News from Notch Consulting, Inc.

Cabot today announced an agreement to purchase Norit N.V., the global leader in activated carbon, from affiliates of Doughty Hanson & Co. Managers Limited and Euroland Investments B.V. for $1.1 billion. According to Cabot’s press release, the acquisition strengthens Cabot’s specialty chemicals portfolio with a non-cyclical, high growth and high margin business.

Activated carbons are performance materials used in multiple high-end applications including environmental protection, air and water purification, food and beverages, pharmaceuticals and catalysts. Norit operates 10 manufacturing facilities throughout the Americas and Europe. It employs 760 people and provides the widest and most differentiated range of activated carbon products of any producer. Norit generated sales of $360 million and adjusted EBITDA of $92 million for the trailing twelve months ended December 31, 2011. The business has grown 12 percent annually since 2007. Norit’s current chief executive officer, Ronald Thompson, will continue to lead the business.

J.P. Morgan is Cabot’s financial advisor for the transaction. Wachtell, Lipton, Rosen & Katz is Cabot’s legal advisor for the transaction, with De Brauw Blackstone Westbroek and Slaughter & May serving as Dutch and English counsel, respectively.

Cabot held a conference call to discuss the acquisition this morning. The presentation that accompanied the call is available here.

The Jakarta Post reports that PT Cabot Indonesia plans to invest US$100 million in Indonesia this year to expand production capacity at its carbon black plant in Krakatau Industrial Estate Cilegon, Banten, Indonesia. The project will increase capacity by 140,000 tons to 290,000 tons and is expected to be completed in mid 2014, based on comments from PT Cabot Indonesia director Gerry Howan on Tuesday in Jakarta. At present, Cabot operates two plants in Indonesia — one in Cilegon and another in Sumuranja, Merak, Banten. Cabot is the only carbon black producer in Indonesia.

“Our current installed capacity is only 150,000 tons, while existing demand is 230,000 tons. For this reason, we want to expand,” Mr. Howan told reporters after meeting Industry Minister MS Hidayat at the ministry.

The firm would allocate its entire output for the domestic market, which would see demand rising to 300,000 tons in the next three years due to the fast-growing automotive industry, Mr. Howan added.

In addition to the capacity expansion, the firm aimed to locally source its feedstock. “We are currently using imported decant oil. But by 2013, we will obtain it from KS [state-owned steel producer Krakatau Steel],” he explained.

Last week, this blog reported the news that Nigeria’s House of Representatives had advised the Nigerian National Petroleum Corporation (NNPC) to shut down its refinery in Warri due to emissions from its carbon black unit. Prior to this news, Notch believed that the carbon black unit had been shut down since about 2005. Based on information from an industry source, Notch has heard that the carbon black unit has been producing for about one year, but that production has been quite sporadic due to persistent mechanical problems with the unit.

Nigeria’s House of Representatives Committee on Petroleum, Downstream, has advised the Nigerian National Petroleum Corporation (NNPC) to shut down the Warri Refining and Petrochemical Company, WRPC, due to the persistent emissions of carbon black on the environment. Notch Consulting data put capacity at the carbon black unit at 18,000 tonnes/year, but industry sources had indicated that the carbon black unit was operating only sporadically for at least the last several years. (It is possible, in other words, that the emissions are not originating in the carbon black unit.)

The Chairman, House Committee on Petroleum, Downstream, Hon. Dakuku Peterside, made the call to shut the refinery in a statement after a meeting with stakeholders over the lingering crisis between the refinery and the Ekpan community. The call followed a petition written to the committee, entitled, “A Save Our Soul Appeal” written by Ajomata/Awhakpor Landlords Association of Ekpan, dated May 24. In the petition to the committee were urged to sanction NNPC over the life-threatening carbon black soot being emitted into their environment.

According to the landlords, “This appeal was necessitated by the reckless emissions of dangerous carbon black soot/chemicals into our environment on a daily basis without due care and keeping to international best practices. Our continuous appeals in writing and physical visitation to the management of the said company and their supervising Ministry of Petroleum over the years have been ignored, as they have never replied any of our letters nor stopped the life-threatening nuisance that their emissions have become.”

After a comprehensive meeting with all the relevant stakeholders which included the people of Ajomata/Awhakpor community; NNPC; the Department of Petroleum Resources, DPR; Ministry of the Environment; National Environmental Standards and Regulatory Enforcement Agency, NESREA; the Environmental Rights Action, ERA, and the committee leaders, the lawmakers called for the suspension of operations at the plant.