Asset restructuring: Trinseo to close assets in Europe/US; Elkem curtails production at 2 plants in Norway due to high power prices

Speciality materials provider Trinseo has announced updates to its asset restructuring initiatives. It adds these actions are expected to result in approximately US$60 million of annual profitability improvement versus the fourth quarter run rate, most of which will be realised in 2023.

These actions consist of the following:

Trinseo says it expects to incur US$79 million to US$89 million of pre-tax, non-recurring charges related to the cessation of manufacturing activities at these facilities. Of this, up to US$61 million is expected to be incurred in the fourth quarter of 2022, with the remainder expected to be incurred through 2024.

The cash amount of these charges is expected to be up to US$77 million, including approximately US$40 million in 2023, with substantially all expected to be incurred through 2024. The actual timing and costs of these actions may differ from the Company’s current expectations and estimates, and such differences may be material. These charges are subject to ongoing negotiations with the works councils, industrial associations and government authorities.

Additionally, In November, the European Commission issued a final decision imposing a fine to Trinseo in the amount of EUR32.6 million related to the commission’s 2018 investigation of styrene purchasing practices in Europe. This amount was in line with its previously recorded liability and was paid in full in December 2022.

Meanwhile in other news, materials firm Elkem has decided to partially curtail its production in Norway by temporarily shutting down two furnaces – one at Thamshavn and one at Rana. This is due to high power prices.

Elkem says it is well-positioned with long-term power contracts securing the company’s electricity consumption in Norway at competitive rates. However, in the current market, curtailing production enables the company to optimise value creation by selling its power at highly attractive rates in the Norwegian power market. It adds that the decision will have no impact on customers or employees.

“In the short term, this is a win-win: By reducing some of our production, we can optimise value creation for Elkem and contribute to increased flexibility in a tight power market for households and businesses in Norway. We will use this time to bring forward maintenance and improvement work at our plants to position for the future”, says Elkem’s CEO Helge Aasen.

“In the long term, however, we are concerned about what the current situation says about Norway’s ability to provide competitive power to households and businesses. It should not be more profitable to sell power than to produce critical materials for the green transition. We see a huge potential to leverage Norway’s surplus of renewable hydropower as a competitive advantage for existing and new green value chains, as we have done since the early 1900s, but securing this requires political action” says Aasen.

The two furnaces are expected to remain shut until early first quarter 2023. Elkem’s plant in Thamshavn mainly produces silicon while the plant in Rana mainly produces ferrosilicon. Elkem has twelve furnaces in total in Norway and temporary curtailments to sell power may also be relevant at other sites, depending on market developments.

(PRA)

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