In Mexico, the most important target industries for Evonik are mining, automotive, animal nutrition, paints and coatings, aerospace and medical devices. Mexico has a solid manufacturing footprint and we are developing new products to help these industries. In addition, the growth of the middle class in Mexico also offers great opportunity in sectors such as personal care, household care and healthcare."

- Martín Toscano, Managing Director

Martín Toscano, Miguel Ángel Delgado, Federico Téllez

MANAGING DIRECTOR, BUSINESS DIRECTOR RE - HIGH PERFORMANCE POLYMERS & BUSINESS DIRECTOR CYPLUS, EVONIK INDUSTRIES DE MÉXICO

March 22, 2019

What has been Evonik’s evolution in Mexico and the region?

MT: Evonik has 22 business lines under three main segments: Nutrition & Care, Resource Efficiency and Performance Materials. In Mexico, the most important target industries for Evonik are mining, automotive, animal nutrition, paints and coatings, aerospace and medical devices. Mexico has a solid manufacturing footprint and we are developing new products to help these industries. In addition, the growth of the middle class in Mexico also offers great opportunity in sectors such as personal care, household care and healthcare. In Latin America, the main markets for Evonik are Mexico, Brazil and Argentina, while Colombia, Peru and Chile are also important in certain business lines.

Being present in the specialty business, how important is to have a good mix between commercial and technical skills?

MT: I do not think technical skills go against commercial skills or vice versa. At Evonik, working with chemical specialties, we have a strong interaction with our clients at all levels. Mexico is different to other emerging markets in that we are seeing multinational companies setting up R&D centers in Mexico, not just for the Mexican market, for also for exports. This is happening mainly in the automotive industry, but also in others. At Evonik we are already very strong in applied technology, with centers in Mexico dedicated to coatings and animal feed, where we support our clients to have a better final product. Now, with the increased levels of R&D in the country, Evonik can use this opportunity to strengthen its relationship with the clients.

What are your main product lines for Mexico’s precious metals mining industry?

FT: Our main product line in the precious metal mining market is CyPlus Technologies. Mexico is the world’s largest silver producer and among the top ten largest gold producers, so the country is a large consumer of sodium cyanide. Our CyPlus Idesa joint venture produces sodium cyanide locally in Mexico to support the growing Mexican precious metal mining market.

Our local production as well as our supply chain are ICMI certified to assure highest responsible care standards for the gold and silver mining industry.

CyPlus offerings encompass services for the entire cyanide life-cycle. Smart packaging solutions and intelligent supply chains together with our global network of experts with metallurgical expertise make our service portfolio unique for innovative customer solutions. CyPlus has the mining expertise and customer proximity to position itself as innovative solution provider beyond cyanide

What do you think of the new USMCA trade deal that replaces NAFTA?

MT: The countries in the region should see themselves as a block and stop looking at each other as enemies. In the automotive segment, Mexico is for the United States what Eastern European countries are for Germany and Indonesia and Thailand are for Japan; we need to understand that we are partners. The new USMCA treaty is not going to change radically what we had before. It is a lost opportunity in terms of modernizing the deal, but we continue to see a great flow of investment into Mexico nevertheless. In the short term, however, we need to evaluate the impacts of other issues such as the fiscal reform in the United States and the discussions around tariffs between the United States, Europe and Asia.

Mexico has 52 free trade agreements, which gives the country access to between 60% and 70% of global GDP, giving us a unique advantage to continue attracting investment in many industries, not just automotive. For instance, we see enormous growth in the Querétaro aerospace hub, and also great opportunity in the medical devices segment, where Evonik participates through its high performance polymers and healthcare business lines. One of our main challenges at Evonik will be to bring new production assets to the country, due to the feedstock situation for the petrochemical industry in Mexico. However, we have a solid production footprint, mainly in the United States, where Evonik has made three important acquisitions recently.

Could you give us some examples of Evonik’s innovation initiatives?

MAD: The focus of the automotive and aerospace industries is to reduce weight, increase efficiency and reduce fuel consumption. This is achieved with different materials such as foams with high mechanical resistance but low molecular weight, and composite materials. These materials are the reason why we have airplanes like the Airbus 380 and the Boeing Dreamliner.

MT: We also work in the green tire segment. By increasing the use of precipitated silica in tire production, we contribute to lower fuel consumption. There, we recently did an investment into a new plant of precipitated silica in South Carolina, which will serve clients like Michelin, Pirelli and Continental eventually also in Mexico. Besides, Evonik has a proprietary technology for absorbable medical implants, which eliminate the need for a second operation once you have an implant. Additionally, speaking of sustainability, Evonik has a joint project with DSM for the production of Omega 3 fatty acids from natural marine algae to replace fishmeal and fish oil as a raw material.

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