The Swiss company is due to construct a new nicotinate plant in Nansha, adjacent to its existing site in the region. This is expected to add an additional 15,000 metric tonnes to its manufacturing capacity.
Nicotinates, which include both nicotinic acid and nicotinamide, are vitamin B3 supplements used in the food, animal feed, cosmetics and pharmaceutical industries.
Lonza, which first announced its intention to expand vitamin B3 production in 2008, said China was the location of choice due to growing demand in the country. “We expect to see at least double digit growth in the Chinese market, compared to only 2-3 per cent growth in Europe and the United States,” said Michael Frizberg, head of corporate communications at Lonza. “It’s a natural market development that is occurring with the growth of the Chinese economy.”
Global vitamin B3 plants
The decision to build a new plant was prompted by the imminent closure of Lonza’s existing vitamin B3 site in Guangzhou, China, which currently runs around the clock and produces 5,000 metric tonnes of ingredient per year. However, the Chinese government has requested that the plant be closed down by 2014 as the city has expanded around the site, which is now located in a residential area.
The new manufacturing site is expected to be up and running by 2012, in time to make up the shortfall in production and meet the increased market demand.
Together with production from Lonza’s Vitamin B3 plant in Visp, Switzerland, the firm’s total capacity for the ingredient is expected to be 48,000 metric tonnes by the time the new Nansha site is running and the Guangzhou site has been closed. This represents an increase of over 40 per cent on its current capacity.
Lonza will be investing a total of CHF 50m (€35m) in the construction of the new plant, which will supply vitamin B3 to the food, feed and cosmetics industries.
Cut costs… and prices?
The key focus for the firm, explained Frizberg, is to be able to increase capacity to meet demand while at the same time “being right next door” to the customer in order to save on logistical costs.
Another major consideration is the need to remain competitive in both the Chinese and global markets, which means the firm must be prepared to lower prices if it is squeezed by competition – a move likely to occur several years down the line once competitor Jubilant completes its new plant in India.
“There is a need for better prices, and we need to be ready for that,” said Frizberg.
The firm hopes to cut production costs by using innovations in technology and process development in its new site.
“These innovations will provide cost and efficiency advantages to all the company’s nicotinate facilities,” said Roman Quinter, senior vice president and Head of Lonza’s Nutrition Ingredients business.