Adisseo: accelerating development in China and consolidating its position as leading methionine producer
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As a global leader in animal nutrition, Adisseo is one of the leading producers of methionine, supplying feed additives including dl-methionine, liquid analogue, vitamins and enzymes to the global market. In recent years, the company has developed rapidly in China, with the opening of its methionine plant in Nanjing marking a milestone of its development in China.
At the China Feed Expo held in Shenyang, Liaoning province, Frank Chmitelin, Adisseo's vice president of worldwide sales, shares with eFeedLink about the company's recent development.
Can you share with us the significance of the operation of this new plant to Adisseo as well as to the market in China?
With the support from and also the cooperation of our shareholder, China National BlueStar Group, we have completed the first phase of the Nanjing liquid methionine plant with an initial annual output of 70,000 tonnes after a few years of effort. We have applied the best practices and technologies to this plant to ensure safety, quality, environmental performance as well as strong cost competitiveness of the product.
For US$600 million, this new plant is Adisseo's single biggest investment. On a land of 54 hectares, we have built a world-class, fully-integrated methionine industrial complex comprised of 26 different production units, including utilities, intermediates, finished products, co-products and a treatment facility for effluent. We are particularly proud of the safety performance of this project with a lost time injury frequency rate (LTIFR) of 0.15 over 10.3 million hours.
In the process, we have also taken into account various factors, such as environmental protection, production safety and cost. This has enabled us to make our product competitive and it plays a significant role for Adisseo to consolidate its leading position in the methionine and animal nutrition business.
Moreover, it is also worth mentioning that throughout the construction and the startup phase, we have been working in a transparent way and in very close cooperation with the Nanjing Chemical Industrial Platform authorities and built a trusting relationship, in particular with regard to the management of safety and environmental protection.
The startup of a methionine unit is a very complex and delicate operation, for which the safety requirements and the environmental performance are critical and mandatory. Without this primary focus, it is simply impossible to imagine producing methionine in a sustainable way.
Can you tell us more about the operation and production volume of the Nanjing plant?
In terms of operation, at this stage we are focused on safety and environmental performance, which are our corporate value and social responsibility. In terms of product quality, the Rhodimet AT88 produced by Adisseo's Nanjing plant has passed the inspection of the local government and other relevant authorities. Our aim is to make a product that meets customers' needs while being cost-competitive.
What is the market position of the plant and who are the target customers by segments and by regions?
For the market position of the plant, we will mainly release the product in the Chinese market for the first year of production. In the meantime, we are planning on expanding the market into Asia Pacific as soon as possible.
As for the target customers, we are mainly focused on poultry producers, particularly integrators. This is due to the fact that the poultry sector is the biggest segment of the methionine market. Poultry integrators achieve a quicker growth, they understand the benefits of liquid methionine and are more receptive to Adisseo Rhodimet AT88 product.
Apart from the poultry industry, large and medium-sized feed millers for other species are also our potential customers. Our liquid methionine provides more options for them.
We are also making strong efforts to improve our service. As of now, we have installed more than 600 sets of liquid methionine dosing equipment for our clients in China, for whom we also provide full maintenance service.
What are some plans and developments for the subsequent phase of the plant?
The designed capacity of this plant is 140,000 tonnes. The majority of our infrastructure investment has been put into the first phase of the project. With an initial annual capacity of 70,000 tonnes, the first phase has set the foundation. We will expand the capacity of the plant step by step up to the designed capacity, depending on the needs of our customers and the market demand.
In recent years, global feed production has been increasing steadily, although there are regional variations. Demand in Europe and the United States has recovered since 2012, while demand growth in China and other emerging countries has slowed due to the lack of purchasing power. How are your thoughts about the fact that in 2013, demand for methionine stayed flat in China?
From the start of 2013 to the first quarter of 2014, the pace of growth in China's demand for feed and methionine was slowing. There are two main causes for this. One is the poor profitability of the poultry industry last year and the other one is the impact from bird flu outbreaks.
What are your views on the development in the global feed industry and global demand, especially in the Asian region?
Adisseo believes that short-term fluctuations in the market are normal and it is also hard to control. We have taken into account this volatility factor in our business management practices.
However, we are still very positive about the long-term prospect for China and the emerging economies in Asia Pacific. By 2030, the world's population is expected to grow to 8 billion, while meat consumption is estimated to increase by 75 million tonnes. Of that total volume, 90% will be concentrated in China and other emerging markets.
That is why we need to increase investment, especially in the Asia Pacific region. It is a dynamic region with diverse types of markets. There are mature markets like Japan, developing countries like China and emerging markets like India. We need to employ different marketing strategies depending on the reality in different countries.
What are Adisseo's strategies in view of the above trends?
Adisseo is still mainly focused on poultry. The reason is that one, prices of poultry products are relatively cheaper, making them more attractive to the consumers.
Two, in terms of farming methods, poultry is more flexible and cheaper to produce, which makes return on investment faster.
And three, the environmental impact of poultry production is significantly less than that of hog production. That's why poultry industry is growing faster in Asia and the rest of the world, and also why we are focused on liquid methionine production in this region.
In the last 10 years, methionine prices have been fluctuating, hitting its peak in 2008 before starting to slide, led by the global financial situation as well as forces of demand and supply. From the perspective of supply, Asia is undoubtedly the source of new production capacity, with Unisplendour's plant in Chongqing and Ningxia, Adisseo's plant in Nanjing, Sumitomo's plant in Dalian, CJ's plant in Malaysia, Evonik's plant in Singapore, Hebang's plant in Sichuan and Zhejiang NHU Company's plant in Shandong. Can you describe how the sharp rise in the supply of methionine will affect Adisseo and other methionine suppliers?
First of all, we welcome competition because it drives us for excellence. This is what we have done with the investment programme that was deployed since we joined Bluestar Group. Not only we have invested in a state-of-the-art fully integrated methionine plant in Nanjing, but at the same time we have also invested more than €300 million (US$408.24 million) in Europe to improve the competitiveness of the European plants. The Adisseo fleet is now comprised of two highly competitive platforms to serve our customers around the world and we are very confident that we are well-equipped to face any competition.
Now coming to the other projects that you have mentioned, there are still a lot of uncertainties about the feasibility them, the competitiveness of their technologies, or their ability to manage the huge safety and environmental hurdles in methionine production. I do think that some of the companies that you have mentioned are really underestimating these challenges.
Can you comment on how this will impact the feed industry and the environment?
Time will tell. However, with 60 years of experience, continuous improvement in technology, our most recent investments in state-of-the-art production plants to expand our capacities, the reinforcement of our competitiveness and the spread of risks, we are not afraid of any new competitor entering this market.
We believe Adisseo's recent growth is largely attributed to its management. Can you tell us more about your current management structure and team and how this is expected to change?
Adisseo has three advantages in the areas of management and sales. One, Adisseo is a medium-sized company devoted to animal nutrition. This gives us more flexibility to come up with strategies tailored to the market needs and make quick adjustments if necessary.
Two, Adisseo is not only able to meet customers' satisfaction in terms of product quality, but we are also helping our customers improve their competitiveness in the market. We have a dedicated team for customer support with a special focus on animal requirements, feedstuffs, nutritional evaluation and liquid application technology.
Three, since 2006 when Bluestar Group acquired Adisseo, Bluestar Group has been very supportive of us in developing our business. Our number one priority now is the development of Rhodimet AT88 and our market focus is in Asia.
We understand that Adisseo's product lines are focused on methionine, vitamins and enzymes. What are your views on the outlook of the vitamins and enzyme product lines?
Our goal is to increase our sales to €2 billion (US$2.72 billion) by 2020 from the current €1 billion (US$1.36 billion). To meet that goal, we plan to consolidate our strength in the existing product folio, such as methionine, vitamins and enzymes. We will increase investment and expand our production capacity according to market needs. The newly-opened Nanjing plant is an example.
Of course, innovation is also important. Part of the growth that we are targeting will also come from partnerships to develop new products and technologies.
Will there be specific emphasis on any of these product lines?
Yes, we are definitely reinforcing all our existing product lines. Just to give you a few examples: we are in the last stage of developing a new product in our Rovabio range, we are extending our production chain for ruminant products with a new Smartamine capacity at the end of this year and we have a project to develop a new formulation of Microvit A.
Will Adisseo be venturing into other product lines or will the company focus on developing the existing lines? Why?
We will bear in mind that no matter what products we are selling, we need to adhere to our principle and bring value-added service to our customers.
We provide services to our customers in various ways. For feed millers, we have PNE service, which is a platform for precise assessment of nutrients; for methionine users, we provide installation and maintenance of equipments; for vitamin buyers, we provide information on nutritional formula and market analysis; and we are also enhancing our enzyme products range.
As a leading feed additive company, how has Adisseo contributed to the progress of the animal Nutrition industry? Can you share with us some of these milestones?
Adisseo has a rich history that spans over 75 years and we are still exploring in the animal nutrition business. Adisseo was the first company in the world producing and selling methionine. During 1980s, we were the first one with an innovative formulation which greatly improved the stability of vitamin A. In 1990s, we became the first company developing ruminant methionine and introduced the brand of Smartamine and MetaSmart. The PNE service we have recently introduced is the result from the data, resources and knowledge we have accumulated over the years.
We have been through ups and downs and we are proud of what we have achieved and the contribution we have made to the animal nutrition industry. However, we also know that we have a long way ahead of us and we will continue to strive for success.
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