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Performance Chemicals

The Performance Chemicals segment groups together our seven application-oriented business units in the field of process and functional chemicals: Material Protection Products, Inorganic Pigments, Functional Chemicals, Leather, Rhein Chemie, Rubber Chemicals and Ion Exchange Resins. They are all among the top suppliers worldwide in their respective markets.

Photo: Passenger plane
Green mobility is not just about road vehicles. Innovative products from the LANXESS portfolio are also used in modern passenger aircraft. For example, our X-Lite technology makes it possible to produce particularly lightweight leather for the seats – with positive effects on fuel consumption and payload capacity.

Overview of the business units

The Material Protection Products business unit is one of the leading global manufacturers of preservatives and biocidal active ingredients. Inorganic Pigments is the biggest producer and supplier of iron oxide and chrome oxide pigments for a wide range of applications. Functional Chemicals provides the plastics industry and many other industries with plastics additives, phosphorus-based and specialty chemicals, and organic and inorganic colorants. As one of the few suppliers to the leather industry, the Leather business unit offers all the products needed to manufacture leather together with chrome chemical and chrome ore specialties worldwide. The Rhein Chemie business unit produces chemical specialties for the rubber, plastics and lubricant industries. Rubber Chemicals is among the world’s main suppliers of high-quality rubber chemicals. In recent years, the Ion Exchange Resins business unit has become a provider of end-to-end solutions for water treatment.

Thanks to their broad portfolio of innovative and increasingly sustainable premium products, the business units of the Performance Chemicals segment participate in several of the megatrends that are the focus of our activities.

Portfolio expansion in response to mobility megatrend

The Rubber Chemicals and Rhein Chemie business units of the Performance Chemicals segment are benefiting most from the mobility megatrend.

Following the acquisition of the Argentina-based Darmex group in 2011, Rhein Chemie gained access to a further business area: the market for vulcanization bladders, which is worth an estimated €300 million.Bladders are used in the production or vulcanization of tires to give them their final shape. Growth prospects in this business are driven above all by the trend among an increasing number of tire manufacturers to outsource the production of vulcanization bladders to specialists.

We have now made the strategically important move into the manufacture of vulcanization bladders for the tires of trucks, agricultural vehicles and construction machinery with the takeover of Tire Curing Bladders, LLC (TCB) in the United States. Based in Little Rock, Arkansas, TCB is one of the world’s leading vulcanization bladder manufacturers with an annual capacity of more than 400,000 bladders. The company primarily serves the North American market. This acquisition further expands Rhein Chemie’s market position as a manufacturer of high-quality vulcanization bladders.

In line with our dual-track growth strategy, we are also facilitating the organic expansion of this business. The plant we have built at our Brazilian site in Porto Feliz at a cost of around €10 million will start manufacturing high-performance vulcanization bladders in the second quarter of 2013. And we increased our production capacities at the Burzaco site in Argentina by 40 percent in the year under review.

Construction work at LANXESS’s first production plant on Russian soil is also proceeding to schedule. Starting in the first half of 2013, Rhein Chemie will use the new production facility in Lipetsk to manufacture rubber additives and release agents above all to serve the automotive and tire industries in Russia and the other CIS countries. The total investment for the project amounts to approximately €5 million.

The systematic expansion of Rhein Chemie’s portfolio with innovative solutions has also been recognized by international experts from the tire industry, the automotive sector and the scientific community. At the Tire Technology Expo – one of the world’s most important events for tire technologies – the business unit was named “Tire Industry Supplier of the Year.”

Rhein Chemie also won first prize in the Responsible Care 2012 competition organized by the German Chemical Industry Association (VCI) for an innovative process to recover the key raw material phenol from mixed wastewater streams generated during the manufacture of a plastics additive. The solution developed by a team of laboratory, production and applications technology experts enables us to reduce the amount of phenol disposed of by around 150 tons each year and the volume of hazardous liquid waste by an even larger amount.

Our Rubber Chemicals business unit also embarked on some innovative product developments in 2012. As part of the work to develop the rubber additive Vulkalink®, which improves the rolling resistance of green tires, selected global tire manufacturers have been given a first-time opportunity to subject what we consider to be the four most promising laboratory substances to rigorous testing and provide detailed assessments at a very early stage. This novel form of cooperation in the industry represents a classic win-win situation. We gain a good idea of the market appeal and likely success of Vulkalink® early on, which significantly reduces the time to market. And our customers have the opportunity to contribute their specific product requirements in subsequent stages of the development process. In the second quarter of 2013, we will be providing our customers with a variant of Vulkalink® optimized in line with their requirements for further testing.

Broad range of services for urbanization megatrend

With urbanization continuing unabated, the United Nations estimates that just under 70 percent of the world’s population will live in cities by 2050, compared to “only” just over 50 percent today. The urbanization trend is most evident in emerging and developing countries. It is predicted that eleven new megacities – cities with more than 10 million inhabitants – will develop in China and India alone before the end of this decade. Our products are used in a large number of customer industries that are benefiting from increasing urbanization.

Pigments for greener living

The demand for sustainable transport concepts is especially high in the steadily growing urban conurbations. Electric cars have the potential to master the balancing act between high individual mobility and sustainability. However, consumer acceptance can only be achieved if the total costs of electric mobility are reasonable – and the service life and range of the batteries used play a vital role in this respect.

Photo: Pigment flasks
The inorganic pigments supplied by our Inorganic Pigments business unit do more than just create color accents. Iron oxides from the Bayoxide<sup>®</sup> line, for example, are an important component in state-of-the-art lithium-ion batteries for electric vehicles.

The Bayoxide® product range marketed by our Inorganic Pigments business unit includes several iron oxides for manufacturing the cathodes used in state-of-the-art lithium-ion batteries. Our latest development is the engineered iron oxide Bayoxide® E B 90. It enables manufacturers to produce high-performance batteries for electric cars that can significantly reduce CO2 emissions per kilometer driven. According to estimates, the global market volume for batteries for electromobility could grow to around €20 billion by 2020. As one of the world’s leading manufacturers of iron oxide pigments, we have the capacities to reliably serve this growing demand.

Inorganic Pigments is also playing a pioneering role in developing environmentally compatible pigment manufacturing processes.

With the construction of a new facility at Ningbo in Zhejiang province in eastern China, we significantly expanded our range of light-colored Bayferrox® iron oxide red pigments, which are used especially by the coatings industry. Designed to meet the latest environmental standards, the facility will initially have an annual capacity of 25,000 metric tons. Construction is scheduled to start in the second quarter of 2013 and start-up is planned in the first quarter of 2015. The facility will use the Penniman process that has been optimized by LANXESS and is characterized by its particularly high energy efficiency. Optimized water treatment and waste gas cleaning will ensure the high environmental compatibility of the new facility. Our €55 million investment will create around 150 new jobs.

We have also invested €1.6 million in modernizing and expanding the water treatment unit at the world’s largest facility for the production of iron oxide and chrome oxide pigments in Krefeld-Uerdingen. Wastewater streams generated during production are treated using the sustainable boiling process to recover iron oxide pigments from the process water. Not only is the process water we return to the Rhine far cleaner than when we originally removed it, we also simultaneously improve our pigment yield. At the same time, the capacity for synthesizing Bayferrox® black and red pigments has been increased.

Flame retardants for improved safety

Another way in which we are responding to the urbanization megatrend is with products from our Functional Chemicals business unit, including a wide range of flame retardants for the polyurethane industry. For example, our Levagard® flame retardants combine the unrivaled heat-insulating properties of rigid polyurethane foams with the ability to comply with increasingly stringent fire safety requirements. Coating polyurethane insulating panels with Bayfomox® in a single production operation gives them not one but three vital properties that previously required several separate work steps – good thermal insulation, a high level of fire resistance and excellent soundproofing. LANXESS products can often be found in the floors, walls and roofs of energy-efficient buildings that meet high safety standards.

Water megatrend offers excellent growth potential

Usable water is one of the most valuable of all raw materials. Even in areas where it is available in sufficient quantities, water often cannot be used due to high levels of contamination. State-of-the-art industrial processes like those used to generate electricity cannot be implemented safely and economically without ultra pure water. Population growth, environmental pollution and climate change will greatly exacerbate the supply situation in the decades ahead. Studies suggest that the demand for clean water in 2030 will exceed current supply levels by around 40 percent. For this reason, water treatment products are steadily gaining significance – and with them the activities of our Ion Exchange Resins business unit.

Successful introduction of membrane filtration elements

When we commissioned a production plant for reverse osmosis membrane technology at the Bitterfeld site in 2011, we became an end-to-end supplier for water treatment. Complementing our proven Lewatit® ion exchange resins, the Lewabrane® membrane elements produced there make it possible to remove even minute particles from water, along with other undesirable substances such as nitrates, pesticides, viruses and bacteria. At present, our products are mainly used to purify brackish water, a process that is needed in many industrial applications including the treatment of circulating water and steam in power stations and the production of ultra pure water for the microelectronics industry. The membrane elements are manufactured using state-of-the-art technology, which we developed and implemented in part ourselves together with the Fraunhofer Institute for Factory Operation and Automation (IFF) in Magdeburg.

Photo: Pigment flasks
With its ion exchange resins and membrane filtration elements, our Ion Exchange Resins business unit is a major end-to-end supplier of water treatment products – a market characterized by dynamic growth worldwide.

The market launch of our Lewabrane® membrane elements was a key event in 2012. The global membrane market is currently estimated to have a volume of around €1 billion, and this figure is set to rise further still. At present, we offer our customers seven universally applicable element types with features such as a very high rejection capacity or a high flow rate. We will systematically add new products to our portfolio. In future, the membrane elements will also be used to produce drinking water from brackish water or seawater. We expect to obtain the relevant authorization in the course of 2013. Our portfolio for industrial water treatment is complemented by our new LewaPlus™ design software for effective support in planning complete water treatment systems incorporating our ion exchange resins and membrane elements.

Further measures in the international production network

Two major investment projects in our Leather business unit are paving the way for its future growth in the BRICS states in particular.

China is the world’s largest market for leather chemicals. A new facility in Changzhou in Jiangsu province is scheduled to start producing premium leather chemicals such as Tanigan®, Isoderm®, Euderm® and Levotan® in the first half of 2013. Equipped with cutting-edge technologies, this facility will have an annual capacity of up to 50,000 tons. We are also placing particular emphasis on the use of environmentally friendly processes at the facility. For example, it is designed to minimize wastewater and will be powered in part by renewable energy from geothermal sources and solar cells. Our €30 million investment will create around 100 new jobs.

At our South African site in Newcastle, we are investing €40 million in the construction of a treatment plant for highly concentrated CO2 at our state-of-the-art production facility for sodium dichromate, which is used to manufacture, for example, products such as chrome tanning agents for the global leather industry. Work began in the first quarter of 2012 and start-up is scheduled for the second half of 2013. This investment means we will no longer need to rely on the supply capability of the external vendors who currently still provide us with CO2. As well as optimizing the facility’s capacity utilization, this project also lays the foundation for future production expansions. By capturing the waste air from steam generation at the facility and using it to cover our CO2 requirements, we will be able to reduce the site’s CO2 emissions by around a quarter, despite the higher capacity utilization.

Our Functional Chemicals business unit has increased the capacity of its production network for phosphorus chemicals at the Leverkusen site by 10 percent. One of the largest of its kind in the world, this network ensures efficient production, global availability and high delivery reliability. Our investment of around €5 million has also enabled us to improve the logistics concepts for filling operations, which has resulted in greater flexibility.

Green chemistry in many facets

Photo: Leather pendant
Our Leather business unit is one of the most innovative suppliers of leather chemicals in the market. Two major investment projects in China and South Africa are now paving the way for the business unit’s future growth.

Our Material Protection Products business unit has identified an important new potential application for its proven product Velcorin®. Midway through 2012, the European Union approved the use of Velcorin® in wines with a sugar content of less than five grams per liter, which means it can now also be used in classic dry wines. Velcorin® protects wine from contamination with microorganisms during production and thus prevents spoilage – without affecting the wine’s sensory properties, aroma or color. Velcorin® has been successfully used as an oenological process in a wide range of applications in the New World wine-growing countries outside the European Union for many years. Other important applications include fruit juice beverages, iced tea, flavored water and isotonic sports drinks.

As one of the few renewable energy sources that can be stored, biogas has a key role to play in the energy transition. In its unpurified form, however, it contains toxic, strong-smelling and corrosive hydrogen sulfide. The highly effective synthetic iron oxide Bayoxide® E 16 marketed by Inorganic Pigments is a cost-efficient and sustainable alternative for desulfurizing biogas. Iron oxide is neither a hazardous material nor a water contaminant, and it can be handled using simple equipment and without expensive metering systems. Moreover, it does not cause any corrosion damage to the plant. Bayoxide® E 16 removes hydrogen sulfide in the fermentation reactor so effectively that the resulting biogas in most cases can be used directly. The desulfurization residues – iron sulfide and sulfur – are substances that occur naturally in soil and can be combined with the fermentation residue to use as fertilizers.

We have taken our strategic partnership with BioAmber Inc. in the United States to the next level by acquiring a 3.4 percent minority interest. BioAmber is currently building a facility to produce succinic acid from renewable raw materials in Sarnia, Canada. The fermentation process used to produce the acid requires less energy, is more cost-effective and emits less CO2 than the conventional process using fossil raw materials. As part of our commitment to green chemistry, the Functional Chemicals business unit has developed a range of new phthalate-free plasticizers based on BioAmber’s succinic acid that is produced from the waste from agriculture and sugar cane production. Four test products distributed to more than 200 customers in various industries in 2012 met with great interest and generated a large number of specific customer projects. We expect to be able to market our new plasticizer in commercial quantities soon after completion of the Sarnia facility.

As part of its pioneering Sustainable Leather Management initiative, our Leather business unit has made significant progress with the new broad-spectrum fungicide Preventol® U-Tec G. Even low doses of this product reliably preserve leather tanned using our new X-Tan® technology. The organically tanned hides and skins, known as X-Whites, can therefore be stored much longer than before without being damaged by harmful microorganisms – especially mold. Entirely in keeping with the philosophy of Sustainable Leather Management, Preventol® U-Tec G is readily biodegradable in wastewater treatment plants.

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