Business Watch: Iran war prompts Sasol plant restart; yet more deals for Lilly

Recent anecdotal evidence suggests that chemical users in the US have serious safety problems. In a horrific accident last week, a tank holding a mixture of sodium hydroxide and sodium sulfide ruptured at a paper mill in Longview, Washington, killing at least eight people. And at an aerospace facility in California a few days earlier, a tank holding methyl methacrylate leaked, forcing the evacuation of some 50,000 residents.

In April, two people died after a chemical leak at a West Virginia plant that recovers silver from spent ethylene oxide catalysts.

In both fatal incidents, the US Chemical Safety Board (CSB), an independent agency, has sent investigators to determine what went wrong. But the Donald J. Trump administration has repeatedly proposed cutting funding for the CSB, maintaining that the board duplicates work done by other government agencies. My experience is that the CSB does the job promptly, thoroughly, and independently. The $15 million or so that it gets from the government each year seems like a small price to pay for such investigations to continue.

Questions? Comments? Tips? Send them to me, C&EN business editor Michael McCoy, at [email protected].

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Business in brief

Sasol restarts European paraffin unit in response to Iran war

The chemical maker Sasol has decided to reopen an n-paraffin production line in Augusta, Italy, in response to the war in Iran. Sasol uses n-paraffins to produce linear alkyl benzene, a precursor to surfactants used in huge quantities by the cleaning product industry. It also supplies the paraffins to other chemical makers. Louis Snyders, Sasol’s vice president for care chemicals, says in a LinkedIn post that the restart makes sense because the firm expects current disruptions to have a lasting impact on chemical supply chains, especially in Europe. Sasol says the production line, which in 2020 (PDF) made about 160,000 metric tons of n-paraffins from kerosene, will be back on line in the second half of this year.

—Craig Bettenhausen

AkzoNobel turns down takeover bid from Sherwin-Williams, Nippon Paint

AkzoNobel has rejected an all-cash acquisition offer from the coating giants Sherwin-Williams and Nippon Paint Group that would supersede its plan, announced last November, to merge with Axalta Coating Systems. The offer values Akzo at about $20 billion, including $5.5 billion in long-term debt. The merger with Axalta is set to create a firm with an enterprise value of $25 billion; current Akzo shareholders would own 55% of it. In contrast, the proposal from Sherwin-Williams and Nippon Paint would split up Akzo: its automotive, marine, and powder coating units would go to Sherwin-Williams and its decorative paint and industrial coating businesses to Nippon Paint. Akzo says its board determined that the new offer is not superior to its pending Axalta deal. Sherwin-Williams and Nippon Paint say they are “considering their next steps, if any.”

—Alex Tullo

Johnson Matthey to buy emission reduction firm Cormetech

Johnson Matthey has agreed to purchase the stationary emission control specialist Cormetech in a deal valued at $360 million. Cormetech manufactures selective catalytic reduction modules that reduce emissions of nitrogen oxides, carbon monoxide, organic compounds, mercury, and carbon dioxide from power plants and industrial sources. Matthey says Cormetech is positioned for the booming data center market and has a $1 billion project pipeline. The business will become part of Matthey’s Clean Air business, a producer of automotive catalytic converters that generated $5.1 billion in sales during the firm’s most recent fiscal year. Matthey has been reconfiguring its portfolio. Pending is the $2.3 billion sale to Honeywell of its catalyst technologies business, which specializes in processes for synthesis gas.

—Alex Tullo

Battery electrolyte firms advance US plans

Anthro Energy and Feon Energy are advancing plans to manufacture battery electrolytes in the US. Anthro is working with the battery firm EnPower to develop US-made lithium-ion batteries using Anthro’s solid-state polymer electrolyte, which the firm says improves energy density and safety. The companies say the high-performance batteries will be used for defense applications, drones, and robots. Meanwhile, Feon says it will work with the chemical maker Orbia to scale up US production of Feon’s advanced electrolytes, which are tailored for specific battery uses. In December, Orbia opened a facility in Wisconsin designed to make small batches of custom electrolytes. The firms involved in the deals say US manufacturing is essential because they plan to sell to the military.

—Matt Blois

IFF food ingredients unit going to investment firm CVC for $4.3 billion

International Flavors & Fragrances (IFF) has agreed to sell its food ingredient division to the private equity firm CVC Capital Partners for $4.3 billion. The division supplies food and beverage makers with emulsifiers, texturants, and plant-based ingredients—some of which came to IFF in its 2021 merger with DuPont’s nutrition and biosciences business. IFF will retain a 10% stake in the division, worth about $200 million. The move is part of IFF’s shift toward high-margin, low-volume specialty ingredients with a heavy emphasis on industrial biotechnology. The company says that after the transaction it will be focused on flavorings for the food and beverage market, scents for the home and personal care and fragrance industries, and biochemistry ingredients for the health and biosciences sectors.

—Craig Bettenhausen

MP Materials accuses USA Rare Earth of stealing technology

In a lawsuit filed in Texas, the rare earth firm MP Materials is accusing USA Rare Earth of stealing rare earth magnet manufacturing technology. MP was founded in 2017 to reopen a rare earth mine in California and has started building capabilities in processing and magnet production. USA Rare Earth was founded in 2019 and has since embarked on an acquisition spree to connect rare earth mining, processing, and magnet manufacturing. Both firms have received substantial financial backing from the US government to shore up the country’s supplies of rare earth elements. In a court filing, MP says USA Rare Earth poached employees with critical technical knowledge about a magnet manufacturing technology called grain boundary diffusion and is now using that information to gain competitive advantage. Grain boundary diffusion ensures that rare earth magnets don’t become demagnetized at high temperatures. Using it allows companies to reduce consumption of heavy rare earths—expensive elements that are processed almost exclusively in China. USA Rare Earth hasn’t yet responded to the lawsuit, which was filed in late May.

—Matt Blois

P2 Science, Phytolon raise funds for green processes

Two chemistry start-ups have raised funds to advance their greener processes. P2 Science has closed a $23 million funding round that it says will accelerate its growth in beauty and personal care ingredients and expand it into new markets, including polymers, home care, and coatings. P2, which was founded by Paul Anastas and Patrick Foley at Yale University’s Center for Green Chemistry and Green Engineering, says it uses flow chemistry and other process intensification methods to make chemicals in an environmentally sound manner. Meanwhile, Phytolon, one of C&EN’s 10 Start-Ups to Watch in 2022, has closed a $23.6 million series B funding round, which will help it commercialize its natural food colors in the US. Phytolon uses fermentation to produce two molecules, the yellow pigment indicaxanthin and the purple pigment betanin. The US Food and Drug Administration approved the firm’s first color, beetroot red, in February.

—Michael McCoy

Solvay to buy rare earth feedstock from Brazil

Solvay says it has a preliminary agreement to buy mixtures of rare earth elements from Viridis Mining and Minerals’ planned mine in Brazil. Solvay’s facility in La Rochelle, France, is one of the only rare earth separation plants that is not in China. Viridis says its ionic adsorption clay mine in Brazil will focus on the heavy rare earths dysprosium and terbium, elements that are now mined mostly in Asia. Viridis hopes to start supplying the feedstock by 2028. Solvay’s agreement follows USA Rare Earth’s bid to acquire Serra Verde, which operates a similar clay mine in Brazil.

—Matt Blois

Quote of the week

Evonik to develop greener mining chemicals with Mexican university

Evonik Industries and the University of Guanajuato will partner to develop greener chemicals for the mining industry. The university’s mining school brings research into greener chemistry for mining applications, including hydrometallurgy and the recovery of metals from ores, tailings, and residues. Evonik will contribute its expertise in biosurfactants. The partners anticipate that the mining industry’s demand for more sustainable chemistry will grow. “As the world’s need for minerals such as copper, silver, gold, iron and rare earth minerals continues to surge, so is the pressure on mines to adopt less toxic and more sustainable materials,” Raymond Pieternella, Evonik’s head of oil field and mining chemicals, says in a press release.

—Alex Scott

Sandoz claims Chinese amoxicillin is being dumped in Europe

The generic-drug giant Sandoz has filed a draft antidumping complaint with the European Commission regarding imports of bulk amoxicillin from China. Sandoz says it sees clear signs of market-distorting behavior by Chinese producers of the antibiotic, including sustained below-cost pricing and use of state subsidies, that constitute a breach of trading rules. Sandoz CEO Richard Saynor says in a press release that “current market conditions do not reflect fair competition—they systematically disadvantage resilient European production—risking the loss of critical manufacturing capacity because it is competing under fundamentally uneven conditions.” Saynor warns that Europe’s antibiotics manufacturing sector is at risk. Sandoz calls its site in Kundl, Austria, Europe’s last large-scale antibiotics plant.

—Alex Scott

CordenPharma to buy US peptide maker

Amid the boom in peptide-based weight-loss drugs, the Swiss drug services firm CordenPharma has agreed to acquire AmbioPharm, a US firm specializing in the manufacture of peptide drug ingredients, for an undisclosed sum. Corden operates 11 facilities across Europe and the US, including 2 plants in Colorado with solid- and liquid-phase peptide synthesis capabilities. AmbioPharm has about 400 employees and brings facilities in South Carolina and Shanghai. CordenPharma says the peptide purification and lyophilization capability at AmbioPharm’s US site will allow it to “deliver a fully US-based peptide” supply chain.

—Aayushi Pratap

Lilly partners with Asian firms Hanmi and Haisco

Eli Lilly and Company has launched collaborations with two firms, Hanmi Pharmaceutical and Haisco Pharmaceutical. The partnership with South Korea’s Hanmi focuses on developing its glucagon-like peptide 2 (GLP-2) analog, sonefpeglutide, as a potential treatment for short bowel syndrome, as it encourages intestinal growth. GLP-2 was approved in 2012 to treat the syndrome, but Hanmi says sonefpeglutide lasts longer. Lilly will pay Hanmi $750 million and milestone payments of up to $1.2 billion for exclusive development, manufacturing, and commercialization rights outside Korea. Lilly also signed a collaboration deal with the Chinese firm Haisco, though the targets and potential therapies were not disclosed. Lilly will pay Haisco $87 million and up to $3 billion in milestone payments. The pacts continue a string of deals for Lilly, including three recent agreements to purchase vaccine developers.

—Sarah Braner

Servier to acquire Edgewise muscular dystrophy program

Servier will buy Edgewise Therapeutics’ muscular dystrophy drug development effort in a deal worth up to $2.65 billion. For Servier, the deal brings Edgewise’s muscular dystrophy drug candidate, sevasemten, a skeletal myosin inhibitor. Servier will pay Edgewise $1.55 billion and up to $1.1 billion in commercial and regulatory milestone payments. Servier, a private French firm governed by a foundation, says the planned purchase advances its ambitions in neurology. Boulder, Colorado–based Edgewise says the funds from the deal will help it advance its pipeline of potential cardiovascular drugs.

—Sarah Braner

Pfizer and China’s Innovent partner for ADCs

Pfizer and China’s Innovent Biologics have launched a collaboration to develop antibody-drug conjugates (ADCs) as potential cancer therapies. The partnership spans 12 programs: 8 originate from early-stage work at Innovent, and 4 are from proposed discovery campaigns at Pfizer. Innovent will shepherd the programs through Phase 1 clinical trials, at which point Pfizer will take over development. Pfizer will pay Innovent $650 million up front and as much as $9.9 billion in development, regulatory, and commercial milestone payments.

—Sarah Braner

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