In the Lanxess specialty chemicals group, every plant manager now knows what to do if a gas embargo occurs. “I hope it doesn’t come to that, because it will paralyze entire value chains,” CEO Matthias Zachert said in a conference call Thursday. In this case, Lanxess is the first company to estimate specific costs, at least for its own production. The direct effect would be between 80 and 120 million euros for the operating result before interest, taxes, depreciation (Ebitda). The indirect effects in industry due to the lack of preliminary products and subsequently of goods for final customers cannot be calculated. “If we resist, the industry will resist,” Zachert said. In the end, the costs are significantly higher.
Lanxess uses gas and coal to generate electricity and, most importantly, steam to make its chemicals. In the projection, the company calculated the demand and found the greatest impact on the sites in the Leverkusen, Krefeld and Dormagen chemical parks. If the gas came only from the Netherlands and Norway, the company would have to reduce its gas consumption by up to 50%, which would shut down gas-intensive operations in the first place. Everyone else would be throttled too.
“Never experienced in my career”
In the first quarter, Lanxess increased its prices by 31% due to the increase in energy costs at the group level. “I’ve never experienced this in my career,” said Zachert. However, there is still no sign of weakening demand, not least because there are still recovery effects due to the Crown crisis. If energy prices remained at the same level, they would cost the M-Dax group in Cologne 1 billion euros per year, double the previous year.
Lanxess still has coal-fired power plants in operation in Leverkusen and Krefeld, but Zachert wants to stick to the exit plan to meet his climate goals. The Lanxess boss expressed respect for Federal Economy Minister Robert Habeck (Greens) for trying to reduce dependence on Russia. However, Zachert criticized the fact that energy policy has been handled in an “amateur” fashion over the past 15 years. “If I did, I should be kicked out of work.”