BASF initiated the process to divest its shares in the two joint venture companies BASF Markor Chemical Manufacturing (Xinjiang) Co., Ltd. and Markor Meiou Chemical (Xinjiang) Co., Ltd. in Korla, China in the fourth quarter of 2023.
As part of its global strategy for 1,4-butanediol (BDO), BASF assessed the market environment and product carbon footprints (PCF) of BDO and its downstream products from various production sites worldwide. The BDO value chains faced increased competitive pressure and featured global overcapacities. Additionally, carbide-based BDO and polytetrahydrofuran produced in Korla had significantly higher PCF due to coal usage as a base raw material and the high energy intensity of the production process. BASF will tailor its global portfolio of BDO and affiliated downstream products to offer competitive low-PCF options in the future.
The situation in the Xinjiang region has always been a part of BASF’s overall assessment of its joint ventures in Korla. Regular due diligence measures, including internal and external audits, did not uncover any evidence of human rights violations in the two joint ventures. However, recent reports concerning the joint venture partner contained serious allegations indicating activities inconsistent with BASF’s values. Consequently, BASF will expedite the ongoing process to divest its shares in the two joint ventures in Korla, subject to negotiations and required approvals from the relevant authorities.
It is important to note that, even in the context of public reports, BASF has no indication that employees of the two joint ventures in Korla were involved in human rights violations. The most recent reports pertain to BASF’s joint venture partner, in which BASF does not hold a stake.
BASF’s presence in China remains otherwise unchanged, and the company is fully committed to its business activities and planned investments in the country. Greater China currently contributes to around half of global chemical production. Global growth in chemical production until 2030 will be driven by Greater China, accounting for approximately 80% of the total growth from 2022 to 2030.