🏭 More brown liquid
Albemarle's upcoming bromine expansion and Covestro's newly issued green bond
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From the condenser:
· Albemarle's bromine expansion
· Covestro's new green bond
· MOTD: propylene glycol
drawing of a brown liquid dripping from a pipe
Albemarle's bromine expansion in Arkansas
Arkansas is home to the Smackover Formation—a geologic formation that houses one of the world's most bromine-rich subsurface brines. After it's discovery in the mid-20th century, Albemarle's predecessors, Ethyl Corporation and Dow Chemical, set up shop and started extracting the element via the air-frozen acid absorption process. That process, at a high level, involves the addition of sulfuric acid and chlorine to the brine, followed by air blowing, absorption with sulfur dioxide, and then a bunch of separation processes. The resulting bromine is then used to produce bromine-containing organic compounds, or it's used to make hydrogen bromide (which is then used to make bromine-containing organic compounds). We're talking about stuff like pharmaceuticals, fire retardants, polymeric foams, and insecticides.
So, what's the deal here?
When the world needs more bromine, all we need to do is drill more wells into the Smackover Formation and go get it (about 40% of global bromine production comes from that formation). Albemarle is planning to drill a bunch of new wells and expand its processing capability at two of its sites in Magnolia. This is the largest bromine expansion the company has done in a couple of decades, and it should be complete by 2028.
Albemarle will probably be a very different company by 2028. It's true that this bromine business is growing, but it's not growing at nearly the same rate as Albemarle's lithium business. That's why the company decided to carve out its catalyst business into a subsidiary, and to split its remaining business units at the application level (now some of its lithium business is in "Specialties" and the rest of it is in "Energy Storage"). If the lithium doesn't come from the same raw material, then they aren't mass integrated, and there is less of a reason for them to remain a single company (maybe ICI's demerger is a relevant example).
drawing of wind turbines on green money
Covestro's $500 million green bond
Green bonds 101:
Companies need capital to build things. They get that capital by selling part of their company in the form of shares (equity), by issuing and selling bonds (debt), or by getting a loan from the bank (also debt). When companies choose to raise capital by selling bonds, they specify things like the term length and the interest rate they'll pay investors for buying one of those bonds. Green bonds work like that too, except they have an extra layer of rules that restrict the usage of the capital to sustainable projects. Because of this restriction, green bonds usually pay investors slightly lower interest rates, which reduces the cost of capital for the company selling the bond.
Okay, so what's a sustainable project?
Covestro is following the 2021 version of International Capital Markets Association’s (ICMA) Green Bond Principles (GBP). The capital raised by the sale of those bonds can only be used for projects that are related to (1) "circular economy adapted products, production technologies and processes; and /or certified eco-efficient products", (2) "energy efficiency", (3) "renewable energy", (4) "sustainable water and wastewater management", (5) "pollution prevention and control", and (6) "green buildings".
What that means:
Most of Covestro's upcoming projects can be twisted to meet those guidelines. For example, (1) can be met by producing polyurethane resins for wind turbine blades or sprayable polyurethane foams for insulation, and (2) can be met by investing in any technology that reduces energy consumption—like their improved isocyanate production process we talked about ($). In short, these green bonds basically just make investing in the things Covestro was already going to invest in a little cheaper for Covestro, and that's about it.
Some more headlines
Wood is going to do the front-end engineering design for a green H2 site in Norway
Ashland introduced a new sclaeolide that reduces the appearance of dandruff
TOYO just received an order from BASF for their new site in Zhanjiang
Yet another company in Asia selected LyondellBasell’s polypropylene technology
Braskem is building a new innovation center in Lexington, Massachusetts
Molecule of The Day
Today's MOTD needs no introduction, it's propylene glycol.
Today, the world produces roughly2 million tons of this stuff each year primarily by the noncatalytic hydrolysis of propylene oxide. A lot of it (about45%) is used to make thermosets and polyurethanes. The rest of it ends up in things like coffee-based drinks, pharmaceuticals, deodorant, and vape juice just to name a few.
Prominent Figure: Have you heard of Gore-Tex? Check out this article about the man who figured out expanded polytetrafluoroethylene.
Course: We think of chemical plants in terms of unit operations. To understand the industry you need to learn about those units.*
Podcast: Check out this episode featuring Dr. Judy Giordan on sustainability in the chemical industry.
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