Finnish chemical group Kemira Oyj has reportedly entered into a joint venture agreement with Shandong Tiancheng Wanfeng Chemical Technology, a Chinese alkyl ketene dimer (AKD) wax producer. With this partnership, Kemira has formed a joint venture called Kemira TC Wanfeng Chemicals Yanzhou (NewCo) in China.

Citing reliable sources, NewCo is aimed at reinforcing Kemira’s position as a prominent supplier for the global Pulp and Paper industry. The joint venture would primarily be producing AKD wax and fatty acid chloride (FACL), its key raw material. Technically, AKD was is utilized as a sizing chemical needed in paper and board manufacturing for creating liquid absorption resistance.

Kemira is well-known as the market leader in sizing chemicals worldwide. NewCo would be providing AKD wax of high-quality and will become the largest AKD wax production unit globally, enhancing Kemira’s wax capacity considerably, the sources mentioned. Apparently, the site of NewCo would be at the same chemical park in Yanzhou where Kemira’s first AKD wax plant is situated.

Sources added that the NewCo plant would also be offering growth opportunities for other relevant chemical products. Besides AKD wax, NewCo will also produce polyaluminum chloride (PAC), a coagulant used in water treatment process. After the required investments and the facility’s ramp-up phase are completed, NewCo would commence chemical production in the second half of 2019.

Kim Poulsen, President of Pulp and Paper, Kemira, stated that the joint venture a strategically a good fit for the company as it strengthens its position in the market with a quality asset, securing a supply of key AKD wax raw material. This deal would help the company to grow at a faster rate in APAC, Poulsen believes.

Speaking on the joint venture, sources confirmed that Kemira holds an 80% stake whereas TC Wanfeng holds the remaining 20%. Kemira’s 80% stake is valued at nearly EUR 55 million, and it also has an option to buy TC Wanfeng’s 20% stake over the coming years, subject to predefined conditions.