$40M boost for Cancarb

By Collin Gallant on December 13, 2018.

cgallant@medicinehatnews.com @CollinGallant

Cancarb will spend $40 million over the next 18 months to add another production unit and expand the warehousing system at its Medicine Hat production facility, the company announced on Wednesday afternoon.

President Ken Tate says a sixth carbon black unit will increase production of the rubber component by 20 per cent to 54,000 tonnes, as well as boost the amount of electrical power produced by a heat-recovery system.

“(Parent company) Tokai Carbon has made a significant investment to our customers, our employees and our community,” Tate told workers, the media and dignitaries during an afternoon event at the firm’s main warehouse.

“Our (current) sales capacity is spoken for, and the outlook for our feed stock (natural gas) is low and stable … we’re sold out and need this expansion.”

Tokai president and CEO Hajime Nagasaka, whose company purchased Cancarb in 2014, told workers that “Cancarb has been a great addition to our company, and we’re very pleased with the results.”

Last year the Tokyo-based company launched a growth and investment strategy that has already seen it double global production, largely from this fall’s acquisition of Sid Richardson refineries in the southern United States for US$310 million.

It moved Tokai into position as the world’s fourth largest manufacturer of carbon black, which is used in tire and gasket production. The new U.S. Division, known and Tokai Carbon U.S., comes with production capacity roughly 10 times that of Cancarb, plus existing sales contracts with U.S. tire makers.

That also left some questions about whether further expansion in North America might be postponed, but Nagasaka said local results and market demand are encouraging.

“This year we’ve entered the U.S. market, and that’s involved big money, but it’s been the dream for a long time has been to the improve the company and we’re very happy,” said Nagaska. “Cancarb is not so big a company, but this is a large investment.”

The acquisition of the Richardson properties comes with a large research campus in Fort Worth, Texas,, but Tate stressed that operations in Medicine Hat is a strong part of the Tokai’s North American strategy.

“We’ve been working hard on new markets, on R&D projects and as we stand now we’re sold out,” said Tate, stating earlier that 20 development projects have been completed locally over four years since Tokai purchased the facility from TransCanada Pipelines.

“We see lots of benefits and we can work together (with Tokai Carbon U.S.),” he said. “The addition of a sister company in the U.S. Is nothing but good news for us.”

Mayor Ted Clugston said the investment shows confidence and will support the local economy.

“It’s a big increase of production and it’s great news,” said Clugston, “This checks a lot of boxes. And a big piece is the ongoing operations. (Exports involve) money from outside of Medicine Hat, coming in.”

Chamber of Commerce president Sarah Mackenzie told reporters the new investment and expansion is welcome news.

“We’re delighted,” she said. “We’ve had lots of positive news lately and it’s all been pro-business. What’s good for business is good for the community.”

The local expansion has been considered for about a year, said Tate.

This summer Cancarb acquired the former warehouse of Lambert Trucking when that firm moved to Highway No. 3 location, partly to arrange land as a buffer around its facility, said Tate. That facility will be retrofitted then joined by a conveyor causeway to amass sacks of carbon black for shipment. It will continue to be trucked to Calgary in containers for further shipment on rail, said Ross Buchholz, a Cancarb vice-president.

Refitting that warehouse on Brier Park Crescent will add 27,000 square feet of storage. The workforce of 78 is expected to expand by nine full-time positions once all work is complete.

Construction work will begin in April with an estimated completion date in the summer of 2020. It would be the fourth expansion of the plant that opened in 1973 to transform natural gas into carbon black, a component in rubber tires, gaskets and other material. Previous work took place in 1985, 1996, and in 2000 when the power generator was installed, and which earns the company offsetting carbon credits.

City officials on hand Wednesday said an agreement was in place to take added co-generated power onto the city’s grid. That would be added to a current agreement to flow 27.5 megawatts into the city’s system.

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