BASF to exit joint ventures in China's Xinjiang amid rights record scrutiny

By Ludwig Burger

FRANKFURT (Reuters) -BASF said on Friday that it would sell its stakes in two joint ventures in the Chinese region of Xinjiang, where human rights groups have documented abuses including forced labour in detention camps.

The German chemicals giant said the divestment of its shares in the joint ventures with Xinjiang Markor Chemical Industry was mainly due to high carbon dioxide emissions and competitive pressure in the market for the chemical intermediate 1,4-butanediol (BDO).

"Recently published reports related to the joint venture partner contain serious allegations that indicate activities inconsistent with BASF's values. Consequently, BASF will accelerate the ongoing process to divest its shares," it said in a statement.

It added that its audits have not found any evidence of human rights violations at the two joint ventures and that it has no indication that employees at them were involved in such violations.

Beijing has repeatedly denied human rights abuses in Xinjiang. Xinjiang Markor did not immediately respond to a request for comment outside of working hours in China.

Earlier this year, German broadcaster ZDF and Spiegel magazine jointly reported that Xinjiang Markor staff were involved in state surveillance of Uyghurs in the region. The United States restricted imports from its parent Xinjiang Zhongtai Group in September citing business practices involving Uyghur minorities.

The Chinese government has faced numerous accusations of suppressing Uyghurs in the region, and Western companies with operations there have come under pressure to act.

Human Rights Watch (HRW) last week urged automakers that produce cars in China to do more to ensure materials that could be made using Uyghur forced labour do not enter their supply chain.

Two of Volkswagen's investors said late last year that the German carmaker must check its operations in China to ensure its supply chains comply with human rights laws, after an audit of its jointly owned Xinjiang site found no sign of forced labour.

BASF, which is spending up to 10 billion euros ($10.8 billion) on a chemical complex in Zhanjiang, southern China, to benefit from growth in the country, said its presence in China remains otherwise unchanged.

($1 = 0.9270 euros)

(Reporting by Ludwig Burger; editing by Matthias Williams and Miranda Murray, Kirsten Donovan)