Cabot to close Indonesian carbon black facility

The Cabot Corporation has announced that it is to close its carbon black manufacturing facility in Merak, Indonesia. It is anticipated that manufacturing operations will cease by the end of January 2016.

The decision, which will affect approximately 50 local employees, was driven by the Merak facility’s financial performance over the past few years. Despite efforts to be competitive, the facility has suffered from low utilisation rates.

Sean Keohane, President, Reinforcement Materials Segment said: "Asia is quickly becoming one regional market and this dynamic has created the need for our facilities to be even more cost competitive. As such, we will consolidate production in Asia by ceasing production at our Merak facility and using our Cilegon, Indonesia, as well as other Asian and global carbon black production sites to meet the regional demand. Indonesia remains a strategic country for Cabot’s carbon black business.”

Cabot expects the closure plan will result in a pre-tax charge to earnings of approximately US$33M, of which approximately US$8M of this amount is cash and US$25M is a non-cash charge. Annual savings related to the closure are estimated to be approximately US$8M, of which approximately US$5M is cash.