Global tendencies unearthed and analysed point out that the chemical compounds sector is increasingly being pushed by Environmental, Social, and Governance (ESG) considerations. It also indicates that decarbonisation is often a key rationale behind the investments (and divestments) in the sector, apart from Africa the place investments understandably lagged again this year.
These are the findings of the newest Chemicals Executive M&A Report for 2022 launched by world management consulting agency Kearney, now in its ninth edition.
“The reasoning for it’s because there are simply not that many enticing goal firms with appropriate ESG credentials obtainable to accumulate for chemicals organizations trying to invest and consolidate on the continent,” explains Prashaen Reddy, Partner on the firm.
As the least industrialized continent, where up to 600million folks nonetheless stay without electrical energy, Africa’s chemical industry is emergent, and its markets are immature compared to its Asian, European, and Middle Eastern counterparts.
Nevertheless, the chemicals sector is a key component of Africa’s economy. pressure gauge octa complicated business, with various sub-sectors, Africa’s chemical industry is intrinsically interlinked with different sectors – fuels, prescription drugs, plastics, and manufacturing, to name a couple of.
The sector is answerable for key outputs and crucial commodities along several industries’ complete 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 offers within the world chemical compounds sector have resulted in a robust investor urge for food for M&A targets with good ESG credentials, allowing Africa’s chemical corporations that embrace ESG to place themselves to draw funding.
“Although realistically Africa will still need to harness its plentiful hydrocarbon-based energy reserves to stay economically aggressive, there are confirmed methods to make even fossil-fuel burning facilities cleaner and extra sustainable, leading to important reductions in carbon emissions, similar to the usage of low-carbon gas, low-carbon hydrogen and low-carbon ammonia,” Reddy elaborates.
Africa’s nascent chemical substances sector thereby has a possibility to leap ahead 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 technologies like carbon capturing and sequestration (CCS).
Echoing international tendencies, African National Oil Companies (NOCs) proceed to function prominently within the chemical trade M&A house.
“Chemicals M&A activity has been relatively quiet in Africa over the past 12 months. Africa’s oil-rich nations’ such as Nigeria, Angola, and extra lately Namibia, who have traditionally focussed on the extraction, manufacturing, and supply of crude oil products, at the second are contemplating the diversification of their product portfolios as part of their future-proofing efforts. This ought to begin to show results in the medium-term,” explains Reddy.
These new opportunities arising are in downstream beneficiation of energy merchandise additional along the value chain.
“We could subsequently see a spate of acquisitions of facilities that produce petrochemicals, ammonia, and fertilisers, for example, by these NOCs over the approaching years. These acquisitions would operate synergistically alongside their present oil and gas-focussed strategies,” he says.
There are signs that Africa is set to take ownership of beneficiation and manufacturing and become a net exporter of chemical compounds, well-poised to produce the mature markets of Asia, the EU, the USA, and its emergent ones.
“Today’s chemical substances 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 remain relevant in a greener future. เพรสเชอร์เกจ hope to see Africa’s emergent chemical substances sector main the charge in direction of an environmentally and socially sustainable chemicals business worldwide.”
For more data, go to www.kearney.com
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