The decision was prompted by intense and increasing competition in the market for the amino acid, L-threonine.
"The very solid annual demand growth for L-threonine was outpaced by a series of world-scale capacity investments," explained Dr Emmanuel Auer, head of Evonik’s animal nutrition business line.
In November 2013, Evonik increased production capacity for ThreAMINO at the Kaba plant, bringing its output of that amino acid to 30,000 metric tons annually. Despite the considerable and continual optimizations, though, Evonik said it is no longer possible for it to maintain economic production in Kaba over the long term.
"Structural disadvantages in fermentative amino acid fermentation in Europe could no longer be compensated by advanced process technology in biotechnology," Auer told us.
The German chemical company said it had thoroughly evaluated possible alternatives to the shutdown, but went with the closure in the end. It is to collaborate with the Hungarian authorities in terms of determining the best possible future use for the Kaba production site.
It said the supply of its L-threonine product to its global customer base "remains assured".
The fate of the 120 employees of Agroferm Zrt., the Hungarian subsidiary of Evonik, is not clear at this stage.
"Various value creating options for Kaba site and its employees have been evaluated and are still under [review], hence we cannot disclose anything at this point in time," said Auer.
He said Evonik is cooperating with the works council of Evonik Agroferm Zrt., the local trade union, and Hungarian authorities to manage potential redundancies in a "socially responsible way".
Chinese deal
In January, Evonik announced a deal with China’s Fufeng Group to toll manufacture ThreAMINO.
The move would allow it to develop the market for that amino acid brand worldwide with a lean asset footprint, said Evonik at the time.
Auer denied that deal had any influence on Evonik's decision to close the Kaba facility.
He said amino acids remain among the core businesses of the German group.
In late 2016, Evonik announced the acquisition of the entire technology portfolio for the fermentative production of methionine, as well as patent and essential bacteria strains from the French group, Metex.
It paid out €45m for that technology; it said the acquisition would expand its leadership in both chemical and fermentation production of amino acids for “animal nutrition and beyond.”
Evonik’s amino acid portfolio was recently expanded to include a valine product called ValAMINO. That product represents the fifth essential amino acid in its portfolio for use in pig and poultry feeds, and will help to reduce the use of crude protein in the diets of those animals, without any loss in terms of growth performance, said the German group.