The European market of raw materials has suffered significant shocks, but raw materials from Russia are still available even directly or in semi-finished or finished products from countries such as Turkey or Serbia and thus create unfair competition for producers who comply with the restrictions, says Alexandru Stânean, CEO, TeraPlast, in an exclusive interview for Energynomics.
How does the war in Ukraine affect investments and turnover, but also the raw materials used by Romanian companies?
We are bearing the brunt of this black swan event, and its impact will be felt for many years to come if we do not protect ourselves as an economy. Our group had no exposure to either Ukraine or Russia. We have a diversified supply, we source raw materials from all over the world and we are not captive to a country or region.
However, the commodity market has experienced significant shocks. There are many overlapping events. Europe has the most expensive raw materials due to the energy shock suffered. Raw materials from Russia have not disappeared from the market. They are still available even directly or in semi-finished or finished products from countries like Turkey or Serbia and more. These materials create an unfair competition for manufacturers who comply with the legislation and restrictions imposed.
Then, when it comes to investments via EU funds, declaratively “we will have” and “we will do”, but although we have the PNRR at our disposal and calls for renewable energy projects have even been launched, they are not evaluated nor approved. The current situation must be a moment of awakening, to face reality and notice the shortcomings we have. We have had energy strategies, drawn up several years apart from each other, but nothing concrete has been done. One of the causes was the lack of financial resources. Now we can benefit from a much better context from this perspective. The Modernization Fund, the entire National Recovery and Resilience Plan have transition and energy efficiency as their central pillar. Significant sums can be attracted to develop clean energy capabilities. It just takes determination.
What must Romania do?
The short answer would be that it must be active. Financing through the PNRR has conditions related to reforms and investments. All the assumed timetable for the release of financing tranches must be met and then we must have quick procedures to send the money into the economy in the most efficient way. We must not neglect the multiannual allocations from European funds. Attracting these financings may require somewhat more complex, perhaps bushy, bureaucratic procedures, but good, well-made projects must be identified, which by their quality can compress many less efficient stages within the absorption. We must be prepared and know clearly what we want because there is a need for funding – we have enough room for development. Digitization, recycling and renewables have huge growth potential because the base is still quite low. We need to interconnect the projects, know how to make the most of the available resources and stick to the implementation timetables.
What are the most important pillars of the company’s new investment strategy?
We want to be leaders in all the market segments in which we operate. We are continuously investing in the expansion of production capacities, as we have done in PVC pipes for outdoor sewers and in polyethylene pipes for water and natural gas. In the installation segment, the potential is huge in Romania. We have underdeveloped areas from the perspective of access to utilities. Even where there are networks there is still work to do as some are physically worn and require replacement. We are ready to respond promptly to the demand that will appear in the market.
At the same time, we are exploring new segments such as fiber optic microducts – TeraDuct – and NeoTer underfloor heating. We applied the same diversification strategy when we decided to expand into flexible packaging. In addition to classic polyethylene films, we have sustainable products in our portfolio – OK Compost certified biodegradable packaging by TUV Austria.
We have had an ambitious investment program over the past two years and have become the largest polymer processor in Central and Eastern Europe. However, our development also has a consistent sustainability component. TeraPlast Recycling, our recycling unit, is the largest European producer of micronized recycled PVC. Another direction was the provision of renewable energy resources. Two years ago we completed a first stage, which consisted in the installation of 7,000 photovoltaic modules on the halls of the Sărătel Industrial Park. This year we started the procedures for the expansion and quite soon we will start the implementation of the project, which will materialize in the expansion with another photovoltaic plant. We are constantly developing, and the difficult context we are going through does not change our investment plans and we aim at local and regional expansion, the deployment of imports and the promotion of quality Romanian products on international markets, in a sustainable approach.
What are the measures that a company could take to save energy?
Increasing energy efficiency was a concern of ours even before we all faced the current crisis as an economy and society. Investments in domestic photovoltaic plants aimed at reducing external demand and partial replacement with a clean resource. We monitor annually, as part of the management analysis, energy consumption in relation to productivity, hours worked and other criteria, and we set objectives for increasing efficiency. Investments in maintenance, which amount to approximately 1 million euro annually, help us ensure the optimal operation of the machines, to upgrade where needed, so that we do not have waste. The new investments involved automated equipment, which includes the latest technologies available in the industry, and they have low energy consumption.
But beyond the big strategy, we are mindful of energy consumption and through small gestures and joint effort. We can contribute as a team to this efficiency through responsible behavior, with fine-tuning adjustments that, however, have a multiplied impact at the level of the entire activity.
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This interview first appeared in the printed edition of Energynomics Magazine, issued in December 2022.
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