Announcement of closure of LyondellBasell/Covestro (Maasvlakte) and Tronox (Botlek) chemical plants ‘tough day for the port’

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LyondellBasell/Covestro and Tronox announce in quick succession that they are planning to close their chemical plants in Rotterdam. This is first and foremost bad news for the employees who are at risk of losing their jobs as a result. But the closures are also a loss for the port of Rotterdam and the cluster of chemical companies in the port area.

LyondellBasell has its European headquarters in the centre of Rotterdam and sites in Botlek, Europoort and on the Maasvlakte. The LyondellBasell factory (PO11) on the Maasvlakte that is closing is one of the newest and largest chemical factories in the port in terms of added value. The company produces base materials here that are used in insulation materials, mattresses, furniture, paint, electronics, medicines, food packaging and wind turbines, for example. Tronox is also a global chemical company. It has been producing pigments in the Botlek area for the paint, plastic and paper industries for decades. The company is part of the closely cooperating chlorine cluster, and production had already been halted recently.

Port of Rotterdam Authority CEO Boudewijn Siemons: “It’s a tough day for the port with the announced closure of these leading chemical companies and the loss of hundreds of jobs. Industry in Rotterdam forms the basis for many products that we use every day. That is of great value to our economy and society, especially now that Europe wants to be more self-sufficient. We must therefore now pull out all the stops in the Netherlands and in Europe so that sustainability and preservation of industry can go hand in hand. It is precisely through intensive cooperation that companies in the port of Rotterdam can produce efficiently; we cannot afford to lose any more important players.”

Chemical market under pressure in Europe

LyondellBasell had already announced a strategic review of its activities in Europe. Tronox recently conducted a similar analysis, too. Both companies state that the closure of the factories is a result of the market conditions for chemicals in Europe. LyondellBasell speaks of “continuous pressure on profitability due to global overcapacity, a strong increase in imports from Asia and the high costs of European production”. The Port Authority has long recognized that more companies are struggling with this and, together with the companies and governments involved, has often expressed its concerns about the investment climate for the chemical industry in the Netherlands and Europe.

Earlier signals and closures

The port of Rotterdam is home to the largest petrochemical cluster in Europe. The companies work closely together and with companies in the broader industrial triangle of Rotterdam, Antwerp and the Ruhr area, which accounts for 40 percent of petrochemical production in Europe. The Port Authority recognizes that the head offices of companies throughout the region, including the Port of Rotterdam, are weighing their presence and investments in Europe.

And that development has resulted in the closure of the LyondellBasell/Covestro and Tronox factories. Last year, the Indorama plastics factory closed, the chemicals producer Westlake stopped production and before that, AluChemie closed its doors in Rotterdam. The Port Authority now realizes that developments are occurring at a rapid pace and is once again emphatically calling on the Dutch government to do what it can for the industry in its Spring Memorandum. Companies in the Netherlands bear extra burdens, compared to neighbouring countries and on a global scale, caused by energy taxes, grid tariffs, the CO2 tax, nitrogen regulations, grid congestion and regulatory pressure. The proposed plastic tax also belongs on this list.

Integration as strength and vulnerability

Companies in the Botlek area, including the chlorine cluster, are part of each other’s chains and are connected to each other by underground pipelines. These companies also use logistic service providers and suppliers based in the Botlek area, facilitating closer collaboration and more efficient production. This makes the port of Rotterdam an attractive production location, also due to its excellent accessibility and connections with industry in Western Europe. At the same time, it also makes companies dependent on each other. The loss of production sites therefore has an impact on the entire cluster.