Solvay: Rare Earth Ambition Amid Middle East Headwinds

Q2 2026: Peroxide shutdown hits EBITDA, but strategic investments in heavy rare earths signal a long-term pivot.

SOLB.BR · Earnings Call · 2026-07-29

Q2 2026: A Quarter of Two Halves

Solvay’s second-quarter results presented a study in contrasts. While the electronic grade peroxides and bicarbonate businesses posted record sales, the ongoing Middle East conflict weighed heavily, with the shutdown of the peroxide plant in Saudi contributing to an estimated €20 million EBITDA hit. CEO Philippe Kehren noted: “On the conflict in the Middle East, we estimate that it had a negative impact of around EUR 20 million on the EBITDA in Q2.” — Philippe Kehren, Chief Executive Officer (CEO) · 2026-07-29 The company is actively preparing to restart the plant before the end of Q3, and management reiterated their full-year guidance. Beyond the immediate disruptions, Solvay is positioning itself for a future beyond commodity chemicals. The most compelling development is the accelerated investment in heavy rare earth separation capabilities, a strategic move to strengthen Europe’s supply chain sovereignty.

Rare Earths: The Strategic Bet

CEO Philippe Kehren highlighted the company’s unique position: “We are the only company outside of China with the technical know-how and industrial capabilities to separate all 17 rare earth elements.” This is not just idle talk; Solvay has signed a letter of intent with Viridis to source mixed rare earth concentrates from Brazil, and is investing an additional €15-20 million to begin industrial-scale production of heavy rare earths (DyTb) in the fall of 2026.

Today, we are taking the next step by investing an additional EUR 15 million to EUR 20 million in heavy rare earth separation capabilities, creating additional opportunities in high-value applications.
Philippe Kehren, Chief Executive Officer (CEO) · 2026-07-29

When analysts questioned the modest size of the investment, Kehren was quick to defend it: “Capacity expansion in rare earth, it might look small, but in reality, it's not.” — Philippe Kehren, Chief Executive Officer (CEO) · 2026-07-29 He explained that repurposing existing facilities at La Rochelle makes it far more efficient than a greenfield project elsewhere. Customer commitments and French government support underpin the project.

Soda Ash: A Persistent Headwind

The other major theme is the continued pressure in soda ash export markets. The seaborne market remains beset by Chinese overcapacity, and prices are at historical lows. This is not a new problem – the company has been navigating this for several quarters. In the prior quarter call, CFO Alexandre Blum noted: “So on EBITDA, take it roughly equally spread during the year.” — Alexandre Blum, CFO · 2026-02-24 – indicating that the seasonal pattern was not a major factor, but the structural issues persist. Kehren confirmed that European and U.S. domestic prices remain relatively resilient, but the export markets, particularly Southeast Asia, are challenging. In the fourth-quarter 2025 call, he noted: “We are still exporting soda ash from Europe to the seaborne market” — Philippe Kehren, CEO · 2025-11-08 – a reality that remains true today. He pointed to competitor shutdowns, like the SBM California plant closure, as evidence of the strain.

Guidance and Outlook

Despite the headwinds, Solvay confirmed its full-year 2026 guidance: underlying EBITDA between €770 million and €850 million, free cash flow above €200 million, and CapEx around €300 million. The company remains committed to its transformation, with €26 million in cost savings delivered in Q2 alone. As Kehren stated, “We confirm our guidance for the year 2026, anticipating the restart of our peroxides plant in Saudi Arabia before the end of the third quarter.” — Philippe Kehren, Chief Executive Officer (CEO) · 2026-07-29 The market’s reaction to this report will hinge on the successful restart of the Saudi plant and the continued execution of the rare earth strategy. While the near-term earnings power is constrained, the strategic pivot towards high-value rare earths could provide a growth engine for the coming years.