Global tendencies unearthed and analysed point out that the chemical compounds sector is increasingly being driven by Environmental, Social, and Governance (ESG) concerns. It also indicates that decarbonisation is often a key rationale behind the investments (and divestments) in the sector, aside from Africa the place investments understandably lagged again this 12 months.
These 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 it is because there are merely not that many enticing target companies with appropriate ESG credentials obtainable to amass for chemical compounds organizations seeking to make investments and consolidate on the continent,” explains Prashaen Reddy, Partner on the agency.
As the least industrialized continent, where as much as 600million people still live with out electricity, Africa’s chemical industry is emergent, and its markets are immature in comparison to its Asian, European, and Middle Eastern counterparts.
Nevertheless, the chemical compounds sector is a key element of Africa’s economic system. A giant complex trade, with diverse sub-sectors, Africa’s chemical industry is intrinsically interlinked with different sectors – fuels, prescribed drugs, plastics, and manufacturing, to name a couple of.
The sector is liable for key outputs and essential commodities along several industries’ entire 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 in the global chemical substances sector have resulted in a strong investor urge for food for M&A targets with good ESG credentials, permitting Africa’s chemical corporations that embrace ESG to position themselves to draw funding.
“Although realistically Africa will nonetheless have to harness its abundant hydrocarbon-based vitality reserves to stay economically competitive, there are confirmed strategies to make even fossil-fuel burning facilities cleaner and more sustainable, resulting in vital reductions in carbon emissions, corresponding to the usage of low-carbon fuel, low-carbon hydrogen and low-carbon ammonia,” Reddy elaborates.
Africa’s nascent chemical substances sector thereby has a chance 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 by way of technologies like carbon capturing and sequestration (CCS).
Echoing world trends, African National Oil Companies (NOCs) proceed to feature prominently within the chemical industry M&A space.
“Chemicals M&A exercise has been relatively quiet in Africa over the past 12 months. เกจวัดถังแก๊ส -rich nations’ such as Nigeria, Angola, and more recently Namibia, who have traditionally focussed on the extraction, production, and supply of crude oil products, are actually considering the diversification of their product portfolios as part of their future-proofing efforts. This should begin to present ends in the medium-term,” explains Reddy.
These new opportunities arising are in downstream beneficiation of power merchandise additional along the value chain.
“We could due to this fact 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 signs that Africa is decided to take possession of beneficiation and manufacturing and turn into 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 companies must navigate the mega-trends of speedy inhabitants enlargement, local weather change, digitisations and decarbonisation. Traditional chemical and energy giants, and NOCs, are repositioning themselves to stay related in a greener future. We hope to see Africa’s emergent chemicals sector main the charge towards an environmentally and socially sustainable chemicals industry worldwide.”
For extra info, go to www.kearney.com
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