Global trends unearthed and analysed indicate that the chemical compounds sector is increasingly being pushed by Environmental, Social, and Governance (ESG) considerations. It additionally indicates that decarbonisation is commonly a key rationale behind the investments (and divestments) in the sector, apart from Africa the place investments understandably lagged again this yr.
These are the findings of the latest Chemicals Executive M&A Report for 2022 launched by global management consulting agency Kearney, now in its ninth edition.
“The reasoning for it’s because there are simply not that many enticing target companies with suitable ESG credentials out there to accumulate for chemical substances organizations looking to invest and consolidate on the continent,” explains Prashaen Reddy, Partner at the agency.
As the least industrialized continent, the place up to 600million folks nonetheless stay with out electricity, Africa’s chemical industry is emergent, and its markets are immature compared to its Asian, European, and Middle Eastern counterparts.
Nevertheless, the chemical compounds sector is a key component of Africa’s economic system. A massive complex business, with numerous sub-sectors, Africa’s chemical business is intrinsically interlinked with different sectors – fuels, prescription drugs, plastics, and manufacturing, to name a couple of.
The sector is liable for key outputs and crucial commodities along a number of industries’ whole worth chains.
In เกจ์วัดแรงดันลม , the continent’s most developed chemical market, the sector accounts for round 25% of producing 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 international chemical substances sector have resulted in a strong investor appetite for M&A targets with good ESG credentials, permitting Africa’s chemical companies that embrace ESG to position themselves to attract funding.
“Although realistically Africa will still must harness its plentiful hydrocarbon-based power reserves to remain economically competitive, there are proven strategies to make even fossil-fuel burning amenities cleaner and extra sustainable, leading to significant reductions in carbon emissions, corresponding to using low-carbon gasoline, low-carbon hydrogen and low-carbon ammonia,” Reddy elaborates.
Africa’s nascent chemical substances sector thereby has an opportunity to leap forward of the curve, by building sustainability and green design rules into new chemical facility developments from the outset, and by working to decarbonise current choices via applied sciences like carbon capturing and sequestration (CCS).
Echoing international tendencies, African National Oil Companies (NOCs) proceed to feature prominently in the chemical trade M&A house.
“Chemicals M&A exercise has been comparatively quiet in Africa over the past 12 months. Africa’s oil-rich nations’ corresponding to Nigeria, Angola, and more just lately Namibia, who’ve traditionally focussed on the extraction, manufacturing, and supply of crude oil merchandise, are actually considering the diversification of their product portfolios as a part of their future-proofing efforts. This ought to start to show leads to the medium-term,” explains Reddy.
These new alternatives arising are in downstream beneficiation of energy products further along the worth chain.
“We might subsequently see a spate of acquisitions of amenities that produce petrochemicals, ammonia, and fertilisers, for example, by these NOCs over the coming years. These acquisitions would operate synergistically alongside their current oil and gas-focussed strategies,” he says.
There are signs that Africa is set to take ownership of beneficiation and manufacturing and become a web 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 fast population growth, climate change, digitisations and decarbonisation. Traditional chemical and power giants, and NOCs, are repositioning themselves to stay relevant in a greener future. We hope to see Africa’s emergent chemical compounds sector leading the cost in direction of an environmentally and socially sustainable chemicals business worldwide.”
For more data, go to www.kearney.com
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