Merger is good chemistry

By FIONA ROTHERHAM

New Zealand's only hydrogen peroxide plant, Degussa-Huls, is to undergo a name change - the third in recent years - after overseas ownership reshuffles.

Its reverting to the name it held last year, Degussa Peroxide.

The future of the Morrinsville plant and its 30 employees is safe, following the latest merger between German owner Degussa-Huls and international chemical company SKW Trosberg. The two combined make the world's largest speciality chemical producer .

The Waikato plant was built in 1991 by chemical giant Dupont based on expected growth in the pulp and paper industry. Instead, the industry declined, only recently relieved by upturned prices.

Hydrogen peroxide is mainly used as a bleaching agent in the textile and pulp and paper industries. It is also used in gold mining, wool scouring, the comestic and food packaging industries and for environmental treatments.

By 1997 Dupont decided to sell to the US-headquartered Degussa AG, which last year merged with the Huls Corporation to become the world's second largest hydrogen peroxide producer.

The Morrinsville plant is Degussa's only presence in New Zealand. It has eight other hydrogen peroxide production facilities worldwide.

Morrinsville was competitive despite being not being a world scale producer, local managing director Tom Barratt said.

He arrived at the site when there was just a "dead cow lying in the middle of a paddock" before construction started in 1989.

One of the biggest fears for the staff when Dupont sold was whether the new owner would change the then-unusual flat management structure. It was this structure that allowed the small plant to foot it with the bigger offshore plants, Mr Barratt said.

The plant produces 80 per cent of New Zealand's hydrogen peroxide requirements. Its main competitor in Australasia is the world number one market player, Solvay Interox.

Degussa doesn't make public NZ financial figures, but Mr Barratt said following the acquisition by Degussa and the new capital structure the plant was running profitably.

In January, the company completed the purchase of the South African Alliance Peroxide business, including a smaller hydrogen peroxide plant. "Part of the decision to acquire that was based on the performance from Morrinsville last year," he said.

Dupont expanded production in 1995 to 17,500 tonnes. The plant is now producing about 14,500 tonnes a year, half of which is exported to Australia where it has a 20 to 25 per cent market share.

Local spare capacity is exported into Indonesia as part of the company's global strategy to gain presence in Asia.

It is expected to take three to five years before growth soaks up over-supply in the Australasian market, allowing either a new entrant or the existing players to "debottleneck" their capacity.