Interview with Haryono Lim - BASF’s new Verbund project in China
BASF is investigating a $10 billion Verbund project in the southern China province of Guangdong. Haryono Lim, Senior Vice President, Senior Project New Verbund Site China, recently provided insights – and a video – about the background and future of the project.
Why did BASF choose Zhanjiang for this project?
Zhanjiang is located at the heart of southwestern Guangdong, China. Although many people outside of China have never heard of it before, Zhanjiang is truly a vibrant, cosmopolitan city, with more than 8 million residents. Zhanjiang has abundant natural resources, an excellent deep-water port and other transportation links, and an engaged, educated workforce. It is also a city with a long history – it was an early departure point on the Maritime Silk Road.
Importantly, Zhanjiang is the right location for us to serve customers in Guangdong Province. Guangdong is home to key customer industries for BASF, like transportation, consumer goods, and electronics. With more than 110 million residents, and annual GDP growth of 7%, it is one of the fastest-growing markets for innovations from chemistry.
What has happened after the signing of the MoU?
BASF signed the first memorandum of understanding with the Guangdong Provincial Government in Berlin in July 2018 and recently on January 9 we signed the Framework Agreement. The project team is established with experts from various units. And the team is growing. We have completed the pre-feasibility study by end of last year. We will open our project liaison office in Zhanjiang in early 2019. In addition to a steam cracker, the Verbund will include plants serving downstream value chains with innovative products.
The new site will become a core part of our production network worldwide, serving customers in Guangdong but also throughout the region. This new Verbund will be instrumental in catapulting BASF’s growth in Asia Pacific.
Why did BASF decide to go for a wholly-owned site instead of a joint venture?
BASF has been very successful with our existing Verbund site in Nanjing, which is a joint venture. We have been recognized as responsible chemical player in the market. This has given the authorities the trust that with our wholly-owned Verbund site in Zhanjiang, BASF will continue setting benchmarks to the chemical industry, particularly in the areas of environment, health and safety. This has been one of the key considerations for the authorities to encourage BASF to benefit from the recent opening-up of the petrochemical sector in China. It’s an opportunity for BASF to demonstrate our capabilities to raise standards in China, and to bring in innovative products to serve the growing demand for high-end materials.
What opportunities and challenges do you see for the new Verbund site in Zhanjiang?
China is the most important chemical market in the world and is projected to account for 50% of the world’s chemical market share by 2030. BASF’s strategy with the investment in the new Verbund is to grab this opportunity while the country is in full-throttle mode, be close to our customers, expand our market share and leave a long-term footprint. The location of the Verbund is also advantageous – Guangdong Province has good connectivity to the rest of China and Hong Kong, and the existing infrastructure is promising as well.
One of the pillars of our new corporate strategy is ‘People’, playing a crucial role in the performance of our organization. I see this as a challenge as well as an opportunity for the Verbund project. To steer this project towards success, it is of paramount importance that we hire the best minds and develop them with the best technical know-how. We are already in touch with the best universities and schools in the region to encourage young talent to work with us.
What makes this site unique from the other Verbund sites?
This is a wholly-owned Verbund and we have our own canvas to paint our story. Today, with digitalization at the forefront, we have the opportunity to get the right infrastructure from the beginning to implement many smart ideas and truly optimize the entire Verbund from our customers to our operations. This is what makes this project truly unique.
At this site, a smart manufacturing concept will be based on cutting-edge technologies that maximize efficiency and reduce environmental impact. This is in line with Zhanjiang's own commitment to sustainable development, as well as BASF’s global strategy. BASF will take an environment, health and safety approach that is in line with BASF’s global standards, while following local laws and regulations. At the same time, we will take advantage of many digital innovations to realize new opportunities.
The production Verbund is BASF’s traditional core competency: we operate six Verbund sites and 355 additional production sites around the world, and this new site will take advantage of all of this experience and expertise. On a global scale, BASF realizes annual savings of more than €1 billion through its Verbund concept. Hence, the Verbund is not just a major economic asset but generates ecological benefits at the same time.