15 – Property, plant and equipment

Machinery and technical equipment contain oil and gas deposits, including related wells, production facilities and further infrastructure, which are depreciated according to the unit of production method.

Additions to property, plant and equipment arising from investment projects amounted to €4,020 million in 2017. Material investments included the acetylene plant currently under construction as well as plants for the production of catalysts in Ludwigshafen, Germany. Additions also comprised the construction of an aroma ingredients complex in Kuantan, Malaysia, and the modification of production plants for plasticizers in Pasadena, Texas, which have already partly started up. Material investments were also made for the construction of oil and gas facilities and wells in Europe and South America. Furthermore, investments were particularly made at the sites in Ludwigshafen, Germany; Antwerp, Belgium; Shanghai, China; Freeport, Texas; Geismar, Louisiana; and Port Arthur, Texas.

Government grants for the funding of investment measures reduced asset additions by €9 million.

Acquisitions led to an increase in property, plant and equipment in the amount of €8 million primarily from the acquisition of GRUPO Thermotek in Monterrey, Mexico.

In 2017, impairments of €262 million were included in accumulated depreciation. These pertained largely to machinery and technical equipment and resulted primarily from the full impairment of a production plant in the Chemicals segment due to overcapacities. The recoverable amount equaled value in use and the weighted average cost of capital rate before taxes was 10.27%.

Depreciation also included impairments in the Oil & Gas segment, which were overcompensated by reversals in the same segment. These primarily concerned construction in progress. In total, reversals of impairments in additions to accumulated depreciation amounted to €182 million.

Disposals of property, plant and equipment were largely attributable to the sale of the Bleaching Clay and Mineral Adsorbents businesses; the production site for electrolytes in Suzhou, China; the inorganic specialties business; and the leather chemicals business.

The transfers largely concerned the confirmed oil and gas deposits in the Maria field in Norway from intangible assets to machinery and technical equipment.

Currency effects reduced property, plant and equipment by €1,663 million and arose mainly from the depreciation of the U.S. dollar relative to the euro.

Additions to property, plant and equipment arising from investment projects amounted to €4,222 million in 2016. Material investments were primarily related to the construction of an integrated aroma ingredients complex in Kuantan, Malaysia, the TDI complex in Ludwigshafen, Germany, and the expansion of the dicamba plant in Beaumont, Texas, which were partially started up in 2016. Further material asset additions included the construction of an ammonia plant in Freeport, Texas, and oil and gas production facilities and wells in Europe and South America.

In addition, investments for expansion purposes were particularly made at the sites in Ludwigshafen, Germany; Geismar, Louisiana; Port Arthur, Texas; and Antwerp, Belgium.

Government grants of €1 million were deducted from asset additions.

Due to acquisitions, property, plant and equipment rose by €155 million primarily from the acquisition of the global surface treatment provider Chemetall from Albemarle Corp., Charlotte, North Carolina.

In 2016, impairments of €254 million were included in accumulated depreciation. These pertained largely to impairments of €133 million on machinery and technical equipment as well as buildings due to the new strategic direction of individual businesses in the Chemicals and Functional Materials & Solutions segments. The recoverable amount of these assets equals their value in use amounting to €72 million. The weighted average cost of capital rate before taxes applied ranged between 9.4% and 12.8%.

In 2016, additions to accumulated depreciation contained reversals of impairments of €2 million.

Disposals of property, plant and equipment were largely attributable to the sale of assets of the global polyolefin catalysts business to W.R. Grace & Co., Columbia, Maryland; the sale of the worldwide photoinitiator business to IGM Resins B.V., Waalwijk, Netherlands; the sale of the 25% share in the Byrding field to Statoil; and the sale of industrial coatings business to the AkzoNobel Group.

Currency effects arose particularly from the appreciation of the U.S. dollar as well as the Brazilian real relative to the euro.