EDITOR ' S LETTER
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Editor : Dr Andrew Warmington editor @ specchemonline . com
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editor @ specchemonline . com JAN / FEB 2022
The spoils of war
While it hardly bears comparison with the thousands of deaths and injuries we have seen in Ukraine and the millions of refugees being sent fleeing in all directions , the damage done to that country ’ s industrial base and the chemicals industry that underpins it has been considerable . The effects will be felt long into the future , even in the extremely unlikely event that the war is over by the time you read this . According to independent advisory body UkraineInvest , Ukraine ’ s chemical industry output was $ 2.8 billion in 2019 and it accounted for 9 % of the country ’ s industrial exports . By April , some 20 % of the companies manufacturing there had suffered direct war damage and hardly any of them had been able to relocate a significant part of their production . Even those not directly impacted because they are in the relatively safe areas of western and central Ukraine have had their business devastated by disrupted supply chains , raw material scarcity , the loss of workers to the front or to exile , disruption at customer sites and everything else that war invariably brings in its train . And no more than anywhere else can Ukraine escape the consequences of soaring energy costs . Thanks largely to decisions made in the days of the USSR , Ukraine is strongest in basic chemicals , fertilisers and plastics . However , it is also a major player in the screening compounds used in pharmaceutical R & D . Together with Russia itself , it accounts for 80 % of world demand . Although some producers have kept producing in Kyiv , there is no certainty how long this can continue and finding alternative sources a short notice is no small matter . The war will be no less damaging for Russia in the longer term . Multiple chemical and materials companies have already announced plans to suspend business with and in Russia . They include DuPont , Clariant , Solvay , Chemours , Kuraray , Johnson Matthey , Kao Corporation , Novozymes , Thomas Swan , Recipharm and Covestro . On 15 March , Ukrainian president Volodymyr Zelenskyy publicly called on others to withdraw , naming BASF , Bayer and pharmaceutical company Sanofi among others , as “ large corporations that still sponsor Russia ’ s military machine and have not left the Russian market , although they should have done so immediately ”. BASF has 12 sites in Russia , where it employs about 700 people , and owns a majority of oil and gas firm Wintershall Dea , which is active there . The company has not done any new business in Russia and Belarus since 3 March , other than for products supporting food production . Similarly , Dow said that it has suspended all purchases of feedstocks and energy from Russia , halted all investment and “ significantly reduced ” its operations there . Again , even supposing the fighting ended tomorrow , it will take decades and regime change by one means or another for investment in manufacturing to return to Russia on a large scale , because investment requires long-term trust and an expectation of stability and the rule of law . Russia has forfeited that for the foreseeable future . The West thought that by binding Russia in to the global economy , mainly by buying gas , would also dissuade it from any attempts to rebuild a lost empire . It seemed sensible enough at the time , but it turns out that we were wrong and we are also paying the price - albeit only in our pockets for now . And there are other nations out there run by nationalist authoritarians with access to nuclear weapons and no great concern for the well-being of their people who could also wreak havoc on the world and its fragile economy if they choose to . These are difficult times but also a reminder that trade , economic integration and fairer globalisation are still the best ways forward .
Dr Andrew Warmington
EDITOR – SPECIALITY CHEMICALS MAGAZINE
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