Global tendencies unearthed and analysed indicate that the chemical substances sector is more and more being pushed by Environmental, Social, and Governance (ESG) issues. It additionally indicates that decarbonisation is often a key rationale behind the investments (and divestments) within the sector, apart from Africa where investments understandably lagged once more this 12 months.
These are the findings of the newest Chemicals Executive M&A Report for 2022 released by international management consulting agency Kearney, now in its ninth edition.
“ เกจวัดความดันน้ำ for this is because there are merely not that many engaging goal corporations with suitable ESG credentials available to acquire for chemicals organizations trying to make investments and consolidate on the continent,” explains Prashaen Reddy, Partner on the agency.
As the least industrialized continent, where up to 600million individuals nonetheless live with out electricity, Africa’s chemical business is emergent, and its markets are immature compared to its Asian, European, and Middle Eastern counterparts.
Nevertheless, the chemical compounds sector is a key part of Africa’s economic system. A giant complex industry, with numerous sub-sectors, Africa’s chemical trade is intrinsically interlinked with different sectors – fuels, prescription drugs, plastics, and manufacturing, to name a few.
The sector is responsible for key outputs and essential commodities along several industries’ whole value chains.
In South Africa, the continent’s most developed chemical market, the sector accounts for around 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 global chemical compounds sector have resulted in a strong investor appetite for M&A targets with good ESG credentials, allowing Africa’s chemical companies that embrace ESG to position themselves to attract funding.
“Although realistically Africa will still must harness its plentiful hydrocarbon-based vitality reserves to remain economically competitive, there are confirmed strategies to make even fossil-fuel burning facilities cleaner and extra sustainable, leading to significant reductions in carbon emissions, corresponding to using low-carbon gas, low-carbon hydrogen and low-carbon ammonia,” Reddy elaborates.
Africa’s nascent chemical compounds sector thereby has a possibility to leap ahead of the curve, by building sustainability and green design principles into new chemical facility developments from the outset, and by working to decarbonise present offerings through technologies like carbon capturing and sequestration (CCS).
Echoing international developments, African National Oil Companies (NOCs) proceed to feature prominently in the chemical trade M&A space.
“Chemicals M&A activity 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 have traditionally focussed on the extraction, manufacturing, and provide of crude oil products, are now contemplating the diversification of their product portfolios as a half of their future-proofing efforts. This should begin to show leads to the medium-term,” explains Reddy.
These new alternatives arising are in downstream beneficiation of energy products additional alongside the worth chain.
“We could therefore see a spate of acquisitions of facilities that produce petrochemicals, ammonia, and fertilisers, for example, by these NOCs over the coming years. These acquisitions would function synergistically alongside their current oil and gas-focussed strategies,” he says.
There are indicators that Africa is set to take ownership of beneficiation and manufacturing and become a net exporter of chemical substances, well-poised to provide the mature markets of Asia, the EU, the USA, and its emergent ones.
“Today’s chemical compounds sector businesses must navigate the mega-trends of fast population expansion, local weather change, digitisations and decarbonisation. Traditional chemical and energy giants, and NOCs, are repositioning themselves to stay relevant in a greener future. We hope to see Africa’s emergent chemical substances sector leading the charge in the direction of an environmentally and socially sustainable chemical compounds industry worldwide.”
For extra information, visit www.kearney.com
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