Investor Update 2021 - BASF's new Verbund site in Zhanjiang
Investor Update 2021
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BASF's new Verbund site in Zhanjiang - Transcript Q&A September 27, 2021
Georgina Iwamoto (Goldman Sachs): Is it fair to say that once the new Verbund in
China is up and running, it raises the mid-cycle EBITDA for BASF by around 10% at a
carbon footprint more than 50% lower than current technologies?
Markus Kamieth: We gave you an outlook on the 2030 numbers roughly. We start
this Verbund site up as of 2025 with the phase 1. That's a big steam cracker and the
big N plus 1 downstream units. And then there will be what we call phase 2 around
2028. I would say, there will be certainly a ramp-up phase, and that's why we gave you
an indication for, e.g., our expectations on EBITDA for 2030, once phase 1 and phase
2 are actually up and running.
Yes, you're right: If you look at the EBITDA intensity, I think what you meant was that
the EBITDA margin as compared to the average of the group is significantly higher. It
is. What we currently project is in the ballpark of what we have already seen in our
Nanjing Verbund site. It's not out of the world. Of course, we have a different product
spectrum. We have a bit of a, let's say, more differentiated and broader spectrum in
Zhanjiang. It's not 100% comparable, but it's in the ballpark.
The EBITDA margin we anticipate is certainly above group average. But of course, this
will also come still with quite a lot of depreciation at that point in time.
Stefanie Wettberg: With regard to CO2, the question was whether it's 50% lower than
with current technology.
Martin Brudermüller: You saw these indications also compared with a coal-based
player where we are significantly lower (see slide 22). I would say, 50% percent is the
order of magnitude. It is not so bad.
Markus Kamieth: It's probably not so bad, but also here: There is no second Zhanjiang
that you can exactly compare it to. We tried to give you a feeling of the ballpark if
somebody would build something similar in scale and scope based on coal, based on
natural gas in, let's say, the traditional, less modern way. That's kind of the indication,
and I think that these numbers are plausible.
Martin Brudermüller: I think if you compare it to a gas-based plant instead of coal, I
think your 50% is not a wrong number.
Markus Kamieth: It's probably the fair comparison also.
Tim Jones (Deutsche Bank): Do you plan to produce TDI and MDI at the Guangdong
site at some point in the future?
Markus Kamieth: That is certainly a possibility. We are, as Martin said, already looking
into opportunities to expand our Verbund beyond phase 2. But we are in very early
stages and this has many variables. First of all, you have to look at how the markets
develop and what kind of markets are developing very prominently around us. You
have to look at competitive activity and you have to look at value chain extension
opportunities. I can tell you that through our announcement and the progress that we've
made in Zhanjiang, already a lot of customers as well as other value chain players
have contacted us and look for opportunities to also expand on our Verbund.
Of course, when we think about, e.g., the isocyanates value chain, you are talking
about a different raw material spectrum, different products and inputs that you need.
But it is one possibility. We have a very successful isocyanates business also in China.
The investment into our Chongqing site proved to be a very good investment for BASF.
It's one possibility we're looking at. But all these things would in high, high likelihood
come beyond 2030.
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