INEOS has bought a sulphuric acid factory at one of the most important logistics centres in Europe. The acquisition of the plant in Bilbao, Spain, complements INEOS’ existing sulphur chemicals business in Runcorn in the UK and effectively doubles its production capacity.
Sulphuric acid is one of the most important, basic compounds manufactured by the chemical industry. It is used to make, literally, hundreds of compounds needed by almost every industrial sector including fertilisers, detergents, water treatment and batteries.
“In days of old, sulphuric acid consumption was a measure of a country’s GDP,” said Ashley Reed, CEO INEOS Enterprises. “Demand was very much linked to the economic health of a country.”
That may also be true today.
Last year Spain was the second fastest growing economy in Europe with GDP growth of 3.2% and the International Monetary Fund believes Spain’s recovery will continue.
“That is good news for us and should provide a strong platform for sales growth in the local markets,” said Ashley.
The Spanish plant, which makes about 340,000 metric tonnes of sulphuric acid every year, is one of the most modern in Europe and is close to the Bilbao Refinery which supplies most of the plant’s key raw material, sulphur.
“Sulphur is often an unwanted by-product in the production of refinery products so it is a way for them to dispose of it,” said Ashley.
About 25% of the plant’s revenue comes from cogeneration of electricity which is produced through burning sulphur in air. Electricity prices in Spain are amongst the highest in the world and under new Spanish legislation to encourage renewable energy production, the Spanish government will underwrite the electricity prices for the business for the next 25 years.
“That was one of the reasons why INEOS was interested in the plant,” said Ashley.
The plant is strategically located in Bilbao port which makes it ideally poised to export around the world.
“There is no other sulphuric acid producer within 400km of the port,” said Ashley. “And because transport costs make up a major proportion of the sulphuric acid price, having the right location is vital for the success of a sulphur chemicals business.”