Major Chemical Makers Halt Investments in Russia

Many companies across a wide spectrum of industries have announced plans to halt operations Russia in recent days as the Russian Federation’s invasion of Ukraine continues to draw international outrage. While governments around the world implement economic sanctions to counter the Putin regime’s aggression and public outrage over the conflict continues to build, several prominent US and European chemical firms have revealed plans to step away from the Russian market.

BASF

Germany-based chemicals giant BASF told business magazine WirtschaftsWoche that it will not engage in new business in Russia and Belarus because of the ongoing invasion of Ukraine, according to a March 3 Reuters report. The company said it will make an exception on humanitarian grounds for new business related to food production activities. As for its current business in the countries, BASF said it will only participate in activities that “fulfils our existing obligations in accordance with acceptable laws, regulations, and international rules.”  

LyondellBasell

LyondellBasell interim chief executive officer Ken Lane pledged that his company will not “enter into any new business transactions or relationships with Russian state-owned entities” in a statement published March 3 in response to Russia’s aggression toward Ukraine. The executive also said the firm will comply with sanctions against the country and is currently examining options to withdraw from its current business relationships with Russian state-owned businesses “to the extent legally possible.”

Clariant

Swiss specialty chemicals player Clariant issued a statement on March 4 that the company will halt its business in Russia because of the country’s “intolerable acts of violence” in Ukraine. “Continuing to do business under these circumstances is incompatible with our purpose and values. Therefore, we have decided to suspend all business with Russia with immediate effect,” chief executive officer, Conrad Keijzer, stated in a company release. Clariant’s activities in Russia make up about 2% of its annual sales.  

Solvay

Dr. Ilham Kadri, the chief executive officer of Belgium-based materials and chemicals company Solvay, said in a release Monday that the company is "deeply saddened by the loss of life and suffering in Ukraine," and pledged to continue providing salaries, benefits, and other support to employees in both Ukraine and Russia during the crisis. Solvay plans to pause its operations in Russia and placed a moritorium on new investments in the country.  The company also said dividend payments from its 50:50 joint venture in Russia, Rusvinyl, will be suspended.

What's Next?

It is likely that other chemical makers with a presence in Russia will follow suit in the coming days and weeks – either on ideological grounds or due to practical challenges posed by sanctions. Regardless, skyrocketing oil prices and shipping costs are likely to cause pain for many American and European chemical makers as the geopolitical tensions continue.