The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
I disagree with the notion that the world is a scary place right now and that it provides a reason to put a break on the trial of a new fuel while our potential partners wrestle with daily problems.
Those of us born in the 50's and 60's remember how chaotic everthing was in the 1970's and early 80's. Today is not unique.
I subscribe to the Rahm Emanuel school of thought regards crises - and I hope MSC and Cargill do too.
"You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things that you think you could not do before".
The Utah cash is like the cheque in the post for those who are old enough to remember.
It’s orbiting somewhere beyond Pluto.
Next Tuesday at the earliest, assuming contracts were agreed last Thursday as the final working day of the quarter.
At least a week for (electronic) signatures by all parties.
There was a pile-on late 2013 (full disclosure me included) on the Maersk news when the sp rose from 14p in August to 46p by December.
There are twice as many shares in circulation now so an sp rise to 23p would mirror the Maersk experience.
However, and it's a big however, the environmental benefits were not a consideration in 2013. It was all down to refinery costs and shipping fuel economics - upon both of which the effect of MSAR was marginal.
Nor was there a changing and financially punitive legislative background to consider.
Blimey! I'd better go and lie down for a moment.
The sp will rise significantly when the outstanding four contracts are signed to govern the POC, the LONO and the thereafter. I think the shape of the thereafter is the reason for the protracted contractual / legal discussions.
Cargill, the largest US privately owned (food / agricultural) company will supply biomass for emulsifying into bio-fuels to power ships belonging to MSC, the words largest privately owned shipping company which owns 20 % of the global container ship fleet.
In the middle of these two leviathans is the worlds’ most tardy publicly quoted company. The only way any investor can invest in this collaboration - which will define how ships are powered in the near future - is by buying shares in Quadrise.
Yesterday the message from the IMC call was when the contracts are agreed and not if. When the contracts are agreed could be this quarter, assuming an agreed deadline midnight Thursday and before the Good Friday BH. Signatures will then take time so we will not find out by RNS until Tuesday 09 April at the earliest. Late April – possibly May at the latest.
It will be big news due to the size of the participants and the ramifications of the agreement.
All that investable green money sloshing around looking for the Next Big Thing will be shut out of Cargill and MSC.
Ladies and Gentlemen, may I introduce Quadrise, the emulsifying link whose sp is primed for a 10x rise.
I saw that too Prep.
And yet, further down we find this….
“The MSAR Manufacturing Unit (MMU) and associated equipment is expected to be installed and commissioned at the MAC2 site in Q224, with the vessel trials beginning in Q324 (subject to the receipt of permits by MAC2)”.
So, signature 1H 24 but installation in 2Q 24 prior to the signature?
Are we to operate under an LOI (Letter Of Intent)?
Or is it just a typo?
All to be revealed in today’s IMC.
Between 5 and 10p, depending on the number of remaining contracts actually signed, and the POC /LONO timetable - with it starting this summer.
He did.
But it would not be the first time JM has told us something that didn’t come to pass.
Crownos your view chimes with that expressed by Bud Darr, MSC GVP.
It’s all very well looking at ammonia and green and blue hydrogen. But an assessment of the issues we are faced with the introduction to the market of a low emissions drop-in emulsion fuel don’t augur well for the more arcane long-term green alternatives in what is a conservative industry.
Meanwhile, the wait for news of the raft of multiple agreements with MSC and Cargill to start the BioMSAR / MSAR POC’s and LONO’s feels interminable.
If you were MSC or Cargill what would you do?
You have a cost-effective solution to the impending draconian environmental legalisation at your fingertips. But the IP is held by a minnow down to its last £1M and its sp is in penny share territory. There’s a danger they’ll go under or have insufficient capex to stay viable throughout the POC/ LONO and beyond without regular cash for equity calls.
If you are MSC you see Cargill as an abundant and reliable source of Glycerol necessary for BioMSAR. But you’re concerned they’re getting a free ride from the POC/ LONO being run on board your ship as they’re a shipping competitor of sorts, albeit as bulkers as opposed to your focus on containers.
If you are Cargill you see the opportunity to freeride on the POC and LONO, plus an amazing opportunity to make even more money out of FAME refining by producing BioMSAR from its Glycerol by-product. And the chance to make money out of every step of the value chain as you’re producing bio-fuel to use in your own ships. Brilliant! But you’re also worried about the minnow with the IP, the fact that a reading of the Runes favours bioMSAR; but it is still pre- POC and LONO. Hmmm. You don’t want to upset MSC too much as you'll have to run the POC and LONO yourself and convert one of your own chartered ships to do so as that will take time .
You both agree that QED needs three years money – say @£10 Million at current spend rate -to bring BioMSAR and BioMSARZero to market.
£4.5M each for a 10% stake each? A 1/5 20% dilution in shares is 300 million shares - 3p ps is £9 million.
The effect on the QED sp with Cargill and MSC as co ventuerers and investors would be transformative and represent good business by both.
I work in upstream oil and gas exploration /production and BP, ConocoPhillips, ChevronTexaco and Schlumberger have all invested in a revolutionary new product from a UK based tech. start up we are now trialling in the North Sea.
Other thoughts to ponder over the weekend.
The LONO will go ahead.
It’s just a case of when, not if.
Cargill’s involvement as fuel supplier (and 600 ship charterer to boot) has ensured MSC will stay the course as the LONO ship provider, as MSC know Cargill will pick up and run with the LONO as both BioMSAR ingredients supplier and customer /end user if they were to decide to pull out, and retain exclusive use of the post LONO fuel.
Funding?
A £1-2 million splash and dash cash for equity post announcement (sp ?) to keep QED going into 2H 2024 and LONO start.
Or Cargill and MSC to take a post announcement equal £X million stake (for equity) send board representation in QED to ensure QED keep both companies interests to heart for the next 3 years towards 2030 net zero with bioMSARzero.
Excellent find jackg123.
I'm beginning to understand the reason why the tri-partite agreement between QED, MSC and Cargill is taking longer to agree; and the reason is because the prize has so huge and its ramifications for shipping will be felt for years.
In my view, there has been a significant case of 'mission creep' and a re-framing of the original QED/MSC agreement signed in 2021. The introduction of Cargill last year into the agreement has both complicated the agreement and magnified its scope.
Potentially, and ultimately, QED could be supplying BioMSAR and -/Zero to both MSC and Cargill - with Cargill essentially smoking their own after MSC have completed the LONO.
From the article...
"And Dieleman said the fuel represents a logical step for Cargill, since it has a refinery at the Belgian port of Ghent that produces 400,000 tonnes per year of fatty acid methyl ester (FAME), a form of renewable biodiesel. The commodities company also has a network of suppliers elsewhere in Europe and Asia."
A by-product of FAME production is Glycerol. QED use 40% -70% Glycerol in BioMSAR.
One can join the dots to see just how attractive BioMSAR is to Cargill. Not only can they produce biodiesel, they can also produce a key component of BioMSAR.
"Josse said regulations by the International Maritime Organization and the European Union are heading in the right direction to create more demand for biofuels.
The executive acknowledged that sourcing a supply of the fuels to meet eventual rising demand will be a challenge, although he said there remain sources of untapped supply of feedstock for renewable biofuels.
But he said that is not the immediate concern, because Cargill can source enough biofuels to meet its own need and to accommodate more demand from third parties. The focus now is to find new buyers of biofuels to build scale and improve the economics of the fuel."
One way to meet rising demand and improve econmics without buildlng additional scale is to use the Glycerol by-prodcut from FAME and emulsify it into BioMSAR and -/Zero.
SJS2019 calls it bang on.
“Yes there is an element of frustration but I am not going to analyse day by day (Would drive me insane)”.
We are powerless to influence QED’s progress with its contractual negotiations with MSC and Cargill and Mac2 in Antwerp, and OCP in Morocco coupled to CEPSA in Algeciras.
Peppering Jason’s inbox with ‘you said December; it’s now almost March’ snotograms doesn’t help QED progress contracts either. If anything it diverts limited resources.
Great article.
Quote.
“But what about the cost, you ask? Yes, biodiesel and renewable diesel are more expensive than VLSFO, two to 2.5 times in the USA at present, and VLSFO blended with 30% biodiesel has increased to $700 per ton in Rotterdam with the recent rebate multiplier cuts. But that’s still a lot cheaper than the four to six times, the best case cost multipliers of synthetic ammonia and methanol and doesn’t require special engines. Lower capital cost and lower operating costs make this a clear winner, and any route that can electrify will have even cheaper operating costs.”
Unquote.
If BioMSAR and -/Zero can compete with VLSFO and ULSFO on cost per tonne, which we know it can, then we are already invested in the solution.
And therein lies the evolving QED strategy to attract more funds from stakeholders looking for the Next Big Thing in bio-fuels.
A comparatively measly £10M injection into QED would keep QED going for @3 years at £0.25K pcm current burn rate.
Jason needs to put on a pair of sparkly ruby slippers (check heart is pure), click heels three times, say “2030, Net Zero, B100, BioMSARZero, BioMSAR, MSAR, EU ETS, MSC, Cargill, so close I can smell it, expected, imminent and substantial, and 9-1/2 out of 10” and behold! He is teleported over to Antwerp with his pockets stuffed and bulging with tenners to supervise the first Cargill supplied BioMSAR bunkering by the MSC Leandra after Easter so it can then shuttle to Turkey and back at 25 knots, burning BioMSAR all the way through the Mediterranean Sea ECA (Emission Control Area) and leaving nothing but white vapour in its wake.
B100 fuel made from an oil in water emulsion such as – um – BioMSAR and -/Zero using CSO / FPBO / etc. derived from grain, food and timber process wastes will gain a lot of interest in what is a fast moving and emerging bio-fuel market.
The alternatives to BioMSARZero run out of feedstock at scale because existing B100 fuels (i.e - bio-diesel) use foodstuffs that should be used for…food!
Quote.
“Up to 40% of corn produced in the United States is used to make ethanol, and worldwide 10% of all grain is turned into biofuel.
A 50% reduction in grain used for biofuels in the US and Europe would replace all of Ukraine's grain exports.
In some poor countries the rising price of vegetable oil is causing problems.
Some propose that fuel only be made from non-edible vegetable oils such as camelina, jatropha or seashore mallow which can thrive on marginal agricultural land where many trees and crops will not grow, or would produce only low yields.”
Unquote.
The race is on for BioMSAR and -/Zero to reach the market before sufficient camelina, jatropha and seashore mallow can be planted in only just cleared and tilled marginal agricultrual land , harvested and refined into oils.
Chaps,
from the announcement today one would assume the counterparties have done their due diligence and have been assured that QED is a viable concern and will remain so throughout the term of the PDA, and /or QED have given the countetrparties the auditable assurances to that effect. That suggests to me that QED have funds available - or a source of funds available that we are not yet party to. We may well be that source of funds, or one of them. Time will tell.
One issue with BioMSAR and its Zero derivative - and all bio-fuels - is the avilability of bio-feedstocks. Just as HFO needs crude oil, bio-fuels need bio-feedstocks. Obvs.
With todays announcement, QED have now secuered three separate bio-feedstock sources;
i. Cargill for glycerin derived from corn husks and wheat chaff from 25% of the total US exported grains - a not inconsiderable volume.
ii. Vertoro for its Crude Sugar Oil (CSO)
iii. and now BTG for is fast Pyrolysis Bio-Oil ("FPBO").
No doubt (i) also feeds some raw bio-feedstock into (ii) and (iii), hence todays announcement on the back of last weeks announcement regards Cargill.
Makes perfect sense to me.
Use the filter!
That's what it's there for.
Emulsion fuels are the way to unlock the collosal bitumen reserves potential in Utah. US based professional observers / followers of Cargill's gaze - and there must be many as it's a Fortune 500 top 15 company - will be able to join the dots between today's news, Utah, its standed bitumen reserves, emulsion fuels, bio-fuel feedstock, BioMSAR and Cargill. Home grown geo-strategically secure bio fuels made from Utah bitumen and US generated bio-waste. If that proposal does not tick every current investment strategy box I don't know what does.
And Cargill have an office in Morocco.
Country Office Morocco
Rue El Gara (ex capitaine Vuillanier)
Ain Sebaâ-Morocco
Tel: +212 22 459 000
Fax: +212 22 308 059
Cargill will be an end-user of BioMSAR as well as providing the bio-feeedstock to QED.
From page 11 of the Cargill Ocean Transportation | Decarbonization Report 2022...
Deploying biofuels on one of the world’s busiest routes.
Biofuels made from used cooking oils can reduce carbon emissions significantly compared to conventional fuels.
In shipping, they also have one big advantage over other alternative fuels: they’re a “drop-in” fuel, which means they can be used in conventional vessels without the need for any modification.
In other words, they offer a practical way to lower climate impacts of older vessels.
Since 2021, Cargill has been offering FAME (fatty acid methyl ester) biofuel to ships traveling between Singapore and the ports of Rotterdam and Amsterdam in the Netherlands, one of the world’s most densely used shipping routes.
The first “green” contracts of affreightment (COAs) stipulating use of the product were closed last year.
Cargill worked with maritime certifier DNV to develop a reliable accounting methodology for CO2 savings.
Biofuels can be seen as a carbon “inset”, because they lower the shipping industry’s actual carbon footprint, as opposed to investing in “offsets”, such as forestry and renewable energy projects, which aim to lower emissions elsewhere. “It’s all part of a growing biofuel business”, says Global Head of Marine Fuels, Olivier Josse. “Besides our own fleet, container ships and car carriers are the main customers. We’re seeing more and more interest all around.”
Cargill has a powerful advantage in biofuels, because we have a shipping business as well as a cooking oils supply chain.
The used oils and food waste products that serve as raw materials are sourced by Cargill’s agricultural origination and processing business in Europe and processed into FAME biofuel at the company’s new plant in Ghent, Belgium.
Through Cargill Ocean Transportation, the fuel is offered to ships in the Netherlands and Singapore, one of the world’s biggest bunkering ports.
In each place, Cargill has partnerships with suppliers who operate bunkering barges and blend the FAME with conventional fuels.
Combined with other fuel-saving measures, biodiesel can help ships lower their carbon emissions by up to 30%. Government policies such as the EU Emissions Trading System (ETS) are expected to help reduce the price gap between biofuels and conventional ones.
Meanwhile, companies across the economy have ambitious climate commitments to fulfill. They are increasingly looking at shipping as a place to cut emissions. Amid those evolutions, Cargill has an important role to play, says Josse. “We have the end-to-end structure in place to supply FAME biofuel.
You can use it without any further investment. It’s a solution that is ready to go right now. That’s the big difference.”
Back in Sept - December 2013 it took four months for the sp to increase from 14p to 46p after the Maersk news.