How Natural Resources Creates Value
Business Area Natural Resources combines businesses that extract minerals, oil, and gas with those that use these materials to develop high-performing and sustainable solutions. Driven by growing oil, metals, and food consumption around the globe, the Business Area addresses emerging trends in multiple industries.
1. Capitalizing on economic upturn and growth in key industries to drive business
In 2018, Functional Minerals continued on its growth path supported by the positive dynamics of the global economy, which increased demand for processed bentonite. Global trends such as urbanization, renewable energy, and changing food consumption supported growth opportunities for purification products. Although purification sales were initially weak due to an unfavorable quality of soybean and palm oil crops, the market saw some recovery in the second half of the year. In addition, the growing demand for purification solutions in the field of renewable energy compensated for the weaker edible-oil purification sales in early 2018. Functional Minerals is very well positioned to grow in this segment as it demonstrated its ability to develop tailor-made and innovative solutions for the purification of second-generation biofuels through strong collaborations with key customers.
Continued growth in the global automotive industry and an increasing trend toward reducing harmful emissions in the iron-casting process created favorable conditions for Clariant’s foundry additives business. Functional Minerals capitalized on this trend by expanding the sales of low-emission foundry additives, such as Geko™ LE. The electrification trend in the passenger car industry is a disrupting challenge where Mining Services has refocused activities in the industrial minerals field toward solutions for lithium extraction, a key raw material for the batteries.
In 2018, the price of oil continued to recover while key commodity markets stabilized. This allowed many of Clariant’s Oil & Mining customers to reevaluate their operations to look for ways to grow and gain efficiencies alongside of opening strategic growth opportunities. However, regional differences persisted. With the trade dispute between the United States and China creating uncertainty in the market and hampering growth in China, Chinese-sourced raw material prices might increase due to the growing costs of regulatory compliance and tariffs.
IDEA TO MARKET
2. Innovating for food safety and environmental protection
The innovation agenda at Functional Minerals was dominated by three main themes in 2018. First, Functional Minerals addressed the need for improved food safety with, for example, the launch of new Tonsil® grades that reduce the risk of harmful substance formation, such as 3-monochloropropane-1,2-diol (3-MCDP), during purification processes.
Second, Functional Minerals developed products that help customers reduce their overall costs. For example, Clariant supports the edible-oil processing industry and the growing renewable fuel industry by innovating in the field of dry-soap removal. Dry soaps are generated during production processes and present a considerable cost factor for Clariant’s customers.
Third, the Business Unit further developed Invoque®, an innovative solution that helps customers in the dredging and mining industries manage disturbed sediments suspended in water. Invoque® allows users to separate solid and liquid components faster and more efficiently while also reducing water usage, environmental impacts, and overall costs.
Functional Minerals ran about 35 active innovation projects (Class 1 and 2) in 2018.
Addressing these three challenges contributed to a well-filled innovation pipeline at Functional Minerals, with about 35 active Class 1 and Class 2 projects and about the same number of smaller Class 3 projects in the stage gate process at the end of 2018. In order to accelerate innovation processes and improve the pipeline output, Functional Minerals improved the stringent evaluation, prioritization, and tracking of innovation projects.
3. Increasing speed to exploit opportunities from unconventional oil production and electrification
The growing global oil demand and rapidly changing characteristics of produced oils increase the complexity of oil production and require shorter innovation cycles. Oil Services is tackling this challenge by working with Group Technology & Innovation on High Throughput Experimentation (HTE) and advanced analytics. Read more The collaboration led to five successful applications in identified growth fields, such as pour point depressants, and will continue into 2019. To support the commercialization of the innovative pour point depressants used in oil production, the iGarage concept was adopted. Read more
In 2018, Mining Solutions focused its innovation activities on copper and iron ore benefication by flotation in efforts to improve customers’ operational efficiency. To improve sustainability in the mining industry, Mining Solutions has been working on replacement technology for the current use of the hazardous material xanthate. Clariant Hostaflot™ products were developed to overcome the hazardous xanthate properties. The current use of hazardous xanthate as a flotation additive to recover fine particles of the desired mineral is both dangerous and cost-intensive since storage involves controlled conditions, specific handling requirements, and constant monitoring.
Lastly, as increasing amounts of lithium are needed to support the growing sales of electric passenger cars and other battery-powered devices, Clariant is developing innovative flotation collectors that improve the separation of lithium-bearing minerals from other rock-forming minerals, enabling lithium extraction from new sources.Plastics & Coatings, Innovating for a sustainable future
MARKET TO CUSTOMER
4. Addressing customer challenges sustainably
In 2018, Functional Minerals helped solve some specific customer challenges and launched, for example, the innovative solution Opazil™ FFR. Opazil™ FFR is an active adsorbent that avoids the penetration of mineral oils from recycled paper into packaged food. Due to the specific absorption properties of the active adsorbent, this product enables food-packaging manufacturers to reduce potential health risks by adjusting and streamlining their production process without jeopardizing food safety standards. Another product example is Toxisorb™ Premium, an additive that binds toxins and neutralizes harmful substances in animal feed. Both products were awarded Clariant’s EcoTain® label in 2018. Read more
Oil & Mining Services successfully launched a series of products in 2018, including newly developed paraffin inhibitors: WAXTREAT DF, which prevent blockages of flow lines in deepwater oil production operations; a water-based paraffin dispersant LIBERATE®, which remediates existing paraffin deposits where inhibitors cannot be applied; and Hostaflot™ xanthate replacement products, which facilitate the efficient and sustainable collection of sulfide minerals.
»Sustainability has become a part of the diagnostic conversations our sales professionals hold with customers. As a result, large copper producers have embraced Clariant’s sustainable xanthate replacement products, aiming to eliminate xanthate use in all their operations.«Jorge Arias Global Head of Mining Solutions
Intensive customer interaction around sustainability challenges revealed an unmet customer need to eliminate hazardous compounds from copper and molybdenum collectors. In response, Clariant developed non-hazardous collectors for enhanced copper and molybdenum recovery, which customers in Chile and North America embraced for their improved performance and sustainability benefits.
The progress in sustainable product development is further exemplified by the successful commercialization of Flotigam™ 7500, an EcoTain®-awarded collector to recuperate iron ore by flotation.
The EcoTain®-awarded iron ore collector Flotigam™ 7500 decreases the amount of fine material discarded to tailing ponds by up to 70%.
As shown by the results of the 2018 customer satisfaction survey, the customers of Natural Resources place high value on the »Technical Services« offering, which they ranked as the most important buying criteria ahead of »Products and Packaging«. Since the last customer survey in 2016, Natural Resources increased their competitive performance as well as overall customer satisfaction and loyalty, which improved to 80 points (2016: 79) and 85 points (2016: 82), respectively. The Net Promoter Score leaped to 45% (2016: 37%).
5. Building on Leading Marketing Organizations to turn value propositions into profitable growth
In 2018, the Leading Marketing Organizations (LMO) initiative was implemented within Natural Resources. By the end of the year, most of the new key functions were filled. In addition, the businesses aligned innovation strategies with Clariant’s overall growth strategy and refined customer segmentation, exploring synergies across regions, coupling offerings with digital support and improving pricing excellence. To support the latter, Functional Minerals launched a value-based pricing initiative to ensure that products are priced according to the value they create for customers. Oil & Mining Services established a Pricing Council, which focuses on developing regional strategies to improve procurement negotiations and position the right value of Clariant’s products in the market.Plastics & Coatings, Launching products successfully
CUSTOMER TO CASH
6. Balancing cost efficiency, risks, and sustainability standards in the supply chain
Natural Resources relies on strong relationships with suppliers to create sustainable value for Clariant, customers, and suppliers. Functional Minerals implemented a series of initiatives in 2018 to increase reliability in the supply chain. For example, it initiated preferred partnerships with logistics providers to ensure access to transport capacities and reformulated certain product recipes to reduce supply chain-related risks. To mitigate the impact of rising energy and transportation costs, Functional Minerals also optimized its value stream from mine to market by sourcing the clays closer to operations and intensifying the sun-drying of bentonite (for example, in Sardinia and Spain) to reduce energy and logistics costs.
Oil & Mining Services uses an individualized review process to assess the performance of its suppliers. To evaluate additional factors specifically related to the product line of Oil & Mining Services that are not covered in the standard performance review or the Together for Sustainability initiative (TfS), Read more a lean questionnaire is distributed. As Oil & Mining Services prioritizes active supplier communication, it shares an updated standard information package regularly and participates in Clariant’s yearly procurement events, which are attended by more than 300 suppliers and offer an excellent opportunity to raise awareness for Clariant’s safety and sustainability requirements.
7. Enhancing research and production capacities through global investments
In 2018, Natural Resources expanded its research and production capacity in several locations. For Functional Minerals, the most important expansion took place in Indonesia, where the Business Unit eliminated specific bottlenecks in the bleaching earth production at different production sites that serve the Southeastern Asian market, thereby supporting Clariant’s strategic growth and profitability targets in that region. Another expansion occurred in South China, where Clariant increased its production of bentonite desiccant clay to meet increasing demand.
Together with Business Unit Industrial & Consumer Specialties, Oil & Mining Services benefited from the completed expansion of the industrial facility in Coatzacoalcos, Mexico, increasing the production capacity of ethoxylates, particularly demulsifiers, by several thousand tons per annum. In addition, it opened a cutting-edge laboratory facility in Clinton, Oklahoma, and announced the inauguration of a similar technical laboratory in its facility in Midland, Texas. In 2018, Oil & Mining Services terminated production activities of the Business Lines Mining and Emulsions in Morocco and started servicing customers in the region with supplies from Europe.
8. Improving profitability through optimized operations
Continually optimizing the operational chain is critical to ensure customer satisfaction and profitability. In 2018, Functional Minerals began implementing a system for web-based slot management with trucking companies to ensure just-in-time arrival of trucks to retrieve finished goods at Clariant’s production sites. Furthermore, it took steps to better integrate the commercial and the operational chain by testing a system for linking customers’ silo levels to Clariant’s planning system.
»Under the new motto ›Customers are our passion, excellence is our way,‹ Functional Minerals engages in a close dialog with its customers. Starting with the question ›what is precious to you?‹ we co-develop new products or solutions with and for our customers.«Sven Schultheis Head of Business Unit Functional Minerals
Oil & Mining Services was able to transition from bulk deliveries to intermodal deliveries across the United States, resulting in net savings of approximately CHF 37 000 per year and a reduction of 36.75 tCO₂ equivalents (– 65%).
Shifting from bulk to intermodal deliveries reduces the yearly greenhouse gas emissions of BU OMS by 36.75 tCO₂ equivalents.
9. Ensuring safety at the workplace and on the road
To increase the occupational health, safety, and well-being of employees, Functional Minerals started the Safety Teams initiative in 2018 to involve workers in continuously improving safety at the workplace. Oil & Mining Services focused its efforts on increasing road safety, as employees drive over 36 000 000 kilometers each year to deliver products or provide services to customers. In 2018, it introduced a driver training program for all employees in North America and installed camera systems with an incorporated event recorder in over 200 vehicles in the United States. The training will be rolled out in Latin America in 2019 and will be available as an e-learning course as well.Plastics & Coatings, Securing raw material availability
Growth potential per year
EBITDA target margin
R&D spend of sales
Raw material procured
in CHF m
Active innovation projects
Number of raw materials procured
Raw material suppliers
Energy consumption in m kWh
Sales in CHF m
Growth in local currencies
EBITDA margin before exceptional items
Production volume in m t
Staff in FTE at year end
(2016: 3 235)
Waste in thousand t
Greenhouse gas emissions
in kg/t production
1 For 2018, the production volume is based on a reduced reporting scope, which includes sites that are responsible for 95 % of total production.
2 Every three years, Clariant validates environmental data from all production sites. The last full reporting campaign was in 2017. In interim years, including 2018, the reduced reporting scope comprises the larger sites responsible for 95 % of production.
In 2013 Clariant adjusted its reporting segments and grouped its businesses with similar end-user markets and growth drivers into four distinct Business Areas: Care Chemicals, Catalysis, Natural Resources, and Plastics & Coatings. View entire glossary
The pool of funds available to the company for use in the production of goods or the provision of services. This can include funds obtained through financing, such as debt, equity, or grants, and funds generated by the company, for example through sales or investments. View entire glossary
Knowledge-based intangibles used and created by the company, often in collaboration with partners. This can include intellectual property, such as patents, trademarks, copyrights, software, rights, and licenses, and »organizational capital« such as tacit knowledge, systems, procedures, and protocols. View entire glossary
Manufactured physical objects such as buildings, equipment, and products. These can include objects that are available to the company for use in the production of goods or the provision of services, or that the company produces for sale to customers or for its own use. View entire glossary
The company’s staff and its composition, competencies, capabilities, experience, and motivation to innovate. This can include employees’ alignment with corporate values and their ability to understand and implement the company’s strategy. View entire glossary
Key relationships including those with significant groups of stakeholders and other networks. This can include shared values, the trust and willingness to engage that the company has developed, and related intangibles associated with its brand and reputation. View entire glossary
Renewable and nonrenewable environmental resources and processes that support the past, current, or future prosperity of the company or are affected by it. Examples can include resources related to air, water, and land that are utilized or impacted for example by emissions. View entire glossary