Kemira Tests Non-Toxic Lether Treatment to Win BMW Order
Stock Chart for Kemira OYJ (KRA1V)
Kemira Oyj (KRA1V) is poised to introduce a non-toxic chemical process for treating leather, betting that luxury-car makers such as Bayerische Motoren Werke AG (BMW) will pay extra for improving their environmental credentials.
Europe’s largest maker of water-treatment additives is in talks with major tanneries about adopting the technology, which is based on aluminum silica and organic acid, Chief Executive Officer Wolfgang Buechele said in an interview in London. Acceptance of the new product would give the Helsinki-based company access to a 500 million-euro ($655 million) global market in both consumer and industrial leather treatments.
“We haven’t started talking to the carmakers as we want to have a proof of concept,” Buechele said. The product will be officially introduced in Bologna, Italy, next month, he said.
Leather-chemical makers in Europe have struggled against heightened competition with Asian manufacturers as well as a slowdown in demand as consumers buy fewer shoes and bags. Among Europe’s largest suppliers is TFL Holding GmbH, which is in the hands of creditors and has been seeking a buyer for a year. BASF SE (BAS) abandoned a plan to exit the industry, opting to restructure its operation to improve efficiency first.
Kemira joins Muttenz, Switzerland-based specialty-chemical maker Clariant AG (CLN) in tapping a growing consumer desire for less- polluting manufacturing processes. The Kemira product, called Tanfor-T, is based on aluminum-silica and organic acid ingredients, replacing chromium salts, according to the company. While chromium is a nutrient, excess exposure to industrial versions of the metal can cause illnesses ranging from skin or lung irritation to kidney failure and cancer, according to the U.S. National Institutes of Health.
Tanfor-T is part of the Finnish company’s effort to build its ChemSolutions unit. Buechele, a former executive at Ludwigshafen, Germany-based BASF and private-equity firm Blackstone Group LP, is seeking to focus the unit on its most profitable products and has earmarked it for potential disposal should a sizable acquisition opportunity arise.
Any non-chromium-based solutions will go head to head with Lanxess AG (LXS), which has the cost advantage of owning its chrome mine in South Africa, acquired from Dow Chemical Co. Leverkusen, Germany-based Lanxess is building a plant in Changzhou, China.
Clariant has entered talks with car manufacturers and is “quite optimistic” about the prospects for its non-chromium leather technology, Kai Rolker, a spokesman, said Sept. 20. Even with interest from carmakers such as Munich-based BMW, Clariant’s technology has been slow to gain customers because of the high costs for tanners to adapt machinery, Jaideep Pandya, an analyst at Berenberg Bank, said in a note.
Kemira’s process “does not target high adoption costs,” Buechele, 53, said in the Sept. 18 interview. “That’s why we believe our market penetration will see a different speed of development than maybe Clariant will see.”
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