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Betting on Alberta

Marcelo Lu, President of BASF Canada, on Agricultural (and other) Opportunities

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Marcelo Lu, President of BASF Canada. Photo source: Ken Morgan.

One of the largest multinational chemical companies in the world, BASF has a broad range of businesses spanning the globe. The 155-year-old German company’s more than 117,000 employees – located in Europe, North America, Asia Pacific, South America, Africa and the Middle East – operate in six distinct business segments: chemicals, materials, industrial solutions, surface technologies, nutrition & care and agricultural solutions.

For almost 60 years, BASF has been operating in Canada. Originally in the chemical industry, BASF Canada, headquartered in Mississauga, has in recent years strengthened its portfolio in both the agriculture and oil and gas businesses. That expansion has led it to Calgary.

“BASF Canada does about $2 billion worth of sales annually,” says Marcelo Lu, President of BASF Canada. Originally from Brazil, Lu has been with BASF for 14 years and held roles in Germany and Hong Kong prior to landing in his current position four years ago. “Around half of that $2 billion is from our Agricultural Solutions business.”

Formerly called BASF Canada’s Crop Protection business, the impressive recent $1 billion in sales is largely due to the company’s acquisition of a range of businesses and assets from Bayer in 2018. “With the acquisition we gained a sizeable critical mass in Western Canada, and it no longer made sense to run that business from Mississauga,” Lu explains. “The majority of BASF’s agricultural field teams and sales are rooted in Western Canada. In recognition of this reality and driven by the importance of better connecting and supporting our customers and farmers – over 90 per cent of whom are based in Western Canada – the move to Calgary made good business sense.”

The office has approximately 70 employees, and there are another 130 BASF Canada employees in Alberta, including at the Lethbridge seed site (other BASF Canada operations in Alberta are a concrete admixtures plant in Nisku and a foam insulation plant in Blackie). The acquisition of the seed business, Lu explains, has rounded out the agriculture solutions business for BASF: “It completes the whole story. Before we focused mostly on crop protection but had little opportunity to talk about seeds, so we were never able to tell the whole story with the farmer. We are now able to have a wholesome discussion, from pre-planting all the way to harvest.”

Canola in particular is the main seed BASF Canada’s Agricultural Solutions produces, at its Lethbridge plant. “Canola is a major crop in Canada, and we are able to supply it to the market,” Lu offers.

While canola occupies the lion’s share of business, BASF Canada’s Agricultural Solutions business also produces some vegetable seeds, biological seed treatments and inoculants for pulse crops, biological and chemical crop protection products, soil management, plant health and pest control systems. “These include herbicides, insecticides and fungicides, mostly dealing with moisture and disease resistance,” Lu says. “We support farmers in their efforts to treat diseases stemming from different weather conditions.”

The majority of the company’s agricultural products produced in are sold in Canada. “That’s the great thing about our agricultural business, and why we have a lot more people in that business than in any other segment in Canada,” Lu says. “There’s frankly not a lot exported out of Canada.” Sales occur through distribution partners and retailers and as of last year, BASF launched a new direct-to-retail distribution model called RetailConnect – a dedicated team that supports the independent retailer.

Another recent innovation in BASF Canada’s agriculture business is xarvio, a digital farming solution aimed at helping farmers optimize the potential of individual fields and field zones. “xarvio currently offers two digital farming tools to help growers use digital insights to inform their decisions,” Lue explains enthusiastically. “xarvio™️ SCOUTING helps detect in-field stress just by taking a photo; it helps identify weeds, recognize diseases and measures leaf damage. This app is free to use and can be used by anyone, it even works for your gardens at home.” The other resources is xarvio™️ FIELD MANAGER, which uses in season satellite imagery, field-specific weather and growth stage modelling to help growers make informed decisions on the best time to apply a crop protection product as well as precisely where the application is needed.

Over time, the collection of digital data is expected to help farmers predict outcomes with greater speed and accuracy. “The more data we are able to supply into this tool, the more predictive accuracy it has.”

While the majority of the Agricultural Solutions customers are famers, the company also produces some non-agricultural products, including for application in the forestry industry, golf courses and along power lines and railways.

Cognizant of global and national economic and regulatory challenges, Lu is nonetheless optimistic about Canada’s agricultural potential. “The availability of land and the efficiencies on Canadian farms are second to none,” he marvels. “We’re talking about one growing season. Canada is pretty darn competitive compared to some other countries that have the luxury of multiple growing seasons due to the weather.”

The province’s other major sector – oil and gas – is also a focus for BASF Canada. The company has many solutions that address the suitability concerns in the sector. It has long been a main supplier of catalysts, which allow for a cleaner and higher yield processing of crude oil, to Canadian refineries. Given that sustainability challenges are present throughout the whole value chain; a logical expansion of BASF offerings has been to Alberta’s oilsands.

One promising project utilizes a BASF proprietary polymer that aids in solid and water separation, for use in oilsands mine tailings ponds. “Our new system innovation gets mixed into the tailings ponds and attaches to the solid particles, causing them to sink to the bottom much faster than current solutions,” Lu explains. “This allows for most of the solid-water separation to occur within the first three years, with separation fully complete within 10 years.” Typically, this type of sedimentation takes approximately 100 years. “It reduces the remediation time by a factor of 10.”

“The production of this new system solution is also innovative,” adds Lu. “It is a modular production site, where the reactor is prefabricated and then shipped to the desired location. Once the treatment is done at a specific site, the reactor can move to a different tailings pond for further implementation. In principle, there is no permanent footprint.”

In addition to environmental gains, Lu notes significant cost savings for oilsands players, including land, operational and remediation costs. “It’s case by case, but the savings are generally high, potentially in the double-digit percentage.”

BASF Canada is working with oilsands operators, Canada’s Oil Sands Innovation Alliance (COSIA) and both the provincial and federal governments to co-fund the project. It hopes to test it this summer. “The vision is to have the Premier walking on a remediated tailings pond next year, to announce the results of our trial,” Lu predicts. “We believe it is a game-changer in the oilsands.”

The second project relevant to Alberta’s oilsands industry is an Enhanced Oil Recovery (EOR) polymer, which, when injected into the ground, allows for higher-viscosity oil to be extracted. “Instead of using water, producers can use our polymer,” Lu says. “It’s mega-innovation to the oilsands structure.”

Beyond agriculture and oilsands, BASF Canada has other innovative businesses on the go in Alberta.

A chemical company at heart, it recently launched Bulky – the first digital freight-matching network for liquid bulk commodities shipments by truck – in Calgary with Trimac Transportation. The two companies’ $1 million investment has allowed the start-up platform to match chemical companies in need of bulk transport with trucking companies. “It’s kind of an Uber freight for bulk chemicals,” Lu explains. “It allows chemical companies to get cheaper freights and logistics companies to minimize the costs of empty hauls.”

Over time, Lu expects Bulky to provide both a return on BASF Canada’s investment as well as significant savings on its own chemical transportation logistics.

Other aspirational projects on the horizon for BASF Canada include its contribution to Canada’s transition to clean energy storage and mobility. “Canada is in a privileged position for having access to basically all battery material components within its resources portfolio,” Lu says. “Canada has not only lithium, graphite and nickel, but also cobalt – which is usually the big challenge,” Lu continues. “In Canada, cobalt is a byproduct of Canadian nickel refining. which is unique to only some nickel deposits. So it’s really an amazing situation to be in, to potentially make big investments to feed the world, but also support mobility and store energy. What more do you want to be involved in?”

BASF has an existing battery materials business in Europe which, to date, has not been present in Canada. Lu aims to change that.

Another project currently exciting Lu is related to plastics recycling. “There are quite a few companies in Alberta that produce plastics and we are piloting a project called ReciChain that aims to prove that plastics circularity is possible today,” Lu says. “Working with a partner, we have co-developed a molecular tracer that can be injected into basically any plastic substrate homogeneously. It survives the extrusion step and mechanical recycling, allowing for full transparency and traceability throughout the entire lifecycle of the plastic.”

“Leveraging the power of blockchain with a digital badge and loop count technology, ReciChain also enables the secured sharing of data, such as the physical movement of plastics, among market participants, and will be especially valuable for plastic producers that will soon be subject to the Extended Producer Responsibility (EPR) systems,” says Lu. “Once the platform is well populated you can do a lot with the data, such as create cryptocredits for producers that have high sustainability ratings and practices that can be used to offset the taxes or fees producers would have to pay in an EPR regime.”

While part of a multi-national corporation, BASF Canada prioritizes the local communities in which it operates. The Agricultural Solutions division recently announced a new partnership with 4-H Canada, with funding going towards both national and provincial 4-H programming. BASF Canada has sponsored an additional Women in Business chapter at its Calgary office and plans nationwide participation in the CIBC Run for the Cure. Across Canada, the company has brought Kids’ Labs, a series of hands-on chemistry workshops developed by BASF for kids aged 6-12, to students in local communities, including in Alberta. It has also partnered with Earth Rangers, a program which teaches students about endanger animals.

Notwithstanding the world as its playground, Alberta remains a strong focus for BASF. The province’s major industries – agriculture and energy – show promise for the company, which is eager to grasp them.

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