Elder Martini, CEO,

Elekeiroz

"We are trying to focus on alternative products that are not dependent on imports. This strategy has brought positive results and helped Elekeiroz improve and reinforce its market share."

Can you give details of Elekeiroz’ evolution and where product demand is coming from?

The first half of 2020 was challenging, but we took advantage of shutdowns to make some plant maintenance and prepare for new demand. As a result of these improvements and increased demand, Elekeiroz achieved positive results in H2 2020 and H1 2021. The Board recently approved our five-year strategic plan (5YP) and ESG goals, aligned with Elekeiroz’ ongoing projects and initiatives.

Every month we undertake discussions on the company's direction since the demand varies according to the segment we serve. Despite the lack of raw material and some supply hurdles, the markets we serve have all been robust recently and we were able to secure our customers demand. As of September 2021, our total sales are in line with our forecast, with some additional volumes in OXO alcohols and fewer volumes in others segments balancing our average sales. The segments that are running well are agro, food, homecare and packaging, while others such as shoes and white goods struggled in 2020, but are recovering in 2021 and will grow in the near future.

To what extent could Brazil’s new gas laws improve the current scarcity of cheap raw materials?

Brazil’s new gas market is a reality now following the recent changes, with the first contracts announced that will be delivered in 2022/2023. However, for the market to truly consolidate and reap its reward, it will take approximately two to three years before we see significant benefits. In the meantime, we will continue to pay more for raw materials than our competitors in the US and Europe.

The imbalance between supply and demand for raw materials, in addition to logistical issues globally, is an issue for Latin American producers that has no short-term solution. To navigate this challenge, we are trying to focus on alternative products that are not dependent on imports. This strategy has brought positive results and helped Elekeiroz improve and reinforce its market share. It was also noted by our customers in Brazil that were able to count on our products locally, avoiding the international logistics issue and the petrochemical shortage worldwide.

How has Elekeiroz optimized its supply chain to counter logistics bottlenecks in Brazil?

Although global logistics issues have become pronounced in 2021, Elekeiroz has initiated several projects since 2015 to address logistical bottlenecks in Brazil by optimizing our supply chain in collaboration with our transport partners. For example, our Cabotage project, where we deliver goods from São Paulo to Ceara State (in northeastern Brazil), has focused on optimization and waste reduction strategies, combining the use of trucks and ships to reduce the time and costs.

Can you describe Elekeiroz’ commitment to a green, sustainable economy?

Elekeiroz launched an ESG program in 2021 with a roadmap to improve performance and achieve our sustainability goals by 2026. An example of a project under this program is the removal of phthalates from plasticizers with the aim of 80% of the plasticizers in our portfolio to be free from phthalates. Last month we concluded our consolidation with Nexoleum allowing us to explore the market of bio plasticizers more.

In 2015, we also invested in a project to recover carbon dioxide emissions at the Syngas plant at Camaçari Complex in Bahia. This allowed us to reduce our carbon dioxide emissions by 90%. Energy is another area of focus, and Elekeiroz is well positioned to produce and use renewable energy across its sites. We generate 100% of the steam needed for our production from Elekeiroz’ three sites, as well as producing 70% of our electricity from our São Paulo site.

These and others actions in our pipeline are driving us to become a more sustainable company, creating value for shareholders and a better environment for our employees and our community.

What are the company’s main goals and expected milestones to achieve by the end of 2022?

Elekeiroz’ focus for the next two years will be the execution of our ESG program, which goes hand in hand with our strategic 5YP. We have a special focus on the social pillar of sustainability, including diversity and inclusion, safety, employee engagement, responsible supply and local community engagement. Governance is another key focus area, where changes include the publishing of GRI reports, enhancement of transparency, working on anti-corruption programs and increasing compliance in alignment with our business ethics.