In order to fully seize the opportunities presented by the energy transition and accomplish the goals of the business plan, MAIRE has made a specific change in mindset by redefining the organizational structure. Thanks to MAIRE's new structure – based on two business units – the intrinsic technological component will be maximized.
The global population continues to grow and is expected to reach 10 billion by 2050 – a figure that necessitates balanced prosperity. In the background, global warming has become an increasingly irreversible force with consequences that will change each of our lives. If the market evolves with complex and interconnected dynamics – from a traditional fossil fuel-based industrial model to a new low-carbon model – economic systems (as well as the processes that shape our daily lives) must also forcibly transform.
In a scenario that requires immediate and conscious action, companies play that central role which is necessary to unlock a faster and more strategic global response for the future. In this vein, Capital Markets Day 2023 was an opportunity for MAIRE's top management to describe the landscape in which the new strategic plan "Unbox the Future" was born, a plan that revolves around the theme of the energy transition and has greatly impacted the organization of the company.
«In order to solve the complicated equation we face – explained Giovanni Sale, Corporate and Business Strategy Senior Vice President of the Group – the industrial world is developing revolutionary solutions that address food security, the decarbonization of businesses, new energy vectors and sustainable materials such as polymers, obtained through a circular model in which even waste is finally considered a valuable raw material».
In fact, MAIRE has identified four clusters that are already part of NextChem's core business and that are affected by the ongoing transformation required by the energy transition: we are talking about nitrogen, hydrogen and circular carbon, biofuels and synthetic fuels, and finally, sustainable plastics.
Food security is driving an intensification of sustainable agriculture, achievable through sustainable nitrogen-based fertilizers. Giovanni Sale explains, «The combined effect of the need to achieve global food security and the energy transition will have a direct impact on the fertilizer market. Those that are nitrogen-based will grow along with the demand for low-carbon solutions, as emissions will represent an increasingly high and unsustainable cost. Ammonia, along with its current use as a fertilizer, will also experience an increase in demand on new fronts, especially as a marine fuel: it is in fact a well-recognized energy carrier. We can state that these new uses will grow rapidly and surpass current volumes of use: fossil-based ammonia will be increasingly replaced by green and blue ammonia, produced respectively from green hydrogen and blue hydrogen obtained through CO2 capture».
Yes, hydrogen. Currently, about 80 million tons of hydrogen are produced each year, mainly from fossil resources, used mostly to produce ammonia, methanol, and to facilitate the hydro-treatment of hydrocarbons in the refining processes. In addition to being an energy carrier, hydrogen is a critical element in facilitating the decarbonization of so-called hard-to-abate industries, in sectors such as cement, steel and chemicals. At the same time, it is the key element in the circularization of CO2 through the production of new chemicals and sustainable fuels. «By 2040, – adds Giovanni Sale, – more than 80 percent will be covered by green and blue hydrogen, resulting in a capital outlay of $13 trillion by 2050. However, this technology still has enormous untapped potential, considering its key role in meeting climate goals. Carbon capture and storage projects are exploding and will reach more than 800 million tons of CO2 capture by 2030».
To decarbonize the transportation sector, MAIRE envisions significant growth in methanol and Sustainable Aviation Fuels (SAFs), which can be obtained from agro-food waste or chemical processes that combine CO2 with hydrogen. Based on the new strategies, defined by the European Union and the United States, SAFs are expected to decarbonize more than 50 percent of aviation fueling by 2050. Meanwhile, in shipping, methanol produced from sustainable and renewable feedstocks will emerge as the main alternative to support decarbonization.
The fourth cluster being addressed has to do with sustainable and biodegradable materials to find a balance between economic growth and environmental friendliness. In the most developed countries, a growing consumer awareness is pushing toward a more sustainable use of plastics. As a result, bio-based, biodegradable, and recycled plastics will become increasingly important, also supported by technological innovations that enable end products to meet technical requirements and be more easily recyclable. MAIRE, which has a leading position in polyolefin production, also plans to work on upcycling plastics, the chemical recycling of polymers, and the production of compostable materials.
An integrated approach that rests on five pillars
If we look at the energy transition as a major global project – all countries on Earth are involved in it to varying degrees – we can better understand why there are already market opportunities, funding and ambitious public commitments related to this momentous phase for our planet. Two trillion euros of public funding have already been allocated worldwide, with an estimated four trillion to be invested each year to achieve the estimated scenarios during the COP 27. «Yesterday's paradigm is no longer valid – Giovanni Sale explained during the event – because this massive availability of funding needs to land in the implementation phase. The market now requires a new integrated approach on five key pillars. First, the partners driving the complexity of the energy transition must be credible and competent, with technological leadership capable of leading the way and setting an example for the entire industry chain. Stakeholders must have a comprehensive portfolio of solutions and different technologies to make the energy transition technically and economically concrete. Third, innovative companies must take a forward-looking attitude that produces revolutionary solutions that can be implemented from year to year. Then there is what we engineers refer to as "flawless delivery": given the complexity of projects and international contexts, it is imperative that those involved in the transition possess the experience and ability to apply the technological solutions delivered. Finally, it is crucial that managers of leading companies know how to involve a wider range of stakeholders: it is no longer enough to know how to manage the traditional EPC value chain, today we need the ability to know how to lead a broader ecosystem to arrange financing, interact with institutions and local authorities, and create additional partnerships».
For its part, MAIRE has always been equipped to offer an integrated approach, anticipating clients needs, providing innovative engineering solutions and applying them to the execution of complex projects. CEO Alessandro Bernini has addressed this, explaining how MAIRE is able to navigate stakeholder ecosystems, supporting them in their decision-making process. «Because of our experience in the industry, we understand their differences based on geographic area, regulatory agenda, available resources, or technological focus. For all of them, we customize and integrate offerings to provide the best and most efficient solutions. We also deploy our distinctive expertise throughout the extended value chain, beyond the traditional "Design–bid–build" phases, including through our project development capabilities and the strength of our digitization in optimizing processes».
Unbox the Future, a plan whose theme revolves around the energy transition and has significantly impacted the company's organization.
The new structure with two business units
To lead the flawless delivery of the opportunities represented by the energy transition and to realize the goals of the business plan, MAIRE has made a specific change in mindset by redefining its organizational structure. A process of major renewal that has led to two business units, complementary platforms that will enable greater generation of value across the board. The executive capacity component (the assets of Tecnimont and KT) flows into the Integrated Engineering & Construction Solutions division – from which EBITDA is expected to grow two to three times and margins of 5 to 6% – while the component related to the technology solutions assets flows into Sustainable Technology Solutions (STS), with an annual growth rate of 18 to 20% and EBITDA margins increasing from 20 to 25%.
«Sustainable Technology Solutions business unit – explained Alessandro Bernini – which due to the nature of its activities will be characterized by lower volumes but higher profitability, will take up the high value-added activities carried out by the Group: from technology licensing to process design and engineering services, from proprietary equipment to digitization and selected special solutions. We can say that this division is the "Home for Solutions in the Energy Transition" designed to enable innovative and sustainable processes by leveraging our well-established know-how in hydrogen and carbon capture technologies, breathing new life into waste and creating new processes from non-fossil raw materials».
MAIRE's CEO then went on to describe Integrated E&C Solutions, which is instead the "Home for Complex Plants" designed to provide access to the latest technologies, capable of performing all the activities of an energy service provider, including Feed, Engineering, Procurement, and Construction, as well as the upgrading and revamping of existing assets. «This business unit – said the CEO – will enjoy higher volumes and profitability in line with this type of business. Through the integration of our specialized know-how and world-class engineering expertise, we will continue to provide technologically advanced and future-proof plants. The new structure – which will stimulate the growth of our technology business – will position MAIRE in a different sector, with more technology-oriented players and high value-added service providers».
With a similar structure, the Project Development department, created a few years ago and already implemented in specific projects around the world, is also being strengthened. «Project Development – Bernini explained – is the great "enabler" of MAIRE, a functional structure for both business units that encompasses all the activities carried out by the Group to start the engine of those projects that would otherwise remain on the starting blocks. It is an important activity to support energy transition projects, it is the fuel that can start the engine from a phase of co-development and partnership. While on the industrial side we secure longterm contracts for raw materials. On the financial side we coordinate the most suitable capital structure, attracting industrial investors and financial sponsors as well as coordinating applications for public financing».
Global technology leader in the energy transition
Thanks to MAIRE's new structure – one based on two Business Units – the inherent technological component will be maximized. Thus, the new business model, where Tech and EPC work symbiotically but are also able to exist independently, becomes clearer for MAIRE's various stakeholders. If until now – as the CEO said – technology has been "hidden" from the business of execution (and therefore the market has not been in a position to value it adequately), now, through the enhancement of the technological side and its growth prospects, the Group, chaired by Fabrizio Di Amato, will be able to maximize its overall value and harness the potential of each line of business. «The goal – concluded Chairman Di Amato – is to play the role of global technology leader in the energy transition, on one side focusing on sustainable technology solutions while on the other side focusing on our historical engineering and construction capabilities».
The humanist engineer reflects on digital change