- The Act Plan includes EUR 53.7 million investment to phase out mercury technology by 2020.
- Chlorine production capacity will be reduced by 56%, shifting entirely to membrane technology.
- The plan aims to achieve a yearly EBITDA of EUR 48 million.
- Investments will be financed 78% by cash flow and 22% by debt.
Investment Plan Overview
Ercros has announced its Act Plan, which involves an investment of EUR 53.7 million to phase out mercury technology in chlorine production. This plan addresses the closure of mercury-operated chlorine plants and the cessation of chlorine consumption by its main customer starting January 2018.
Production Capacity Adjustments
Instead of converting its entire 213,000 t/year mercury-based chlorine production capacity, which would cost around EUR 180 million, Ercros will increase the capacity of its existing membrane technology plants by 45,000 t/year. This will bring the total membrane production capacity to 130,000 t/year, meeting the expected demand for 2018 and complying with European regulations.
Financial Impact
The total investment of EUR 53.7 million is significantly lower than the cost of converting all mercury capacity to membrane technology. This approach not only offsets a potential EUR 22 million drop in EBITDA but also aims to achieve an annual EBITDA of EUR 48 million, an improvement of EUR 5 million.
Implementation and Financing
The Act Plan will be implemented from 2016 to 2020, featuring high-yield investments with an average return time frame of 2 years. These investments will be modular, quick to implement, and will incur minimal additional fixed costs. Ercros plans to finance 78% of these investments through cash flow and 22% through debt.
Future Outlook
Upon completion of the Act Plan, Ercros will have a 56% reduction in chlorine production capacity, all using membrane technology. This transition will also result in significant electricity savings. The company will focus on increasing production capacity for high-demand products and those derived from chlorine, ensuring a balanced and profitable portfolio.
