Russia's Bashkhim to invest 60B rubles over next five years in new Bashkir Soda Company, which will focus on production of soda ash, caustic soda and PVC

Mathew Kearney

March 18, 2013 (Interfax) – Bashkir Chemistry (Bashkhim) plans to invest more than 60 billion rubles over the next five years in the Bashkir Soda Company that it is creating, Bashkhim chief executive Nadezhda Pinigina said in an interview with Interfax.

"We plan to concentrate the main investment resources on production of our key products - soda ash, caustic soda and PVC, as well as on tackling strategic issues in supplies of raw materials," Pinigina said.

The company plans to invest up to 10 billion rubles in 2013-2017 in the development of the Karanskoye limestone deposit in order to supply carbonate for soda ash production; about 41.5 billion rubles in expanding PVC production capacity to 600,000 tonnes per year, including the construction of a new electromembrane process; and 2.4 billion rubles in completing an overhaul of the Berezniki Soda Plant (BSP) to expand capacity to 600,000 tonnes of soda per year, including the construction of a brine facility. Another 5 billion-6 billion rubles, according to preliminary estimates, will be invested to expand capacity of BSP to 1.2 million tonnes per year, and 1.3 billion rubles will be spent on building a power plant for BSP.

As part of its plans to diversify production and manufacture new products, the company also plans to launch a production line for granulated calcium chloride with capacity of 100,000 tonnes per year at a cost of 1.5 billion rubles, and expand its branded line of soft cable compound.

Pinigina said that this year the company will continue working on the projects to overhaul production facilities and build the brine division at BSP (1.4 billion rubles), and introducing an automated process control system and new bicarbonate packaging line at Soda. There are also plans to complete construction of an air separation plant at Kaustik.

Bashkhim plans to finance the projects with both its own resources and bank financing, at a ratio of 70% to 30%.

"Our main partner creditors will continue to be Sberbank (RTS: SBER) and VTB (RTS: VTBR), with which we have a long positive history of cooperation," Pinigina said.

The company will devote particular attention to environmental issues in the expansion of its business. In 2013 it expects to complete construction of a still waste liquid filtration system at Soda at a cost of 560 million rubles, as well as launch a GKhK-100 gasifier at the plant at a cost of 1.5 billion rubles.

"The implementation of these projects will make it possible to substantially reduce the burden on the Belaya River, stop building new slurry dumps, as well as recycle the solid part of production waste (lime) into production of construction materials," Pinigina said.

Spending on environmental measures this year will amount to 381 million rubles at Soda, 91 million rubles at Kaustik and 157 million rubles at BSP.

It was reported earlier that Bashkhim plans to merge OJSC Kaustik (RTS: KAUS), OJSC Berezniki Soda Plant (RTS: BRSZ), transport company Transneftekhim and OJSC Soda to create the Bashkir Soda Company. Bashkhim will own 60% of the new company, Bashkortostan will own 38% and minority shareholders will hold 2%.

OJSC Soda includes several production facilities that produce more than 20 types of chemical products, including of soda ash, purified sodium bicarbonate (baking soda), white silica, calcium chloride and lime. Soda sells its products on the domestic market, in the CIS and more than 20 other countries.

Berezniki Soda Plant is one of Russia's largest soda ash producers, with a market share of about 15%.

Kaustik controls 14% of the Russian soda ash market, 32% of the suspension PVC market and 17% of the PVC cable compounds market. Kaustik has capacity to produce 200,000 tonnes of PVC per year, with potential to expand to 600,000 tonnes by 2018-2019.

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