September 19th, 2023 | 09:00 CEST
ExxonMobil, First Phosphate, Shell - The fight against black gold
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"[...] The Oxbow Asset now delivers a substantial free cash flow stream to internally fund our impactful drilling and workover programs. [...]" John Jeffrey, CEO, Saturn Oil + Gas Inc.
Lawsuit against oil giants - California takes action
Do the oil multinationals such as Shell, ExxonMobil or Chevron downplay the dangers and risks resulting from using fossil fuels? According to the state of California, this is a fact, and they are accusing the producers of black gold of "deception of the public." So, the Golden State is suing leading oil companies for misleading the public about the dangers of their products. The suit, filed in San Francisco, alleges that the companies have known for decades about the potentially "catastrophic consequences" of fossil fuels.
Other US states have filed similar lawsuits, but California's case is particularly sensitive because the state is a major oil producer, and prosecutors have had success in the past, according to the New York Times. The lawsuit targets companies such as ExxonMobil, Chevron and Shell. Some of these companies reject the allegations and stress that climate change should be addressed globally, not judicially. The American Petroleum Institute sees the lawsuit as a coordinated attack on the industry. California is demanding that the oil companies pay for the costs incurred and pay penalties. California Governor Newsom accuses the oil industry of lying for more than 50 years. Richard Wiles of the Center for Climate Integrity calls the case the "most significant climate lawsuit" against the oil industry in the United States.
Investors are not yet taking the aftermath of the lawsuit very seriously. The largest oil producers all began trading in New York with positive gains.
First Phosphate - The hope of green energy
While the oil multinationals are likely to face more and more waves of lawsuits in the coming years, producers of raw materials for electromobility and battery storage, in particular, should get a tailwind. First Phosphate focuses on extracting and purifying phosphate to produce active cathode material for the lithium iron phosphate battery industry. Along with copper and lithium, phosphate plays a critical role in energy storage in contemporary vehicles. LFP batteries have recently become increasingly popular due to their outstanding fire safety characteristics, durability and economic advantages.
Automotive giants such as Tesla, Volkswagen and Mercedes are increasingly favouring this technology over traditional lithium-ion batteries. Research from Fortune Business Insights shows that the global LFP battery market will grow from USD 10 billion in 2021 to an impressive USD 50 billion by 2028.
First Phosphate is taking a strategic position in this rapidly expanding sector and has acquired all of the land in the Saguenay-Lac-Saint-Jean region of Quebec. This region, which covers more than 1,500 sq km, offers excellent infrastructure and rare anorthosite igneous phosphate rocks. Phosphate of the highest quality is extracted from these rocks without any harmful admixtures. After various processing steps, this raw material is supplied as the purest battery-grade phosphoric acid to renowned LFP battery producers in North America. First Phosphate places great emphasis on high purity and production with a low carbon footprint.
The agreement with American Battery Factory Inc. to support production of up to 40,000 t per year of fully North American produced active lithium iron phosphate cathode material has set an important course for the future.
"Stationary energy storage and telecommunications applications are already an established market for LFP batteries in North America, along with the rapidly growing electric vehicle sector," said John Passalacqua, CEO of First Phosphate. "Launching our LFP feedstock strategy with a focused partner like ABF, which has existing LFP product demand in North America, allows us to enter the market in a prudent and pragmatic manner."
Shell sells battery manufacturer
In addition to filing a lawsuit, Shell, one of the largest petroleum and natural gas companies, popped up on the news pages with the sale of battery maker Sonnen. The German solar subsidiary, which Shell acquired only about 4 years ago, was supposed to be a building block for its new strategy of becoming one of the largest electricity providers. However, as Handelsblatt reported, citing financial circles, the deal will likely be a significantly positive trading transaction. The Company paid about EUR 500 million in the takeover in 2019. Currently, the transaction could range between EUR 1.35 billion and EUR 1.8 billion.
In addition to Sonnen, Shell has already sold its complete residential electricity business in Germany and the UK to British competitor Octopus Energy, as well as various projects in the wind and biopower sectors. It is assumed that the profit margins in the residential customer business are too low. The new management team under CEO Wael Sawan, therefore, intends to focus more on key accounts.
The lawsuit from California against several oil multinationals could weigh on the base price in the long term. Shell is also selling its stake in Germany's Sonnen GmbH and increasingly withdrawing from the private customer business. First Phosphate achieved an important milestone with the agreement with ABF to produce lithium iron phosphate cathode material.
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