Could you introduce the OCQ Group and the role it plays in the Latam chemical space?

My two brothers and I started the Oswaldo Cruz Química company in 1984, which later, in 1999, became a Group, with the entry of the second company, Chembro, today representing 21 companies. We started making mixtures of PVA (polyvinyl alcohol) before moving to our production of PVA, acrylics, and other resins. With the market liberalization in the 1990s, OCQ started to import various chemical products into the Brazilian market, which propelled our growth. We began to be a distributor in 2005, creating the company Brisco, focusing on styrene and styrene derivatives; Brisco has another branch in Houston, from where we distribute to Central America. Passing the years, we took positions in different companies across Brazil. For example, we acquired a 50% stake in Ekonova, a highly specialized chemical auxiliaries’ manufacturer for the textile and pulp and paper industry based in Santa Catarina, southern Brazil. Similarly, in the northeast of Brazil, we acquired a 30% interest in Avco, also operative in the textile sector, but given the country’s territorial size and complexity, it is essential to have manufacturing bases at different locations to reduce transportation costs. Our portfolio includes many other companies, namely McLaw, BR Resinas, Noren Plast, A&S Technologies, Expressu, Fort Banco, Focus Quimica, Alianza, Formular, Aggrium, Versatto, Pupbras, Vetta Química, Quimflex, and, last but not least, Elekeiroz, which we acquired this year.

Could you comment on the acquisition of Elekeiroz, which is a leader in oxo-alcohols, plasticizers, phthalic, maleic anhydrides, and sulfuric acid in Brazil?

OCQ Group acquired 100% of Elekeiroz, and my brother, Domingos Fortunato, and I assumed the leadership this September after a five -month transition period. Elekeiroz is an essential addition to our network because it has a strong presence in the oxo-alcohols line, with products that serve as raw materials for specialized plasticizers produced by our affiliate companies. Particularly in the paints and coatings segment, we see a significant gap in the supply of specialized products, which are typically imported in Brazil. There are clear synergies between Elekeiroz’ large-scale plants for commodity raw materials, which would not allow them to produce small volumes of performance chemicals, and OCQ’s group of companies.

What are the main challenges of manufacturing in Brazil?

Brazil’s size has always created logistics challenges. Also, establishing a company in one state in Brazil can be more advantageous than another. Changes consistently test us in taxation, the tax regime changing every 10 to 12 years. This volatility will likely continue in the coming decades as new leaders develop new ideas. The “Brazilian cost,” as we call it, is challenging for us locals brought up here, let alone for foreigners. Businesses need a big tax team and incur high costs to navigate these regulations.

On the other hand, opportunities abound. Brazil is an agriculture powerhouse, and our industry is shifting towards green chemistries as fossil fuels are phased out. To me, Brazil is a “green Saudi Arabia,” and our focus as a group will be to tap into bio-based raw materials the country offers.

How is OCQ’s offer to the market evolving in terms of sustainability?

Sustainability is our top priority. We have some actions inside the group that I am very proud of, for example, the recycling of more than 120 million PET bottles in the manufacturing of alkyds and polyester resins; our reverse logistics, using recycled and reused packaging; and our work in increasing our green product line, having rosin resin-based products and we are heavily focused on oleochemicals products too. We strongly believe in non-fossil chemistry and are adamant about moving in that direction. Nothing happens in isolation, but by working with suppliers and customers. OCQ is assessing potential expansions outside of Latam. Can you tell us more about this?

We want to replicate the success we had in Brazil in other countries. With this in mind, we started a broad study to delve into other regions' dynamics, regulations, and culture. We aim to internationalize through exports and establish a footprint in different geographies. We currently have operations in Argentina, Chile, Peru, and Mexico, but these markets are similar to Brazil. The big challenge will be to make that expansion in a place like China, India, the US, or Europe. Our internationalization strategy starts from this preliminary study, which will inform our next decision