Investor Update 2021 - BASF's new Verbund site in Zhanjiang
Investor Update 2021
-
BASF's new Verbund site in Zhanjiang - Transcript Q&A September 27, 2021
market demand. And with that, we have even added some plants, which we had initially
not thought of.
This is how the whole investment amount actually went up a little bit. I think the most
important part is – we mentioned that: There is a huge infrastructure part in there. It's
the same experience we had in Antwerp in the 60s, but also in Nanjing. That caters
also for going forward. What is very important: We have a large area over there. I would
say this is a growth vehicle for decades of BASF. There will be a wave 3, 4, 5, 6, I
would assume, and that benefits then from this. You have to think a little bit ahead
already. If you really have the big plans to say: "I want to participate here," you have
to build the one or the other utility a little bit bigger. Just think about the jetties. This is
an enormous investment for the jetties, which then also will dilute the cost. There are
many of these pieces.
Let me finally say: There are also some make-or-buy decisions where some things
went differently; some went in, some went out if you look at the local framework. You
can imagine: There are so many ingredients or components to the final investment
sum, that this is a little bit a moving thing.
Sebastian Satz (Barclays): How cost-competitive will the cracker be, bearing in mind
the use of electricity rather than steam? Where on the cost curve do you expect the
plant to be?
Markus Kamieth: As we have said, this will be a mixed feed cracker. It is certainly
designed to provide a certain product breadth in output, so a certain ratio between C2,
C3, C4 that is appropriate for our downstream Verbund planning.
And this sets the stage already for any comparison with other crackers. You can
certainly have a cash cost curve on ethylene for pure ethylene crackers that is maybe
a little bit more favorable on the ethylene front, but we look at it very holistically.
We are convinced that the cracker that we invest in, together with the feedstock
flexibility that we have, will provide for a mixed feed cracker setup a very favorable cost
competitiveness, also within the Chinese context. Especially the variability between
naphtha and butane, e.g., as feedstocks will assure that we have the flexibility also to
react on certain movements on the raw material front.
This is giving us very strong confidence that we have a starting point for the entire
Verbund that absolutely secures that profitability is on the left hand of the cash curve,
so in the right quadrant.
Oliver Schwarz (Warburg): Is there a way to refit existing Verbund sites, e.g.,
Ludwigshafen, at a later stage to come close to the carbon profile of Zhanjiang without
having to scrap major parts of those sites due to their high level of integration?
Martin Brudermüller: A large part of the 25% CO2 savings we are targeting for 2030
is certainly also coming from Ludwigshafen because Ludwigshafen is 8 million tons of
21/22 million tons globally. That has to have a big share.
This is basically a kind of a role model how you can reshape and reschedule also an
existing Verbund site. There will be a lot of drop-in measures where you replace one
thing after the other. That makes it, on the one hand, also very flexible in terms of
timing and how quick you are going to deploy these technologies, certainly also
coupling customer requests.
Page 8 of 12View entire presentation