Expanding horizons Polwax

EXPANDING HORIZONS

Poland’s Polwax is already the country’s largest producer of paraffin and paraffin derivatives. Now it has set its sights on the European market for paraffin and waxes for industry. Peter Mercer reports.

Polwax is Poland’s leading producer of paraffin, candles, waxes and speciality paraffin compositions and one of the largest companies in the industry in Europe. It was established in its current form in 2012 when Krokus Private Equity acquired a majority holding In Lotos Parafiny from Poland’s Lotos Group and, together with the management, set up the new company under the Polwax name. Headquartered in Jaslo, in southeastern Poland, and with a second production plant at Czechowice-Dziedzice, Polwax today produces a wide range of standard and low-oil paraffins, waxes and ceresin, candles and grave lights as well as specially developed paraffin products for the paper, food, rubber and packaging industries and for agriculture.

Polwax’s standard paraffin (with an oil content of up to 1.1 per cent) is a basic raw material for candles and an essential feedstock for the paint, textiles and paper industries. Its low oil paraffin (with an oil content not exceeding 0.5 per cent) is used to produce high-quality candles and for the manufacture of impregnating and protective products used in the chemical industry and in other industries. Like standard paraffin is it also widely used in the paint, paper and textile industries.

The company’s waxes and ceresin products are used by many industries, including the dairy industry, for cheese coatings, the poultry industry, for de-feathering and the food industry, for paper packaging that comes into contact with food products.

Industrial applications of Polwax paraffins include wood preservation and kindling production and a new highly specialised product, WOSKOP, has been designed specifically for the rubber industry where it is used in the manufacture of tyres to help to resist the degradation effects of ozone etc. The company’s Agrowax is used in the agricultural industry as an anti-caking agent to prevent lumping of fertiliser granules and its Ceresine and green wax protects seedlings against moisture loss.

Modernising production

Polwax’s two production facilities specialise in different product areas. The Jaslo plant is equipped with a complete line for the production of standard paraffin, including the processes of deoiling, refining and deodorising; it also produces high-volume products such as paraffins for grave lights and for emulsions. The Czechowice-Dziedzice plant is focused on production of a wide range of low and midvolume products, including industrial waxes. These, in particular, are finding more and more customers not only in Poland but also in many other European countries. The CzechowiceDziedzice plant also incorporates a facility specifically for the production of anti-caking agents. A key advantage of this plant in driving Polwax’s exports is its strategically convenient location near the A1 (north-south) and A4 (west-east) motorways and the E65 rail line.

Investment in the latest production technology is a current priority for Polwax. Its largest recent investment was made in 2013 when a new Sulzer paraffin deoiling plant came into operation at its Jaslo facility. This replaced production from two old crystallization units. The new crystallizer produces paraffins with significantly better performance. The construction of the new plant took only six months.

“The Sulzer deoiling plant has been one of our biggest investments since privatization two years ago. This installation uses the latest technology and provides a huge advance on what we had before”, says Jacek Stelmach, Polwax Vice President. “It enables us to significantly increase the speed and the efficiency of the production process and, at the same time, reduce the discharge of industrial waste. It came into full operation only a few months ago but it is already working at its full scheduled capacity.

“We are also undertaking major investments at our Czechowice-Dziedzice plant. A new line for blending low-volume industrial waxes is at an advanced stage of construction and will be completed when a pastillizer from Sweden’s Sandvik is installed. This new line will enable Polwax to significantly expand the sales of its advanced products for industrial applications.” Strategic plans

Currently some 60 per cent of Polwax’s total production is of paraffin for candles and gravelights, mainly for the Polish market. “However our strategic plan is to change the balance of our production by developing more and more specialised paraffin and wax products for the industrial market,” explains Commercial Director Jacek Budzowski. “We are focusing in particular on products for the wood industry, on the rubber industry – that protect tyres against the aging effect of ozone – and on the agricultural industry, with waxes used in the production of fertiliser. A crucial benefit to us from this diversification of our product range is that it makes us much less exposed to seasonal fluctuations in demand.”

Increasing the share of production going to export markets is also a crucial element in Polwax’s growth strategy. “Our number one export market is Germany, which currently accounts for about half of our total nondomestic sales, and Hungary and the Netherlands are also important markets for us,” says Mr Budzowski. “Expanding our product range,

particularly for industrial applications, is the key to developing our export trade. We are welladvanced in the development of specialised products for industrial customers and our aim is to be recognised as a major supplier to the industrial market at the European level.”

Among the most interesting of these new industrial products is WOSKOP, a wax that is used in tyre production to create a physical barrier between the tyre surface and the atmosphere to prevent drying and cracking. “This is a very promising new development for us but we are not yet in a position to fully exploit it since the demand from the tyre industry is much higher than we can currently meet,” says Director of Development Izabela Robak.

“We have also begun production of new Hot Melt waxes which work to control the viscosity of adhesives in many industrial applications, including paper, wood and packaging. Our new investment at Czechowice-Dziedzice now allows us to produce a range of multi-component specialised mixtures that play a critical role in lamination and adhesive processes. Our new ALPACKWAX Hot-Melt product, for example, meets all the requirements for use in laminated packaging for food products. We see very interesting market possibilities in these lowvolume special wax blends.”

“Polwax has also developed a wide range of products for agricultural applications,” adds Ms Robak. “Our special green wax is proving very popular for spraying on seedlings to protect them against loss of moisture. We currently produce around 100 tonnes of this product per month and it is widely used in Italy, for example, for protecting grapes, and in Poland itself, often for protecting roses.”

Realising the dream

All of these developments are part of Polwax’s drive since its privatisation to establish itself as a modern, innovative manufacturer of industrial paraffin products in what remains a highly competitive market. “We are always thinking about our future, looking for new ideas that will secure our place in the European paraffin market,” says Polwax President Dominik Tomczyk. “At the corporate level we are also considering our future options. It is likely that our financial partner, Krokus Private Equity, will look for an exit in a few years’ time and that present us with some alternative scenarios. We might decide to float the company on the Warsaw Stock Exchange or we might look for another financial partner. But, whatever the outcome, the priority remains the same: to continue to grow the company, perhaps by more investment in new facilities and perhaps through strategic acquisitions – I can say that we are already aware of several interesting possibilities in Europe.

“All of these things require time and patience but our management team is united in their determination to establish Polwax as a leader in industry-specific paraffin products. That has been our ambition – our dream, if you like - since we were privatised and that is what we will achieve.” n