15 – Property, plant and equipment

Machinery and technical equipment contain oil and gas deposits, including related wells, production facilities and further infrastructure, which are depreciated according to the unit of production method.

Additions to property, plant and equipment arising from investment projects amounted to €4,222 million in 2016. Material investments were primarily related to the construction of an integrated aroma ingredients complex in Kuantan, Malaysia, the TDI complex in Ludwigshafen, Germany, and the expansion of the dicamba plant in Beaumont, Texas, which were partially started up in 2016. Further material asset additions included the construction of an ammonia plant in Freeport, Texas, and oil and gas production facilities and wells in Europe and South America.

In addition, investments for expansion purposes were particularly made at the sites in Ludwigshafen, Germany; Geismar, Louisiana; Port Arthur, Texas; and Antwerp, Belgium.

Government grants of €1 million were deducted from asset additions.

Due to acquisitions, property, plant and equipment rose by €155 million primarily from the acquisition of the global surface treatment provider Chemetall from Albemarle Corp., Charlotte, North Carolina.

In 2016, impairments of €254 million were included in accumulated depreciation. These pertained largely to impairments of €133 million on machinery and technical equipment as well as buildings due to the new strategic direction of individual businesses in the Chemicals and Functional Materials & Solutions segments. The recoverable amount of these assets equals their value in use amounting to €72 million. The weighted average cost of capital rate before taxes applied ranged between 9.4% and 12.8%.

In 2016, additions to accumulated depreciation contained write-ups of €2 million.

Disposals of property, plant and equipment were largely attributable to the sale of assets of the global polyolefin catalysts business to W. R. Grace & Co., Columbia, Maryland; the sale of the worldwide photoinitiator business to IGM Resins B.V., Waalwijk, the Netherlands; the sale of the 25% share in the Byrding field to Statoil; and the sale of industrial coatings business to the AkzoNobel Group.

Currency effects arose particularly from the appreciation of the U.S. dollar as well as the Brazilian real relative to the euro.

Additions to property, plant and equipment arising from investment projects amounted to €5,651 million in 2015. Significant investments were primarily related to the construction of a TDI complex in Ludwigshafen, Germany; a production complex for acrylic acid and superabsorbents in Camaçari, Brazil; and an MDI plant in Chongqing, China. Each of these started up either fully or partly in 2015. Further significant investments included the construction of an integrated aroma ingredients complex in Kuantan, Malaysia, and oil and gas production facilities and wells in Europe and South America. Investments for expansion purposes were particularly made at the sites in Ludwigshafen, Germany; Freeport, Texas; Geismar, Louisiana; and Antwerp, Belgium. Government grants of €10 million related to tangible assets were deducted. Due to acquisitions, property, plant and equipment rose by €91 million primarily from the acquisition of BASF TODA Battery Materials LLC, Tokyo, Japan.

In 2015, impairments of €485 million were included in accumulated depreciation. Of this amount, €336 million pertained to impairments on oil and gas fields in Norway, Libya and Germany in the Oil & Gas segment. These impairments arose particularly from the ongoing low oil and gas price levels and the resulting revision of planning assumptions. These fields were written down to their recoverable amount, totaling €1,338 million. The weighted average cost of capital rate before taxes used ranged between 9.13% and 88.83%. The high cost of capital rates were due to the special income tax for the oil and gas industry in Norway. The recoverable amount for impaired property, plant and equipment equals their value in use. In 2015, additions to accumulated depreciation contained write-ups of €5 million.

Disposals of property, plant and equipment were primarily attributable to the asset swap with Gazprom and related primarily to the transferred natural gas trading and storage business. Furthermore, BASF’s share in Wintershall Noordzee B.V., Rijswijk, Netherlands, was reduced to 50%. With this loss of control, the company was reclassified as an investment accounted for using the equity method. 50% of the property, plant and equipment was reported in disposals and the remaining 50% in transfers.

Currency effects arose particularly from the appreciation of the U.S. dollar relative to the euro.