Koppers Inc., a subsidiary of Koppers Holdings Inc., has announced plans to cease phthalic anhydride production at its Stickney, Illinois facility by 2025. This move, which will affect approximately 25 employees, stems from the significant near-term capital expenditures required to maintain operations, which could not be economically justified given the projections for end-market demand. The decision to close the plant also offers an environmental benefit, with the expectation of a 50 to 70 percent reduction in annual emissions of certain regulated air contaminants.

The closure is scheduled for mid-2025, with production gradually winding down over the next six months. Koppers plans to build inventory during this period to fulfill existing customer contracts through the end of 2025, ensuring a smooth transition. However, the shutdown will not affect other operations at the Stickney facility, including coal tar distillation, which manufactures products like creosote, carbon pitch, and pavement sealer base. These operations, vital to Koppers' portfolio, will continue unaffected by the plant closure.

The phthalic anhydride production line at Stickney was originally designed to utilize naphthalene, a byproduct of the coal tar distillation process, as a feedstock. This feedstock was used to produce phthalic anhydride, a chemical intermediate crucial for the manufacture of plasticizers, polyester resins, and alkyd paints. However, over time, the availability of coal tar has decreased, which has led to a reduction in naphthalene production. As a result, Koppers has been forced to supplement its production with increasingly expensive third-party feedstocks, making the plant’s operation less economically viable. This decline in profitability, along with the high capital investment required to maintain operations, led to the decision to discontinue production.

The closure is expected to result in pre-tax charges of $51 million to $55 million through the end of 2026. Of this, approximately $28 million will be non-cash charges, which will be recorded in 2024 and 2025. The remaining $23 million to $27 million will be cash expenditures, primarily for plant cleaning, waste disposal, and demolition costs. Koppers expects that these charges will be offset by ongoing operational and capital expenditure savings, which are incorporated into the company’s current 2025 goals of achieving $300 million in adjusted EBITDA and $65 million to $75 million in capital expenditures.

Leroy Ball, CEO of Koppers, emphasized the company’s commitment to optimizing its portfolio for long-term success. "The decision to close the phthalic anhydride plant demonstrates our ongoing willingness to critically assess our portfolio and pivot from underperforming businesses when it is clear that improvement is not on the horizon," he said. "By focusing on our core strengths, we can enhance our competitive position in healthier markets and drive better long-term returns." Ball also acknowledged the impact on the affected employees and expressed gratitude for their contributions, pledging to support them through the transition.

This strategic move reflects Koppers’ ongoing efforts to streamline operations, improve environmental sustainability, and position itself for continued success in the evolving market landscape.