BASF Doubles Down on AgChemTech, Europe Leads in Sustainability, and Hexion Moves Into Wraps
Hexion launched a fire resistant wrap for wood poles to help protect power grid infrastructure during wildfire events that are growing in frequency and magnitude over the last few years. Hexion’s wrap is named ArmorBuilt(TM) and it has passed wildfire simulation burn tests for fire resistance. This is a significant move by Hexion because it is a move into Hexion’s traditional customer space. I suspect the technology behind ArmorBuilt(TM) is based on Hexion’s core competency of phenol-formaldehyde and/or amino resins with some sort of additional flame retardant additive.
BASF and Tecnalia are accelerating R&D of new crop protection technologies through artificial intelligence and machine learning. The technology was developed by Tecnalia in partnership with BASF’s crop protection division and centers around using machine learning and artificial intelligence to process images faster and with more accuracy. Images of crops, pests, and what fields and greenhouses look like are the raw data that comes in from testing and being able to process a large amount of visual data quickly and with more accuracy is a key factor in developing the actual agricultural products that BASF sells.
EU Pushing for Reducing Emissions from Chemical and Material Production
There is a call by the Renewable Carbon Initiative for extending the targets of the European Green Deal into chemicals and materials in the European Union. The European Green Deal has set aggressive targets on greenhouse gas emission reductions of 55% by 2030 compared to 1990 levels and has been primarily focused on energy. The ultimate goal of the EU here is to have climate neutrality by 2050 and have set aside 750 billion euros to assist member states in making the transition.
The Renewable Carbon Initiative was founded from a consortium of industrial companies including Covestro, LanzaTech, Henkel, and Neste, under the leadership of the Nova Institute. Companies like Covestro and LanzaTech are already making investments into more sustainable feedstocks and circular economies. If the EU extends the European Green Deal to include chemicals and materials then the Renewable Carbon Initiative advisory companies will have a definite competitive edge going into 2050 for doing business in Europe.
It is interesting to see how chemical companies are trying to do good while being good. I see the push for making sustainability part of chemical policy as a competitive moat to the companies not making investments now. It can take years for validation of a new product that is more sustainable into markets like automotive and aerospace. Companies should be developing their plans and making strategic investments and partnerships now. Helping set the policy is better than having to catch up.
British Beauty Council Publishes Sustainability Report
The British Beauty Council released their sustainability report “Courage to Change” behind a paywall in October. Provenance.org has a good summary of what the report entails and it essentially comes down to figuring out the packaging problem. Personal care and beauty products are especially pernicious in their packaging waste due to small volume sizes and high value content. The British Beauty Council also seems to be advocating for consumers being able to check the product’s sustainability score.
Blockchain Can Be Used to Track Sustainability of Products
Provenance.org recently won an award for “Blockchains for Social Good” from the European Union. There are other companies looking to use blockchain for more transparent supply chains and chemical compositions. I got a chance to see Circularise present at a Greentown Labs event in early 2020 (pre-covid) and to me it looks like the model can work it just needs more industry adoption. Circularise has membership from Covestro and Domo and it appears that membership gets companies access to Circularise’s technology of visibility into supply chains without compromising intellectual property and trade secrets.
Momentive sells its consumer sealants business to Henkel. This represents the GE branded silicone caulking products available at hardware stores and also represents Momentive transitioning away from consumer branded products. Momentive has gone through a rough few years with being spun off from Hexion, going bankrupt, getting acquired, and pivoting their business towards a global specialties market.
Siemens has acquired computational chemistry firm Culgi. This acquisition will enable Siemens’ digital innovations divisions to better model and develop advanced soft materials before any sort of prototype is developed. The acquisition builds on the Multimechanics acquisition from about this time last year. Siemens appears to be building out a suite of digital tools that will be critical to development and deployment of advanced materials both within Siemens and their competition.
BASF acquired melon breeding company ASL and appears to be a move to grow its agriculture business to compete with the already consolidating AgChem market with the spin-off of Corteva from the old DowDupont and Bayer’s acquisition of Monsanto.
Evonik has completed their acquisition of Porocel for $210 million or about 9.1x Porocel’s EBITDA. This seems to be a medium term investment because Porocel makes catalysts that enable low sulfur fuels and regeneration of catalysts. Countries around the world are seeking to ban of sales of new internal combustion engine vehicles in 15–20 years, which means less fuel will be needed globally. This acquisition by Evonik is a short to medium term investment to boost profits.
BP is closing their refinery in Perth. The integrated oil company is looking to cut costs as low oil prices cause the economics of low margin refineries to flip to negative margins. I’ll update sporadically on what I see in the oil markets as refineries start to shutter and oil companies pivot from their core businesses. Expect more refinery and well closures in the coming years.
Consider liking, subscribing, and sharing with your friends, family, coworkers, and random people you see on the street. Thank you for reading
All views and opinions here are my own and do not represent the views of my employers or should they be considered investment advice.