Growing wealth, broader income distribution, urbanization… Kemira’s Region Head for South America tells why conditions are prime for the company to play a major role in the region.
”Broader income distribution is gradually taking place, as we have seen average GDP per capita growth rates of between four and five percent over the past several years,” explains Hilton Casas de Almeida, head of Kemira’s activities in the South America region.
“As a consequence, there are more and more consumers in the market which results in a greater demand for the key products our business is involved with. For example, when it comes to paper, there are more people buying newsprint, magazines, packaging and finished goods.”
A Growing Presence
Kemira is a relative newcomer to the South America region; its first significant activities started in 1996 with the establishment of a joint venture in Brazil. Since 2000, the company has grown its presence organically as well as through a number of startups and acquisitions in Argentina, Brazil, Chile, Colombia, Uruguay and Venezuela. The results of its investments have been to give the company a stronger competitive position in all three of its core activities – paper, water, and oil and mining.
“Paper business has been growing between three and four percent per year in South America. We see the market increasing by approximately five to seven percent per year through 2015,” notes Casas. Today, Kemira supplies a wide range of international and regional customers operating in South America.
“When it comes to our water business, the urbanization megatrend is an opportunity for us. The region has some of the largest population centers in the world – Buenos Aires with 13 million people, Rio de Janeiro with about 12 million, São Paulo with 18 million, and many mid-size cities with over one million inhabitants. This creates a strong demand for municipal drinking water and waste water treatment.”
Opportunities in All Types of Fuels
In the oil and gas sector, the region is one of the most important in the world in terms of reserves. Some recently discovered oil deposits are from five to seven kilometers from the surface of the ocean, significantly deeper than other offshore finds in the world.
“They require totally different solutions in terms of chemicals, equipment and processes. This poses technical challenges, which means interesting business cases for us.”
And the opportunities don’t stop there. Casas points to the growing use of biofuels as substitutes for oil-based fuels, particularly in Brazil. Ethanol produced from sugar cane is an area Kemira is deeply involved in.
Positioning Locally
According to Casas, Kemira has been active in building up its local presence, which gives it one of its key competitive advantages. Recent acquisitions and investments are evidence of the company’s growing local commitment.
“Over the past 10 years, Kemira has invested over EUR 150 million in South America, a substantial amount for a chemical producer. Today we have eight production sites in the region, which gives us a well-established presence, a strong team and a lot of expertise.”
Among the largest commitments the company has made to date are the construction of the chemical island at Fray Bentos in Uruguay, and more recently, the acquisition of the water treatment chemicals firm Nheel Química in Rio Claro, Brazil.
Organizationally, Kemira has been realigning its operations to better support and manage its growth across South America. The goal, says Casas, is to shift its disparate regional operations into a more unified Kemira.
Looking to the future, Casas sees building on their local competencies as a crucial factor for success.
A new regional Technology Center is currently in the pipeline as the company strengthens its relationships with the academic community in region.
“This is how Kemira really found its initial success in South America – by solving problems our competitors could not.”
Text: Michael Larkin
Original article has been published in Kemira’s stakeholder magazine Just Add.