Borealis restructures

December 17, 1999, 08:00 CET

Production of glass-mat reinforced thermoplastic (GMT) at Borealis is being sold to Symalit of Switzerland as part of a strategic agreement.

The business is due to be taken over on 1 January from the Copenhagen-based petrochemicals group, which is owned 50 per cent by Statoil.

This sale follows the disposal earlier in December of the Borealis compounding plant at Norderstedt in Germany to Reco, a German company.

GMT is a recyclable polypropylene-based product particularly suitable for the automotive industry, and Symalit ranks as its leading European producer.

Under the strategic agreement, the two companies will join forces to develop and market new plastic applications for components made from GMT and polypropylene. Borealis will make research and product development capacities available to Symalit.

Symalit is taking over all current projects, and plans to move production equipment from the Borealis plant at Linz in Austria to Lenzburg in Switzerland and Lotte in Germany.

"We've opted to divest our GMT production as part of a long-term strategy," says Borealis executive vice president Staffan Lennström.

"This is a small part of our business within a specialist field, where we don't have a large enough volume to be competitive."

The cooperation deal will allow Borealis to focus on its core business in engineering applications.

Strategic considerations also underlie the disposal of the Norderstedt facility which will operate in future as PolyComp. Borealis announced in April that the plant would be closed by the end of next year, in line with its long-term strategy

Compounding involves putting together blends of plastic, colourants and other additives, and the German unit currently produces 32,000 tonnes of such compounds.

"Selling this facility allows us to concentrate our operations at sites where compounding forms an integrated part of the business, and to improve our competitiveness in engineering applications," says Mr Lennström.

A three-year agreement on producing polyolefins at the plant has also been concluded by the two sides.

"This safeguards continued operation at the unit and simplifies the transfer of production volumes to our compounding plants in Belgium, Austria, Finland, France and Italy," Mr Lennström adds.

"The transitional phase will not create any service or delivery problems for our customers."