Serious investments in recycling caught our attention this week. Plug Power made recent headlines for their new hydrogen deal with Amazon, while Rio Tinto announced a new aluminum recycling facility in Quebec. We explored what other companies are doing with CleanTech and recycling as supply chains continue to struggle with demand.
This week on our ESG Safeguard platform, recycling and hydrogen made a prominent splash keeping in line with the results we analyzed in earnings calls. These themes have been a focus at Amenity for a while now going back to our 2022 ESG Preview and the year before. Recycling and Hydrogen are themes that have emerged as real focus areas for companies to not only clean up their environmental image, but also push real operational changes that can be revenue drivers.
Plug Power (PLUG), which we have been covering for some time now, signed a seven year deal worth $2.1 Billion with Amazon (AMZN) to provide green hydrogen for a variety of uses, including trucking and forklifts. Plug shares are up 33% in the past month with the passage of climate legislation and new revenues lifting investor confidence.
Reliance Industries (500325:IN), will be transitioning from grey hydrogen production to green hydrogen in 2025. Grey hydrogen is the term used to describe hydrogen that is produced using fossil fuels, in most cases natural gas or coal. The transition will be powered by solar arrays the company will be developing themselves for internal consumption, including the manufacturing of clean hydrogen.
POSCO (005490:KR), the fifth largest steelmaker in the world, is establishing a new battery recycling facility in Poland. Located outside of Warsaw, the new facility has the capacity to process 7,000 tons of scrap annually. This is part of the company strategy to diversify revenues. With the emergence of electric vehicles there has been a real market need for the recycling of metals like nickel, lithium, cobalt, and manganese. This is a need that such recycling facilities fill in bolstering the sustainability of supply chains.
Covestro (1COV:DE), plans to build a plastics recycling facility at their location in Shanghai that will process 25,000 tons of polycarbonate annually when it opens next year, with plans for increased capacity in future years. The German company aims to process up to 60,000 tons annually in Asia alone by 2026 with plans to open similar facilities in Thailand. The price tag for the Shanghai location will run Covestro a cool $27 million and hopefully pay dividends for years to come.
Rio Tinto (RIO:GB) announced it will be building a new aluminum recycling facility at their Arvida plant location in Saguenay-Lac-Saint-Jean, Quebec. It will be operational by 2024. The investment will run Rio Tinto $29 million to expand the current Arvida plant, and create the capacity to process 30,000 tons of scrap annually. Scrap metal will be sourced locally from construction materials and used vehicles, aiming to provide low-carbon aluminum for similar segments. Last year, we covered efforts by Rio Tinto to develop low-carbon aluminum technology and this seems to be a strategic step in line with those goals.
Hydrogen and recycling are emerging as not only ways for companies to clean up their environmental metrics, but also real investable themes that will drive operational performance. Hydrogen is already paying dividends for Plug Power as they continue to sign massive deals around the globe.
Recycling has gained momentum in serving supply chains that are under stress in the automotive industry and others. Sustainability initiatives, when done right as these companies demonstrate, occur within the scope of company operations and have the ability to drive value for the company and their shareholders in addition to the environmental benefits
The market isn’t interested in another ESG story. Investors want to understand what companies are actually doing—what companies are investing. What commitments are they making towards these investments, and what milestones are they reaching? This data needs to be in real time, not just from stale annual CSR reports. This webinar, featuring our materiality dataset, demonstrated how investors can cut through the greenspeak to understand what companies are actually doing when it comes to ESG for Climate Week 2022. Watch Recording
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