KaMin to buy Imerys’ UPHK business

By Kasia Patel
Published: Monday, 21 December 2015

Deal anticipated to close before 2016 as part of recent transaction with BASF.

KaMin LLC is to buy Imerys’ US-based global ultrafine paper hydrous kaolin (UPHK) business to bolster its expertise in kaolin and boost its product offering.

In a statement, KaMin said that "the parties have agreed not to disclose any financial details of the transaction".

The UPHK business is part of Imerys’ recent acquisition of BASF’s paper hydrous kaolin business (PHK).

Under the terms of the agreement, Imerys will retain all of the non-UPHK business from the BASF transaction.

KaMin said that Imerys had reviewed all the available strategic options for the UPHK operations and concluded that the deal offered the "best option for a smooth and efficient transition of the existing UPHK customers".

Imerys said that KaMin could provide a "sustainable long-term source supply of ultrafine kaolin for these customers".

KaMin is a global kaolin specialist with production facilities in the US and in Brazil.

A KaMin spokesperson told IM that the UPHK is primarily supplied to customers in Europe and Asia. 

"This acquisition fits perfectly with our core competencies in ultrafine kaolin and KaMin is well positioned to supply quality product and superior support to the UPHK customer base", said KaMin president, Harlan Archer.

Imerys’ kaolin activities, which generated €480m ($522m*) in revenue in 2014, are based in the US, in Brazil and in the UK.

Over the next few months KaMin will be aiming to close the acquisition, which is expected to be finalised by 31 December.

BASF acquisition

In November, Germany-headquartered chemicals company BASF has completed the divestment of its global PHK business to Imerys.

Under the terms of the agreement, BASF will continue to produce and supply PHK products to Imerys for a period of time determined by the French company to ensure a smooth transition for customers, BASF told IM.

A spokesperson for Imerys told IM that the acquisition is an opportunistic move rather than a strategic one.

"Through this operation, we intend to improve our service offering to the paper industry via an optimisation of our production," the spokesperson said, "It does not mean that we are focusing on paper. By doing it, we are improving our profitability by better loading our production capacity."

"We have taken action to make our business fit for the future," BASF’s vice president of global business management for kaolin, Dr Shane Porzio, said.

"Several key markets for kaolin are experiencing declining demand, including graphical paper, ceramic proppants and refractories," a spokesperson for BASF told IM in October. "The market for graphical paper continues to decline as e-media becomes ever more popular. Kaolin, whether used as a filler or as a coating pigment in graphical paper, accompanies this decline."

The company stressed that the sale does not signal a complete move away from the paper business, saying: "BASF continues to be a leading global supplier to the paper industry and offers a wide range of products for paper manufacturing and coating."

BASF’s PHK business is expected to generate revenue of $60m for Imerys on a full-year basis.

According to UK-based industry consultant Ian Wilson, BASF’s divestment to Imerys is indicative of continued industry consolidation in addition to the limited growth displayed by the paper industry. He is also more conclusive about what the decision means for BASF’s involvement in paper chemicals.

"They are keeping their calcined clay division, but Imerys is very much in the driving seat here," Wilson told IM. "For BASF though, this does signify a total move away from paper and this is a very significant development."

Declines in kaolin

The use of kaolin in paper has been declining over the last few years as electronic devices become more popular in developing counties.

As a result of the declining end markets for kaolin, a number of companies have decided to move away from production of the mineral and refocus attention on more profitable areas. 

Non-paper applications tend to expand at close to GDP levels and these are the areas that are likely to show key growth in the future, in addition to hydrous and calcined kaolin for industrial applications as well as kaolin for process catalysts, according to BASF.

*Conversion made December 2015