Cancarb’s owner expanding N.A. presence

By Collin Gallant on July 13, 2018.

The parent company of Cancarb, which operates a carbon black production facility in Brier Park (pictured), is expanding its North American presence with an acquiring Texas-based Sid Richardson.--NEWS FILE PHOTO

cgallant@medicinehatnews.com @CollinGallant

Tokai Carbon is set to greatly expand its North American presence four years after it entered the market with the purchase of Cancarb in Medicine Hat.

The Toyko-based industrial materials company announced it has an agreement to acquire Texas-based Sid Richardson this fall for US$310 million.

The transaction, announced in late June, would increase its production capability of rubber component carbon black in North America to 500,000 tons annually, including the 45,000 tons from Cancarb.

In September, when the deal is expected to close, it would nearly double its global production and make it the fourth largest producer in the world.

Cancarb president Ken Tate told the News on Thursday the transaction leads to “exciting” times in the industry and for the company.

“We’re pleased to see Tokai Carbon expand their footprint into the United States with the purchase of the largest producer of furnace carbon black in the U.S.,” said Tate. “At this time, we do not anticipate any changes in our local operations here in Medicine Hat.”

Carbon black is a strengthening agent mainly used in tires, gaskets, plastics and electrical insulation.

A company release states the acquisition “represents a strategic investment that is part of Tokai Carbon’s growth strategy under the mid-term management plan.

“It is especially important for us to establish a global production and sales system by advancing into the carbon black business in non-Asian regions.”

Tokai, an 80-year-old Japanese production company, also has production in Thailand and China, and bought Cancarb in 2014 for C$190 million to gain a foothold on the continent.

Sid Richardson was founded in 1947, and with three major plants in Texas and Louisiana, is the largest producer in the United States of the rubber component made from natural gas.

They have 350 employees and US$318 million in sales in 2017.

It was a potential buyer in 2001 of the Medicine Hat facility, then owned by Trans-Canada Pipelines, though the deal was scuttled when natural gas prices rose dramatically.

A corporate presentation outlines that the company hopes to capitalize on high demand in the North American market. The difficulty in commissioning new production plants makes the purchase of existing company preferable, it states.

They expect demand to outstrip supply for the next five years, and expect to benefit from existing agreements with major tire manufacturers, and Richardson’s research facilities in Fort Worth, Texas.

Following the sale’s approval by U.S. regulators, Tokai’s global production would be a combined 937,000 tons.

Among the world’s largest suppliers are U.S. based Cabot (2.1 million tons), Birla Carbon Group of India (2 million tons), and European firm Orion Engineered Carbons (1.3 million tons).