Global trends unearthed and analysed point out that the chemical compounds sector is increasingly being driven by Environmental, Social, and Governance (ESG) issues. It additionally indicates that decarbonisation is commonly a key rationale behind the investments (and divestments) within the sector, except for Africa where investments understandably lagged again this yr.
pressure gauge น้ำ are the findings of the newest Chemicals Executive M&A Report for 2022 released by world management consulting firm Kearney, now in its ninth version.
“The reasoning for this is because there are merely not that many enticing target firms with suitable ESG credentials available to accumulate for chemical compounds organizations seeking to invest and consolidate on the continent,” explains Prashaen Reddy, Partner on the agency.
As the least industrialized continent, the place as a lot as 600million people still stay without electricity, Africa’s chemical industry is emergent, and its markets are immature compared to its Asian, European, and Middle Eastern counterparts.
Nevertheless, the chemical substances sector is a key component of Africa’s financial system. A giant advanced industry, with numerous sub-sectors, Africa’s chemical trade is intrinsically interlinked with different sectors – fuels, prescription drugs, plastics, and manufacturing, to call a couple of.
The sector is liable for key outputs and essential commodities along several industries’ complete worth chains.
In South Africa, the continent’s most developed chemical market, the sector accounts for round 25% of producing gross sales. (Chemical and Allied Industries’ Association: https://home.kpmg/za/en/home/industries/chemicals.html)
ESG and decarbonisation increasingly being the dominant rationales behind M&A deals within the world chemicals sector have resulted in a robust investor urge for food for M&A targets with good ESG credentials, allowing Africa’s chemical firms that embrace ESG to place themselves to attract funding.
“Although realistically Africa will still must harness its plentiful hydrocarbon-based energy reserves to remain economically competitive, there are confirmed methods to make even fossil-fuel burning amenities cleaner and more sustainable, leading to vital reductions in carbon emissions, such as using low-carbon fuel, low-carbon hydrogen and low-carbon ammonia,” Reddy elaborates.
Africa’s nascent chemicals sector thereby has an opportunity to leap forward of the curve, by constructing sustainability and green design principles into new chemical facility developments from the outset, and by working to decarbonise current offerings via technologies like carbon capturing and sequestration (CCS).
Echoing international developments, African National Oil Companies (NOCs) continue to function prominently in the chemical business M&A area.
“Chemicals M&A exercise has been comparatively quiet in Africa over the previous 12 months. Africa’s oil-rich nations’ similar to Nigeria, Angola, and more lately Namibia, who’ve traditionally focussed on the extraction, production, and provide of crude oil merchandise, at the second are considering the diversification of their product portfolios as part of their future-proofing efforts. This ought to start to show results in the medium-term,” explains Reddy.
These new opportunities arising are in downstream beneficiation of vitality merchandise further along the value chain.
“We could subsequently see a spate of acquisitions of amenities that produce petrochemicals, ammonia, and fertilisers, for instance, by these NOCs over the coming years. These acquisitions would operate synergistically alongside their present oil and gas-focussed strategies,” he says.
There are signs that Africa is decided to take possession of beneficiation and manufacturing and become a internet exporter of chemical compounds, well-poised to supply the mature markets of Asia, the EU, the USA, and its emergent ones.
“Today’s chemicals sector companies must navigate the mega-trends of rapid population expansion, climate change, digitisations and decarbonisation. Traditional chemical and energy giants, and NOCs, are repositioning themselves to remain relevant in a greener future. We hope to see Africa’s emergent chemical substances sector main the charge in the course of an environmentally and socially sustainable chemicals industry worldwide.”
For extra information, visit www.kearney.com
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