Raw materials

Strategy

The Verbund system is an important component of our resource efficiency strategy: The by-products of one plant often serve as feedstock elsewhere, thus helping us to use raw materials more efficiently. In 2016, BASF purchased a total of around 30,000 different raw materials from more than 6,000 suppliers. Some of our most important raw materials are naphtha, natural gas, methanol, ammonia and benzene. In addition to fossil resources, we also employ renewable raw materials. We use these to manufacture products that either cannot be made with fossil resources, or only at significantly greater expense. Renewable raw materials also give us the opportunity to expand our raw material basis. Depending on the application, the better solution can be fossil or renewable raw materials; renewable raw materials are not per se sustainable, but can contribute to sustainability by, for example, reducing greenhouse gas emissions.

Renewable resources

• Joint venture with Avantium
• Numerous projects to improve sustainability along the value chain

In 2016, around 5.4% of the raw materials we purchased worldwide were from renewable resources. To make the use of these materials more competitive, we work on product innovations based on renewable raw materials as well as on enhancing production processes in reaction technology and preparation.

We also further established our “biomass balance” approach on the market in 2016. The goal here is to replace natural gas and naphtha at the beginning of the value chain with biogas and bio-naphtha from certified sustainable production. Should a customer select a biomass-balanced product, the proportion of renewable feedstock to be used is calculated based on the formulation. The calculation is certified by an independent third party (TÜV Süd). Our Verbund production ensures that the properties and quality of all end products remain unchanged and that our customers can use them as usual. This method has already been applied for more than 40 BASF products – for example, for superabsorbents, dispersions, plastics such as polyamides and polyurethanes, and for intermediates available on the market as “drop-in products.” These can be used in place of previously employed products in the production process without having to change the process itself.

Together with Avantium, BASF established the Amsterdam-based Synvina C.V. joint venture in 2016 to produce and market furandicarboxylic acid (FDCA) from renewable resources. FDCA is a key chemical component of polyethylenefuranoate (PEF), which will also be marketed by the joint venture. PEF has a broad application profile and is especially suitable for producing certain food packaging materials, such as films and plastic bottles. Compared with conventional plastics, PEF demonstrates higher barrier properties for gases like carbon dioxide and oxygen, leading to a longer shelf life for packaged products. In addition, its higher degree of mechanical strength allows for thinner – and therefore lighter – packaging. We also offer our customers 1,4-butanediol (BDO) on a commercial scale using sugars as a renewable feedstock, based on a licensing agreement with the company Genomatica Inc., headquartered in San Diego, California. We use BDO to produce bio-based polytetrahydrofuran 1000 (PolyTHF^® 1000), which primarily serves as a chemical component in thermoplastic polyurethane (TPU), an ingredient used to manufacture skis and roller skates, shoe soles, dashboard films in the automotive industry, and other products.

Palm oil, palm kernel oil, and their derivatives are some of our most important renewable raw materials. We want to ensure that the raw materials stem from sustainable, certified sources and actively support the Roundtable on Sustainable Palm Oil (RSPO). Based on the voluntary commitment to sustainably source palm oil products that we expanded in 2015, we increased our purchase of certified palm kernel oil by around 32,000 metric tons to 158,000 metric tons in 2016. In addition, our new BASF Palm Sourcing Policy addresses the requirements for protecting and preserving forests and peatland, along with the involvement of local communities in decision-making processes, and we began its implementation together with our suppliers in 2016.

We have intensified our dialog with partners along the value chain. In order to involve smallholder farmers and improve their living conditions, BASF and Henkel are working together with the development organization Solidaridad to provide training for around 5,500 farmers in Indonesia. BASF also advanced the RSPO certification of its sites for cosmetic ingredients. In 2016, 19 production sites worldwide were already RSPO certified. Our goal is to only source palm oil and palm kernel oil with RSPO certification, provided it is available on the market. This voluntary commitment has been expanded to include the most important intermediate products based on palm oil and palm kernel oil up to 2025; these include fractions and primary oleochemical derivatives as well as edible oil esters.

We successfully completed our joint project with Cargill and the German governmental agency for international cooperation (Gesellschaft für Internationale Zusammenarbeit, or GIZ) on the sustainable production of coconut oil in the Philippines in 2015. Since then, small-holder farmers have been producing the world’s first Rainforest Alliance-certified dried coconut meat (copra), from which the oil is extracted. In a follow-up project, BASF is working together with Cargill, Proctor & Gamble and the GIZ to support the expansion of a certified and transparent supply chain for coconut oil in the Philippines and Indonesia. The project is being financed in part by the “develoPPP.de” program of the German Federal Ministry for Economic Cooperation and Development (BMZ). The project is also expected to result in improved income and living standards for around 3,600 small farmers.

BASF signed a contract in 2016 together with Arkema and Jayant Agro, along with the non-governmental organization Solidaridad, to promote sustainability in the castor oil supply chain. With the Sustainable Castor Initiative – Pragati, the project members want to improve the livelihood of castor oil farmers and their employees in India by helping them optimize their yield and reduce the impact on the environment. Furthermore, a sustainability code is being developed that will enable Indian farmers to offer the first certified sustainable castor oil on the global market. The project is initially scheduled to run for three years.

Mineral raw materials

We procure a number of mineral raw materials, like precious metals, that we use to produce process and mobile emissions catalysts. In suspected cases, we track the origins of minerals – as defined in the Dodd-Frank Act – to see if they come from mines in conflict regions. We reserve the right to conduct an external audit and, if necessary, terminate our business relationship. The suppliers addressed have confirmed to us that they do not source minerals matching this definition of conflict minerals from the Democratic Republic of the Congo or its neighboring countries.

BASF is observing the current development of a European regulation on conflict minerals that creates obligations for importers and processors of mineral raw materials originating from conflict regions.