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 2017, 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, for example. Depending on the application, the better solution can be fossil or renewable raw materials. Renewable raw materials are not sustainable per se, 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 2017, around 5% 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.

We also further established our biomass balance approach on the market in 2017. 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 model 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 50 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.

Synvina C.V., Netherlands, a joint venture of BASF and Avantium based in Amsterdam, has been producing and marketing furandicarboxylic acid (FDCA) from renewable resources since being established in 2016. FDCA is the most important chemical component of polyethylenefuranoate (PEF), a new plastic that is marketed by Synvina. In 2017, Synvina intensified its cooperation with partners along the entire value chain with the aim of making PEF commercially available in the medium term. One major step was the preliminary approval granted in 2017 to recycle PEF bottles in the European market and thus to integrate PEF into the circular economy. 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, extending the shelf life of packaged products. In addition, its higher degree of mechanical strength allows for thinner – and therefore lighter – packaging. Another product based on renewable feedstock that we offer our customers on a commercial scale is 1,4-butanediol (BDO), which is made from sugars. We use BDO to produce bio-based polytetraydrofuran 1000 (PolyTHF^® 1000), which primarily serves as a chemical component in thermoplastic polyurethane (TPU), an ingredient used to manufacture ski boots 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 aim to ensure that these raw materials come from sustainable, certified sources, and actively support the Roundtable on Sustainable Palm Oil (RSPO). In 2017, we published our first progress report – the BASF Palm Progress Report – for greater transparency in the value chain. Based on the voluntary commitment to sustainably source palm oil products that we expanded in 2015, we were able to purchase large volumes of certified palm kernel oil in 2017 despite a difficult business environment. In addition, our 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.

We further expanded the support offered to our customers to help them meet their voluntary commitments: BASF stepped up its commitment to certified sustainable oil palm products in the German, Austrian and Swiss markets by joining the Forum for Sustainable Palm Oil in 2017 as a manufacturer of oleo derivatives. Demand for certified products again increased significantly.

In order to involve smallholder farmers and improve their living conditions, BASF and Henkel have cooperated with the development organization Solidaridad since 2016 to provide training for around 5,500 farmers in Indonesia. To date, more than 1,700 smallholders have completed a training program as part of the Farmer Field School initiative.

BASF also advanced the RSPO supply chain certification of its sites for cosmetic ingredients. In 2017, 20 production sites worldwide were RSPO certified. Our goal is to only source RSPO certified palm oil and palm kernel oil by 2020, provided it is available on the market. By 2025, this voluntary commitment will be expanded to include the most important intermediate products based on palm oil and palm kernel oil; these include fractions and primary oleochemical derivatives as well as edible oil esters.

BASF is working together with Cargill, Proctor & Gamble and the German governmental agency for international cooperation (Gesellschaft für Internationale Zusammenarbeit, or GIZ) to help set up 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). It is expected to improve income and living standards for around 3,300 smallholders.

The joint initiative established by BASF together with Arkema, Jayant Agro and the non-governmental organization Solidaridad to promote sustainability in the castor oil supply chain continued in 2017. With the Sustainable Castor Initiative – Pragati, the project members aim to improve the economic situation of castor oil farmers and their employees in India by helping them to optimize their yield and reduce the impact on the environment. The first smallholders were trained and audited in 2017 based on a newly developed sustainability code. This enables the Indian smallholders to offer certified sustainable castor oil on the global market in the future. The project is scheduled to run for three years until 2019.

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 working on the implementation of the E.U. Conflict Minerals Regulation published in May 2017. This lays down supply chain due diligence obligations that must be met by importers and processors of certain mineral raw materials such as tin, tantalum, tungsten, their ores and gold originating from conflict regions and high-risk areas.

BASF is committed to fostering a responsible and sustainable global supply of cobalt. As such, in 2017 BASF became a founding member of the Responsible Cobalt Initiative and the World Economic Forum’s Global Battery Alliance. These initiatives were created by companies in collaboration with international organizations such as the OECD and UNICEF to address fundamental challenges in the supply chain of battery materials.

BASF mainly uses the mineral raw material mica and mica-based effect pigments in the production of coatings. Our demand is largely met with mica from our own mine in Hartwell, Georgia. We require our mica suppliers to comply with internationally recognized standards, including the prohibition of child labor. As a member of the Responsible Mica Initiative (RMI), BASF is actively working to eradicate child labor and unacceptable working conditions in the mica supply chain in India.