advanced Process Control solutions or the use of neural networks.

In terms of costs, the soda plants are implementing the so-called insourcing strategy (resigning from third-party subcontractors and relying on the Group's own resources) of repair and maintenance processes for production lines through CIECH Maintenance, a company operating since the beginning of the year.

The CIECH Group manufactures light and heavy soda in two plants – Inowrocław and Janikowo. The production capacity of these factories stands at 1.5 million tons per year. In addition, the German soda factory located in Stassfurt produces approx. 610 thousand tons of soda annually. The total soda manufactured by the CIECH Group gives it the position of the second largest producer in the European Union.

CIECH is an international, expanding chemical group, with a strong standing on European and global markets and with a stable strategic investor (Kulczyk Investments). The company exports its products to over 100 countries around the world, including soda ash, purified soda, salt, plant protection agents, epoxy and polyester resins, polyurethane foams, silicates, and glass packaging. CIECH manufactures products of the highest, world-class quality, which are further used to produce articles which are essential in the everyday life of people all over the world. At the same time, it combines a modern approach to business with the tradition of production which dates back to 1882. Since 2005, the company has been listed on the Warsaw Stock Exchange and, since 2016, on one of the largest stock exchanges in Europe: Börse Frankfurt.

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1. Effective production capacity reflects actual production vs. its nominal level resulting from the construction of a soda production line.

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