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CSM signs agreement for gluconates plant sale

By Jess Halliday , 15-Jul-2008

CSM has announced plans to sell its Purac gluconates production plant in The Netherlands to Avebe, as part of a broader restructuring of manufacturing and focus on core competencies.

The Purac subsidiary of Dutch bakery supplier CSM unveiled a restructuring programme last September with a view to improving its results. The plan was said to affect some 160 jobs and involve an expected asset write-down of between €40m and €55m. The gluconates plant in Ter Apelkanaal was put up for sale at that time. Last week CSM signed a 'heads of agreement' with Avebe, but value of the transaction has not been disclosed. CSM spokesperson Mirko Creyghton told FoodNavigator.com that the final price will depend on details of the contract, which are still being worked out. The agreement does, however, safeguard the jobs of all 68 employees of the Ter Apelkanaal plant, who will transfer to Avebe. The transaction is expected to close at the end of September. Creyghton confirmed that the sale is not expected to have a great affect on gluconate customers, as CSM/Purac will still carry out marketing and sales of the products. He explained that CSM does not want to be involved in the production facility and ongoing investment in it, as gluconates are not seen as part of its core competencies. Gluconates are described as carriers for minerals, acidifiers, and chelating agents. Produced by fermentation, they are used not only in food and beverages, but also in dietary supplements, pharmaceuticals, cosmetics and personal care products, cleaners, film and paper. Under its Gluconal brand, Purac's offering includes calcium gluconate, magnesium gluconate. ferrous gluconate, zinc gluconate, potassium gluconate, copper gluconate, and manganese gluconate. In the context of Purac's portfolio, these have been seen as "an add-on, or service product". The core competencies, meanwhile, are lactic acids and lactates.


Overall restructuring plan When the manufacturing restructuring plan was announced last year, CSM said it was also integrating the new Purac production plant in Thailand into overall production capacity. Creyghton said that the focus of the manufacturing plant in Thailand is on lactic acid, and he is not aware of activities there in gluconates at this time. The restructuring also sounded the death knell for lactic acid production in The Netherlands and Spain, and lactitol production in Gorinchem, The Netherlands, was to be closed down. Price increases Also last week Purac announced across-the-board price increases for all its products by €0.20 to €0.30 per kg, depending on composition and how affected they have been by raw material, energy and feedstock price increases. The new sales prices come into effect immediately, or as soon as possible in the case of pre-negotiated contracts. "This increase is deemed necessary in order to offset the high volatility and increase in the costs of many key components in the manufacturing of lactic acid, lactic acid derivatives and gluconates. In recent months, these raw materials have experienced up to triple digit cost percentage increases," said the company.


It added that it is working with its raw material suppliers to ensure it can maintain supply of raw materials in tight supply situations.


In the case of gluconates, however, there is not likely to be much impact on raw material availability. Gluconates are derived from glucose, and Purac says on its website: "What makes gluconates so special is that the availability of these raw materials is unlimited thanks to their endlessly renewable sources."

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