The first group names the possible costs of a gas embargo

In the specialty chemicals group Lanxess, every plant manager now knows what to do in the event of a gas embargo. “I hope it doesn’t come to that, because it will cripple 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 80 to 120 million euros for operating income before interest, taxes, depreciation and amortization (Ebitda). The indirect effects in the industry due to the lack of preliminary products and later in the goods intended for the final customers cannot be calculated. “If we hold on, the industry will hold on,” Zachert said. In the end, the costs are significantly higher.

Lanxess uses gas and coal to generate electricity and, more importantly, steam to manufacture its chemicals. In the projection, the company calculated the demand and discovered the major impact on the sites of the chemical parks in Leverkusen, Krefeld and Dormagen. If the gas only came from the Netherlands and Norway, the company would have to reduce its gas consumption by up to 50%, which would primarily lead to the shutdown of gas-intensive operations. Everyone else would also be strangled.

“Never known 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,” Zachert said. However, there are still no signs of weakening demand, not least because there are still catch-up effects due to the Corona crisis. If energy prices remained at the same level, they would cost the Cologne M-Dax group 1 billion euros over the year, twice as much as 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 in order to meet his own climate goals. The Lanxess boss expressed his respect for Federal Economics Minister Robert Habeck (Greens) for trying to reduce dependence on Russia. However, Zachert criticized that energy policy had been handled “in an amateurish way” over the past 15 years. “If I did that, I should be fired from my job.”

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