“I am very keen to attract new contract manufacturing clients. We are currently producing pathogen controls chemicals in animal feed for a client, but our facilities are flexible to accommodate different requirements.”
AstaChem is a leading producer of formaldehyde, adhesive resins, as well as specialty chemicals. Could you walk us through the history and evolution of the company?
AstaChem’s roots date back to 1974 when it was part of American multinational Borden Chemicals, now called Hexion.
AstaChem is a leading producer of formaldehyde and resins (wood, foundry, paper laminate, textile, as well as adhesive and specialty resins). We produce chemical adhesives for the wood industry for making plywood, particle board, MDF, lamination, finger joints, etc. We also export extensively to Africa, Southeast Asia and China.
Could you tell us more about AstaChem’s diversified business model into toll manufacturing and logistics?
In the wood sector, many customers have been struggling with raw materials supply and poor demand as a result of the poor economic climate. When supply of resins exceeds demand, margins are low thus the decision to diversify the business. AstaChem acquired a logistics company to mainly transport its own resins and raw materials and provide bulk storage for companies like PETRONAS and Alliance Steel. Next, we went into toll manufacturing to produce specialty chemicals. We are currently producing pathogen controls chemicals for animal feed for a client. Our facilities are flexible and can accommodate different chemicals. AstaChem is a reliable partner that pays a lot of attention to GMP, QA and EHS, which has always been the backbone of our business. Our dedicated EHS manager takes care of training, monitoring and ensuring best practices.
We have three spray dryers producing Urea formaldehyde powder resins. These UF Powders have a longer shelf life compared to liquids and are easily handled and transported to factories that are in area where accessibility can be a challenge. Currently, we export to 23 countries.
Where do you identify the main growth opportunities for AstaChem?
Currently, with the weak housing market in the US and in Europe, many of our customers are running at 50% capacity, and I personally do not expect significant improvement in the next six months. For this reason, I am very keen to attract new contract manufacturing clients. We are willing to invest in the right infrastructure with long term mutually beneficial agreements. To-date, we have received some enquiries by MNCs and chemicals manufacturers interested to produce in Malaysia. Meanwhile, on our Adhesive business, we will continue to remain a dominant player with a focus on R&D to improve formulations that enable better performance for our customers. Recently, we invested in a new reactor to produce phenolic tackifier resin, which we will commission this year.
AstaChem is the first chemical manufacturer in Malaysia to win a carbon award from the Ministry. How is AstaChem realizing energy efficiency at its operations?
Upon taking over the company in 2012, we upgraded the formaldehyde plant in Kuantan, to reduce both costs and CO2. The new plant was designed to recycle the exothermic heat to production and won the award. Staying conscious of the importance of sustainability, we started developing lower-formaldehyde emission resins formulations, enabling E1, E0, and super E0 certifications by our customers. We were also successful in producing a low-emission UF powder. With the recent pullback in energy subsidies from the Malaysian government, energy costs went up by between 60 to 80%, which had a significant impact on our competitiveness. Currently, I am exploring opportunities in biomass as an alternative energy source.
Do you have a final message?
AstaChem is a people-oriented Company, focused on GMP, QA, EHS and ensuring sustainability in our long-term strategy. Personally, I think people are the heartland of any business. With the right people, the rest falls into place. I am very proud of our evolution from a basic resin chemical, commodity business to become a diversified player with expertise in specialty chemicals, storage, logistics, and contract manufacturing. We will continue to strive to be the market leader in our field. AstaChem is also ISO 9002 and Fami QS certified.
AstaChem has an excellent relationship with our banks, thanks to the credibility built over the years, and will consider the right investment opportunity.