Kehren (Solvay): We will no longer use a single kilogram of coal, we will invest 1.2 billion for net zero

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«The demand for basic chemistry is very low, it has never been so low, but our products, from sodium carbonate to silica to peroxides, were needed yesterday, needed today and will be needed forever». This is said by Philippe Kehren who became the global CEO of the Solvay group (basic chemicals), following the spin off of Syensqo (specialty chemicals) which took place at the end of last year in the Belgian multinational. He has just completed over 100 days of meetings with stakeholders, from workers at 45 sites around the world to customers and shareholders. Kehren’s agenda is very busy because the manager is still busy with the roadshow to explain the spin off that was created at the end of last year. The perception is that “stakeholders are understanding more and more clearly why this separation was made: to be a simpler and more standardized company”. And therefore maintain leadership in production, in a market where competition is very high and where very important investments in sustainability are required, also as a result of the green deal. In Kehren’s vision, the future of a factory today is measured precisely in this way, by whether or not the energy transition is achieved.

The spin off and competitiveness

«In the past months, with all the management we reasoned regarding the need to identify reference performances that made sense for the future – says the manager -. This made it necessary to separate two businesses that have characteristics that are too different to remain in the same group: on the one hand specialty chemistry, represented by Syensqo which is more focused on new molecules and new products, with an approach linked to innovation and a high growth potential. On the other hand, the basic chemistry from soda to carbonates to peroxides which are essential today and will always be because they are used in all processes, from glass to rubber, to plastic up to michochips. Basic chemistry is based on an important technological process that cannot be invented overnight. We have 160 years of history, an important legacy and we decided to take the leap through the spin off. This organizational change will bring greater efficiency and competitiveness. Doing so will facilitate the growth of both companies. The stakeholders and analysts I am meeting have understood the reasons for the spin off, as have our 9 thousand people who work in 45 production sites, divided equally between the United States, Europe and China. The possibility of building our future is in our hands, our history is certainly a strong point, but we cannot overlook the fact that we operate in a very competitive market, where we must be very competitive ourselves.”

Declining demand for basic chemicals

When it comes to global prospects, and for Italy,Kehren admits that «this is not a phase of growth. In 2023, following a positive first half, in the second half we saw a sharp decline in demand associated with high inflation and high interest rates. From the beginning of 2024, demand remains lower than in the past, but inflation has fallen and so have interest rates. I’m confident in a recovery this year, even if it won’t be a strong recovery. Our group, however, will be able to continue investing thanks to its solid financial performance and cash flow.” Net revenue in 2023 was 4.9 billion euros, Ebitda reached 1.2 billion euros with a margin of 25.5%. And it is precisely this margin that Kehren wants to improve from year to year. Free cash flow is equal to 0.6 billion euros with a conversion rate of 45.4%. This allows us to look at very ambitious sustainability plans. «The number one priority for the Solvay group is called energy transition. In the next 20 years we will no longer use a single kilogram of coal and to reach the net zero objective we are planning investments of 1.2 billion euros globally”, explains Kehren who a couple of months ago was among the top managers who met with Ursula Von Der Leyen in Antwerp, Belgium to represent the needs of the industry. «In Europe we need the support of everyone, from customers to member states: we need a strong industry and at the same time to continue to pursue the objectives of the green deal. But politics must not forget that without industry the green deal is emptied of all meaning.”

The rare earth supply chain in Europe

The new Solvay today has 5 business lines, three of which are historical: sodium carbonate, peroxides, silica, rare earths and fluorine. «Each has its own strategic nature and its own history. Rare earths certainly represent a great challenge for us because we have set ourselves the objective of being the point of reference for the European supply chain in order to reduce dependence on China which is currently still the largest supplier of rare earths. Strategic especially for electric mobility. However, Solvay can count on a unique site in the world, such as that of La Rochelle, which is the only one capable of separating all the rare earths – explains Kehren -. Our goal will increasingly be to obtain rare earths from recycled products.”

The new era of Solvay in Italy

In Italy the new era begins with a new production, that of a chemical agent called Alveone which will be produced in the Tuscan site of Rosignano. Kehren says that «it will change the world of blowing and foaming agents in plastics used for shoe soles, construction and automotive, replacing some of them. It is a mineral-based product, formulated with sodium bicarbonate and is free of dangerous substances: it has been recognized as a substitute for azodicarbonamide, the use of which risks being limited in Europe as it has been classified by Reach as a substance of extreme concern for effects on health and the environment”.