Development and innovation in non-fertilizer business
Since 2018, investment projects, research and pro-environmental upgrades of the Grupa Azoty Group’s plants have been financed from a EUR 145m loan provided by the European Investment Bank.
Since 2018, investment projects, research and pro-environmental upgrades of the Grupa Azoty Group’s plants have been financed from a EUR 145m loan provided by the European Investment Bank. The loan agreement supports the Group in funding innovation, energy efficiency improvements and development of environmentally-friendly processes. The projects financed with the loan will include the upgrade of the nitric acid plant in Puławy and the plastics compounding plant in Tarnów. The Group has also secured EIB funding for its R&D projects in 2018–2021.
It is the second loan from the EIB obtained by the Group over a period of a few years – two large-scale investment projects co-financed by the EIB under a 2015 credit facility agreement commenced in Tarnów in 2017: polyamide plant II and fertilizer granulation unit II. The Group is pursuing three other projects co-financed by the bank under the same agreement, including the construction of a fertilizer mechanical granulation unit in Puławy.
BEST PRACTICE
In 2018, Grupa Azoty signed a cooperation agreement with an accelerator as part of the programme ‘Poland Prize by AdVentures – Looking for Business Opportunities in Southern and Central and Eastern Europe’. Poland Prize is an initiative of the Ministry of Entrepreneurship and Technology and the Polish Agency for Enterprise Development (PARP) seeking to attract foreign startups to Poland. Teams of AdVentures experts and Grupa Azoty Group specialists will visit Belarus, Ukraine, Romania, Bulgaria, Hungary, the Czech Republic, Slovakia and other countries. In each country, the teams will meet with startup communities, accelerators, VC funds and scientists. Twenty outstanding startups will be invited to Poland.
Under the cooperation agreement, our experts will assist AdVentures in selecting the most interesting startups, will aid the startups during the acceleration process in Poland, and will support them in planning the implementation and in effectively implementing their innovations within the Grupa Azoty Group.
For more than 20 years, we have been extending the product chain of polyamide 6 (PA6), a structural plastic with a wide range of applications. The Grupa Azoty Group is consistently reinforcing its position, and following the launch of our new PA6 plant we have become the third largest polyamide producer in the EU. Our new product mix guarantees strong diversification of sales to different market segments:
- Engineering applications: automotive sector, household appliances, construction sector, etc.,
- Film applications: packaging materials for the food industry, pharmaceuticals,
- Textile applications: BCF carpet fibres, monofilaments, technical fibres.
However, the 21st century poses new challenges to the chemical industry. At the Grupa Azoty Group, we acknowledge our responsibility for developing innovations and investing resources in the most promising substances. That is why we have embarked on the largest investment project in the contemporary Polish chemical sector: a new propylene and polypropylene plant in Police.
POLYPROPYLENE FROM POLICE – A STRATEGIC INVESTMENT FOR THE POLISH ECONOMY
‘Polimery Police’ is the Polish chemical sector’s largest investment project in this century. It will be a complex comprising propylene and polypropylene units, a port with raw material storage facilities, auxiliary facilities and logistics infrastructure. It is seen as a strategic venture not just for Grupa Azoty Police, but for the Polish economy as a whole. Poland is one of the largest consumers of polypropylene in the region and its imports are constantly growing. Polypropylene is a basic plastic for immediate use in the manufacture of end products in a number of industries.
The project will enable production of 440,000 tonnes of polypropylene annually, considerably reducing Poland’s raw material dependence in this area. The estimated capital expenditure is EUR 1.27bn.
The decision to give green light to ‘Polimery Police’ was made in reliance on positive opinions from reputable business, technical and market advisors. Polypropylene production is of strategic importance from the perspective of the Grupa Azoty Group. The project will make it possible to:
- Grow and diversify revenue across the Group,
- Broaden the Group’s product portfolio and flatten the business cycles,
- extend the product chain in line with the Grupa Azoty Group’s strategy,
- Generate strong margins on a promising market of products for a broad range of applications,
- Leverage synergies between the ‘Polimery Police’ project and other Group plants.
The complex will include a propane dehydrogenation unit (PDH) and a polypropylene unit (PP), infrastructure comprising port facilities to unload and store propane and ethylene carried by ships, as well as auxiliary facilities, inter-unit connections and logistics infrastructure for polypropylene.
The construction works are scheduled to begin in late 2019. According to the project schedule, the works and commissioning are to be completed by the end of 2022.
The project is being implemented by PDH Polska, a special purpose vehicle of Grupa Azoty. The licence selection process, a key element of the pre-construction phase, was completed in 2018, with GRACE, a US-based company, selected after long negotiations as the licence provider.
The project is being implemented by PDH Polska, a special purpose vehicle of Grupa Azoty. For more information about ‘Polimery Police’, visit the PDH website.
In the chemical industry, innovation and looking for ways to meet customer expectations are inextricably linked to scientific efforts. We believe that the competitive edge of the Grupa Azoty Group can be successfully built on knowledge, and therefore we are expanding our research facilities with a new Research and Development Centre at Grupa Azoty Kędzierzyn, a project valued at approximately PLN 13m. The Centre is expected to focus on developing new solutions involving OXO alcohols, work on polymer modifiers to obtain innovative plasticizers, and perform related application testing. Plans also include development of plastics mixtures with those additives and tests of their properties.
Interview with Grzegorz Kądzielawski, Vice President of the Grupa Azoty Group
There are many companies in Poland that are only seemingly engaged in R&D activities, pretending to be active in that area. And what about Grupa Azoty?
Vice President Grzegorz Kądzielawski: The R&D&I area (Research + Development + Innovation) is one of our strategic pillars. We are aware that growth through innovation is essential to the development of the chemical industry. Also, we operate on increasingly demanding markets, especially in the fertilizer segment. To keep pace with global trends, we need to work hard to diversify our product portfolio, in particular to meet the requirements of precision agriculture. This, in turn, encourages even more activity on our part in R&D&I and looking for new products and technologies that offer development potential to the Group.
Can we say then that the intensification of R&D efforts is a response to the challenges faced by the market? If so, which areas are of particular interest to you? For instance, can you imagine having a role in the development of electromobility?
At Grupa Azoty we are well aware that “if you don't move forward, you move backward.” Therefore, we look for ways not only to strengthen our existing product portfolio, but also to gain a foothold in areas in which we have not been present to date, such as electromobility. We could position ourselves as a future supplier of specialty chemicals for cell manufacturers, such as cathode and anode materials, catalysts, or membranes. We expect to have 3-4 technologies developed in this field within two years. We are also working on 3D-printing technology as well as the application of hydrogen in the transport sector. Of course, there is also the entire system of precision agriculture, which we are developing in cooperation with a few start-up companies.
How much are you spending on R&D today, and how much do you plan to allocate to that area within, let’s say, 5 to 10 years?
In accordance with the Group’s updated strategy until 2020, we intend to allocate 1% of our revenues to research and development activities. We understand the need to increase R&D&I spending and to grow the scale of proprietary projects, hence, for example, the construction of the Research and Development Centre in Tarnów. Last year, we also signed an agreement with the National Contact Point for Horizon 2020, which I hope will help us obtain funds from the EU Framework Programme Horizon 2020 for interesting research and development projects.
What precisely is the Grupa Azoty Group going to achieve through the new Chemical Technology and Development Centre?
The Group’s ambition is to not only benefit from national development and education efforts, but to actively participate in, or even lead such initiatives. Our new Research and Development Centre will mainly focus on state-of-the-art materials, modern fertilizer products and technologies, as well as pro-environmental solutions. The main outcomes of the efforts to develop the R&D infrastructure in Tarnów will be expansion of the Group’s own research activities and a new environment to verify research results on a pilot-plant scale. A part of the activities that are now outsourced can be carried out in-house. We will be more self-sufficient. The Centre will include a pilot-plant hall to test solutions on a bench - or pilot-plant scale before we think about going full scale. Our humic acid pilot plant is a good example. More than 70% of Polish soils are deprived of the humus layer. We have taken up the challenge to address this issue. Until now, we have imported humus from abroad. Today we are about to launch a pilot plant for its production. We have high hopes – it is going to be one of the first plants to be launched within the R&D centre. And there are more in the pipeline. Other expected benefits of the project will include establishing and expanding cooperation with start-ups, research institutions and non-governmental organisations.
Do your R&D activities fit into any broader institutional context? Like, for example, cooperation with state institutions.
Both the R&D centre in Tarnów and other activities undertaken by the Group in the area of innovation are perfectly aligned with the national programme for sustainable development and the Strategy for Responsible Development prepared by Prime Minister Mateusz Morawiecki. Obviously, we would not be able to carry out such far-reaching projects without the support of state institutions and a number of legislative measures taken, for instance, by the Ministry of Science and Higher Education, which provide for stepping up activities aimed at the commercialisation of research and partnerships between science and business.
Let’s talk about Idea4Azoty. In what way is it different from other acceleration programmes?
What makes it unique is that it is the only programme of this type on the market that goes beyond financial support. We offer a mix of support options for potential beneficiaries. These might include legal assistance, mentoring, commercialisation support, or the possibility of testing a product or solution using our facilities or laboratories before we even talk about industrial implementation. In other words, the Idea4Azoty programme comprehensively bridges the gap that exists on the Polish market between ideas and industry.
How popular is the programme?
It attracts a lot of interest. We have already completed the first evaluation of applications and we are receiving new ones because, as you might remember, applications are accepted on an ongoing basis. Once a month, our team reviews the projects and decides which should be proceeded with at the Grupa Azoty Group.
Can Idea4Azoty serve as a driving force in the development of new areas of activity for the Group?
It can and I hope it will. I also count on good projects for new chemical technologies emerging as part of the programme, because chemistry is the core industry of our Group. Personally, I feel we could do more as regards good new chemical projects.
With financial support from the National Centre for Research and Development, in the coming years our experts from the Kędzierzyn-based facilities will be able to engage in creating technologies for the production of specialty esters. The project involves development work on a pilot line, where a new technology will be applied on a pilot-plant scale to obtain batches of product prototypes. Following that, industrial-scale production will be launched. One advantage of the new plasticizers is their good performance characteristics, such as improved durability. Moreover, the planned production will have a reduced environmental footprint.
We are also interested in cooperation with promising start-ups. Grupa Azoty is running a modern accelerator programme Idea4Azoty, which provides a platform for sharing highly innovative ideas and combines crowdsourcing, networking and the start-up community. The project brings together the potentials of academic and research institutions and business. Idea4Azoty is the first initiative of this type on the Polish market. Its beneficiaries will include not only the chemical industry, but also providers of new technologies and services in such areas as environmental protection, agriculture, engineering, power generation, materials science, and biotechnology. Applications may be sent via the website www.idea4azoty.pl.
About the programme
In the first half of 2018, we signed a letter of intent with one of the programme’s originators ScienceBioTech of Wrocław to develop and implement a technology for the production of modular osteotomy plates. The new solution is expected to replace the currently used techniques for stabilising fractured bones, and for the Group it creates an opportunity for expanding into new areas.
Other projects submitted under the programme offered ideas for the Grupa Azoty Group’s principal business in such areas as advanced materials,modern fertilizer products, and environmental technologies and solutions.
The launch of the accelerator programme helped to step up the consolidation of our Group’s research and development activities. Representatives of our key companies exchange information on planned research and joint ventures on an ongoing basis.
Types of beneficiaries
BEST PRACTICE
3D printing is one of the fastest-growing new technology industries. This is largely due to the availability of more and more durable but less expensive materials. With 3D printers, plastics can be used to make components not only for toys, but also for articles with much more serious applications. 3D-printed components are now used in the automotive, aerospace and clothing industries, and many more. In 2017, Grupa Azoty commenced work to expand its product range with polyamide 6-based materials for 3D printing.
