BASF, Globex Mining, BP – Industrial giants in transition: Billion-dollar lawsuits, the lithium boom, and the turbulence of the energy transition

Billion-dollar lawsuit: BASF demands damages from Clariant and three other chemical companies

The German chemical company BASF is suing four competitors, including the Swiss company Clariant. The EUR 1.4 billion claim for damages that BASF has filed with the Munich District Court describes the illegal behaviour of the four defendant companies in the procurement of the valuable raw material ethylene.

Ethylene is a key component in the production of plastic. It has a wide range of uses, including in the production of films, plastic bags and bottles, floor coverings, pipes, and packaging. Clariant and the three other companies are said to have engaged in unfair price fixing. The party harmed by this was BASF, as the Company was excluded. The simple calculation of the competition: low procurement prices and higher margins when selling the finished products in global markets.

Clariant already attracted negative attention in this context in 2020 and was forced by the European Commission at the time to pay EUR 260 million. The Swiss colluded with the Mexican company Orbia and the US group Cleanese to deliberately keep ethylene prices low. It was uncovered at the time by the company Westlake, which, in return for the information, received immunity from prosecution. Now, they are all in the dock with Clariant.

For BASF, the lawsuit has more weight than just the claim for damages. The Company makes it clear that it has zero tolerance for competitive distortions. Accordingly, BASF stands for fair competition in the chemical industry.

Although Clariant vehemently denies that it is involved in the renewed price fixing, the evidence seems to point clearly towards a cartel. Therefore, it looks promising for BASF.

Strategically, the Ludwigshafen-based company wants to focus this year on its expandable polystyrene business and the Neopor and Styropor brands. To this end, BASF is planning to expand its Neopor production capacity at its Ludwigshafen site: from the beginning of 2027, annual production there is to increase from 50,000 to 250,000 tons. The material is a further development of Styrofoam and is mainly used in construction for thermal insulation. It is thinner and more economical than its Styrofoam predecessor, thus saving space and material. The lawsuit and the forward-looking orientation seem to be benefiting the share price, which is currently trading at EUR 43.70.

Globex Mining: Promising lithium discoveries in the James Bay drilling project in Canada

Globex Mining is a Canadian exploration and mining company with a remarkable business model: instead of searching for natural resources itself, it manages over 200 different mining projects in its portfolio and lets other companies do the exploring. In return, Globex receives money, shares, and retains a portion of future profits, from which all investors will also benefit. This smart strategy has made the Company successful for around 70 years. In addition, Globex Mining supports its partner companies by providing expertise, thereby contributing to value creation. The revenue streams of Globex consist of options, sales, and royalties. A particular focus is on minimizing share dilution while increasing exploration spending and avoiding debt in order to keep risk low for shareholders.

Promising lithium discoveries are now emerging in the Mirage Project/James Bay exploration. The Company there, Brunswick Exploration, has discovered high lithium deposits as part of its 12,000 m drilling program. Globex Mining holds a 3% metal royalty on the project.

Of particular note in this drilling is a 37 m interval grading 1.14% lithium oxide in hole MR-24-87 and a 23 m interval grading 1.15% Li2O in hole MR-24-89. These findings confirm the continuation of the mineralization at depth. An impressive intersection of 1.74% Li2O over 19.7 m was recorded in drill hole MR-24-84 in the MR-6 vein area.

The global lithium market is estimated to be worth USD 22.19 billion in 2023 and is expected to continue growing at an annual rate of 22.1% through 2032. The main reason for this is the many facets of e-mobility, from passenger vehicles to commercial vehicles.

Globex Mining benefits from the wide range of commodities in demand due to its numerous properties. The Company focuses on three main categories: precious metals such as gold, silver, platinum and palladium; base metals such as copper, zinc, lead and nickel; and a wide range of speciality metals and minerals, including lithium, rare earth elements, titanium and uranium. Investors in Globex Mining are literally acquiring shares in a diverse mineral bank.

BP warns of weak year-end results - Investor Day postponed

Investors in BP need to be strong now: The British energy company is warning of disappointing figures for the fourth quarter of 2024. The main reasons for the weak business are falling oil and gas production, setbacks in the trading business and declining refinery margins. In addition, the Company is postponing its Investor Day by about two weeks because the new CEO Murray Auchincloss is still recovering from a medical procedure.

The Investor Day is particularly exciting for all stakeholders, as Auchincloss will present BP's new corporate strategy to shareholders. The core topics will be the transformation from an international oil company to a diversified energy company and the improvement of corporate performance. Auchincloss, who has held the position since January 2024, is generously remunerated for his role: in total, he receives USD 9.8 million with a base salary of USD 1.24 million, plus variable bonuses and share-based compensation. Critics dislike his focus on renewable energy at the expense of oil production. In doing so, he is taking a course different from that of his predecessor, Bernard Looney. However, during such a transformational phase, growing pains are to be expected, which can result in profit warnings.

The Company's financial outlook is cause for concern: BP expects a USD 300 million drop in profits due to the aforementioned decline in refining margins and maintenance work. Furthermore, a decline in the range of USD 200 million to USD 400 million is expected in oil production and operations. The reason for this is the oversupply due to new refineries in Asia and Africa. In Q3/23, BP recorded its weakest profit since the end of 2020 at USD 2.27 billion. The share price is EUR 5.02.

BASF is suing Clariant and other chemical companies for billions. The evidence suggests that the Ludwigshafen-based company has a good chance of success. The forward-looking capacity expansions at the Ludwigshafen site are also positive. In particular, a plant for heat-insulating plastics is being expanded there. Globex Mining is pleased about promising lithium discoveries at one of its partner companies. The broadly diversified mineral portfolio, combined with the unique business model of the project holdings, makes Globex Mining a high-growth player in the mining sector, where investors benefit from the clever and risk-conscious strategy of founder Jack Stoch. The British oil giant BP is undergoing a major transformation. The new CEO, Murray Auchincloss, faces the complex task of restructuring the Company from a traditional oil company into a diversified energy group. The structural challenges in the refining business could lead, among other things, to profit warnings, which particularly annoy existing shareholders.