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Socio-economic megatrends are driving the development of our DL-methionine business: The world population, which already numbers seven billion people, is increasing by over 80 million a year. That will mean that demand for animal protein continues to rise steadily in the future. This growth momentum is reinforced by the fact that disposable income in the emerging markets is expected to grow by 8 percent p.a. up to 2015. In the wake of rising prosperity and increasing urbanization, the growing middle class is adapting its eating habits to western patterns. Consumption of meat is increasing sharply, especially in Asian cities, leading to more intensive livestock farming in this region. In western industrialized countries, there is a clear trend towards eating more low-fat poultry. In addition, environmentally compatible agricultural production that makes more efficient use of resources is becoming more important worldwide for ecological reasons.
In the light of this, our DL-methionine business has developed very dynamically in recent years and is a key growth driver within our specialty chemicals portfolio. We are the global market leader in DL-methionine and have around 60 years experience in production and distribution of this product.
DL-methionine is an amino acid for environment-friendly nutrition, especially of poultry and pigs. As building blocks of all proteins in the body, amino acids are indispensable to maintain vital metabolic functions. Methionine belongs to the group of essential amino acids. Animals cannot produce this amino acid themselves so they have to ingest it daily with their feed. Poultry needs particularly large amounts of methionine for physiological reasons. Feed components such as cereals and soybean meal do not normally contain enough natural methionine to meet the needs of livestock. DL-methionine from Evonik covers this need and thus ensures a balanced diet. It improves the digestion of feed by pigs and poultry and thus enhances growth. At the same time, livestock farming is more cost-effective.
Our complete portfolio of amino acids is a significant competitive advantage for our DL-methionine business. We are the only supplier in the world that markets all four major amino acids required for animal nutrition: DL-methionine (MetAMINO®), L-lysine (Biolys®), L-threonine (ThreAMINO®) and L-tryptophan (TrypAMINO®). This is attributable to our leading technological position, resulting from extensive research projects that focused on both chemical and biotechnological processes.
Evonik's strategy for the production of DL-methionine is one of complete backward integration. The aim is to supply all key starting precursors to our facilities from captive sources, enabling us to maximize the reliability of supply to our customers. In addition, Evonik produces DL-methionine cost-efficiently in world-scale plants, two of which are in Antwerp (Belgium), while the others are in Mobile (Alabama, USA), Wesseling near Cologne (Germany), and Singapore. The technologically demanding production process and backwardly integrated world-scale production add up to high entry barriers for this business.
Sound applications know-how is indispensable for economically viable and environment-friendly use of DL-methionine. Customers in more than 100 countries receive extensive advice, which takes full account of specific local aspects of livestock farming. This is made possible by our global distribution network, with regional centers in Hanau, Atlanta, São Paulo, Beijing and Singapore. We therefore do business directly with a high proportion of end-customers, giving us a deep insight into the market.
Our wide range of services along the value-added chain in livestock farming include preparing customized feed formulations. The starting point for this is careful analysis of the amino acids in the feed components used by the customer. With our technologies we can analyze all raw materials used in animal feeds to establish their natural amino acid content. Over the decades, we have used these data to build the world's most extensive amino acids database. We give our customers access to this information, along with fully automated dosing systems to accurately regulate additions of amino acids. The F@ces portal (Feed Additives Commercial Elec-tronic SolutionsTM) offers a range of other functions. On the market, Evonik uses this to differ-entiate itself as the supplier with the broadest spectrum of animal feed-related advisory ser-vices, which ensures intensive customer relationships. Moreover, our services contribute to high quality standards and thus greater safety in the food chain.
Life cycle studies by independent institutes provide impressive evidence of the sustainability of industrially produced essential amino acids. For instance, using DL-methionine in livestock farming avoids excess amounts of nutrients, reduces the nitrogen content of excrement and thus cuts the nitrate load of soil. There are also significant savings in water consumption in the livestock industry. Another advantage is reduced pressure on valuable natural protein resources. For example, 1 kilogram of DL-methionine can replace about 50 kilograms of fishmeal. Supplementing feeds with DL-methionine also helps reduce global farmland re-quirements, firstly by reducing overall demand for raw materials for animal feed and secondly because domestic cereal can be used as a source of nutrition in livestock farming, in place of imported soymeal. That reduces energy-intensive imports and takes the pressure off agricultural land in soya-producing countries such as the USA, Brazil and Argentina. As a sort of extended carbon footprint, life cycle analyses show that for every metric ton of CO2 emitted in the pro-duction of DL-methionine, 23 metric tons of CO2 can be saved in a climate-friendly way over the entire product life cycle.
To safeguard our leading position in this market, we are proactively expanding capacity to meet rising global demand. Our new DL-methionine complex on Jurong Island (Singapore), came on stream in fall 2014. We use it principally to serve the Asia-Pacific region, the most dynamic market for DL-methionine, so we can utilize opportunities for further profitable growth. Investment in this complex exceeded €500 million, making it Evonik's biggest single investment to date. The new production facilities in Singapore have an annual capacity of 150,000 metric tons, bringing our methionine capacity worldwide up to 580,000 metric tons. Evonik now has highly efficient state-of-the-art production facilities for DL-methionine in all major economic regions worldwide.
As part of its strategic development, in recent years Evonik has successfully launched innovative products for new DL-methionine applications. These include, for example, products for aquaculture, where the addition of DL-methionine saves valuable fishmeal, raises the efficiency of feeding fish and crustaceans and reduces environmental impact by cutting nitrogen emissions. More balanced nutrition also improves the health of the fish.
We are convinced that—driven by the global megatrends health and nutrition—the market for DL-methionine will continue to develop very dynamically in the future, especially in Asia. We will therefore be systematically continuing our strategy geared to sustainable innovation-driven growth in this attractive business.
C-IR, May 2015