BASF and Hydro sign sales/production deals

(April 25, 2002) Norsk Hydro and German industrial concern BASF signed an agreement Wednesday for the latter's purchase of the feed additive Formi. The two companies simultaneously penned a deal for Hydro to produce Formi for BASF over a 15-year period.

The agreements are expected to generate some NOK 1 billion for Hydro during the contract period.

Formi is made by Hydro Formates, part of Hydro Pronova, a wholly owned product and business development subsidiary of Hydro. It is the result of a successful, innovative research program in Porsgrunn, Norway.

Formi got EU approval last year as the first non-antibiotic growth promoter for use in pig feed. It is an alternative to the antibiotic growth promoters, which are being phased out or completely banned in a number of countries. The four antibiotic types permitted by the EU today are expected to be gone by 2006.

"This is very good news for Hydro," said Kjell Ramberg, board chairman of Hydro Formates.

BASF has been a natural partner for Hydro throughout the process. Not only is it the world’s largest producer of formic acid, a key component of Formi, but one of the largest global players in animal nutrition. BASF has vast expertise selling feed additives and currently offers an extensive range of products.

Hydro Formates will continue to produce Formi at its Porsgrunn plant. It is anticipated that sales of Formi will be substantial, and plans are already being made to triple production capacity at the plant. BASF plans to meet a further increase in demand through separate production in Ludwigshafen, Germany.

"We will hire more staff in Porsgrunn and manufacture for BASF for 15 years. Next year we plan to invest NOK 120 million in connection with production at the plant in Porsgrunn," explains Egil Greve, director of Hydro Formates.