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OHS:
Thanks for the links.
I did notice that in all the articles people posted, the wording was generally that Greensill were denied access to funds because of overexposure to GHG companies rather than explicitly because GHG were in trouble. I suppose that's a bit like if 100% of your portfolio were in SAE, you might find that nobody was willing to lend you money to invest, but that doesn't necessarily mean that SAE are in trouble - it just means you're overexposed.
Of course, the fact that Apollo Global Management have only offered £43 million for the assets it wants suggests that the GHG debt isn't exactly desirable.
Also, in that first article you posted it says SAE borrowed £75,000? That seems like pocket change - not something that we would struggle to pay back.
Someone correct me if I'm wrong, but to my understanding SAE's involvement in the GHG alliance supply chain is fairly minimal. The electricity that Uskmouth will (hopefully) end up generating could easily be sold to a data centre or the National Grid, and I'm not aware of anything irreplaceable GHG does in SAE's tidal business.
Personally, my biggest concern for now is still the planning permission and the possibility of it being called in and rejected for political reasons. I'm increasingly confident that the EP will be granted, and I think finance for Uskmouth will be determined by the viability of the power station and not on the financial troubles of GHG/SIMEC group.
I posted about this a few days ago. I wouldn't like to guess at what the exact implications would be, but I would repeat that GFG isn't a single company, but a collection of companies with various connections. The most important of these to SAE is SIMEC Group since SIMEC owns about half of all SAE shares. If SIMEC went under and had to sell its shares in SAE that would undoubtedly hit the SP of SAE.
The (hypothetical) collapse of Liberty Steel would affect SIMEC as well of course - for example, SIMEC operates two port in Newport which do a lot of trade with Liberty Steel .
I'm not very well versed on this, but I *think* the superdeduction announced in the budget will apply to SAE.
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/967202/Super_deduction_factsheet.pdf
I believe this would be particularly important if SAE is profitable after the first 110MW are up and running and they need to start spending to get the second 110MW.
Does anyone have expertise on this?
@Strangy There was actually another update to the document today, but there wasn't an update on Uskmouth so I didn't post it.
For anyone who checks manually: there is a great app on android called web alert that auto-retrieves web pages and checks for changes to whichever parts you're interested in. I use it to monitor sites like the NRW correspondence page so I don't miss any updates.
This is my understanding of the situation re: GFG Alliance.
GFG Alliance is a legally meaningless (?) term for a group of separate companies, one of which is SIMEC Group.
SIMEC Group owns about half of SAE (https://simecatlantis.com/2020/08/28/tr-1-notification-4/)
If (not when) SIMEC group were to collapse, it would have to sell its stake in SAE and that would tank the share price.
SAE's ability to secure financing for UPS and its tidal projects will be based on the merit of those projects and its own financial position - what's going on with GHG shouldn't directly affect SAE financing.
So the worst case scenario as far as the GHG Alliance stuff goes, is that SIMEC has to sell its shares in SAE, the share price drops, and that limits SAE's ability to raise funds through equity financing. Is that correct?
If I've misunderstood anything, I'd be very grateful if anyone could point out where I'm going wrong.
Thanks!
Thanks for replying. I don't think I properly looked into GFG financials when I first invested. I should probably take a look.
Why does it matter? Personally, I appreciated the links and sources they posted. As long as you do your own research, I don't see why it would be upsetting that other people post biased research.
Obviously none of us has seen them - we can only see the same posts as you! Frankly I'm not interested in petty squabbles - it doesn't help anyone and it distracts from useful research. To be honest Eric, I don't see how you contribute more to this board than OHS/OT did...
It seems to me like Greensill is in more trouble than GFG. I can't find anything concrete to suggest GFG might collapse - just rumours of shady dealings. As I understand it, the problem at Greensill is that they are overexposed to GFG and have lent money that isn't secured by anything? It's not clear (to me) that GFG can't keep up with payments, only that Credit Suisse aren't willing to take the risk that they can't.
Is there anything specific that makes you think GFG is close to collapse, GreenFuture?
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/966131/UKIB_Policy_Design.pdf
Pg 19 3.3 and 3.6:
"In the Bank’s interim form, its primary focus will be on the economic
infrastructure sectors covered in the National Infrastructure Strategy: clean energy,
transport, digital, water and waste...
"The Bank is not expected or set up to fill this gap on its own. Instead, it will
help bridge this gap by co-investing alongside the private sector, crowding in private
investment to support projects across these sectors. The Bank will focus in particular
on scaling early-stage technologies that have moved through the research and
development phase. "
My guess is that there might not be much support for tidal in R4 of the CfD auctions but that SAE would have a decent chance with the UKIB.
A lot of these policies sounding suspiciously like the Labour party's 2019 manifesto. I definitely remember the National Infrastructure Bank and the rise in Corporation Tax being derided as fiscally irresponsible and economically illiterate 18 months ago...
I want more details on this green grant
yeah, 1614. If you look at the date it was received (02/02/2021) I think it's the application we're concerned with.
I just spoke to a bloke in the planning office to ask what "under consideration by Senior Officer" means and he said it means a member of staff within Welsh Government is currently considering whether the application should be called-in for determination by the Welsh Ministers.
So it sounds like it hasn't been called-in officially yet.
This has been updated to say "under consideration by Senior Officer"
https://gov.wales/sites/default/files/publications/2021-02/planning-decisions-being-considered-by-the-welsh-ministers-called-in_1.pdf
So it seems like it has been called in. Can anyone else interpret that - have I read that right?
I don't think we'll necessary find out today, or even this week. They aim to decide within 21 days of receiving the local planning authority's report, but we don't know when that was sent and if you look at this document:
https://gov.wales/sites/default/files/publications/2021-02/planning-decisions-being-considered-by-the-welsh-ministers-called-in_0.pdf
it looks like there are several applications from January that are still "under consultation"
Newport council website is down so I can't check on there, but I have a feeling that it has been called in :/ The share price has dipped enough that I think some people must know something.
If it has been called in, we're looking at several months delay minimum from what I can tell. We already have an Environmental Statement so I think the application should be sent to the Planning Inspectorate fairly speedily. Does anyone have experience with called-in applications and how long we should expect it to take?
hahaha I wish my other holdings were doing so well that a 100%+ (20p) increase in share price counted as modest.
I'm not very good at predicting, but given the Arden report's target price of 67p, I'd have thought that approval of environmental permit and planning permission would get us above 50p - they remain the biggest source of risk I think
https://publicregister.naturalresources.wales/Search/Results?SearchTerm=PAN-008534&sortBy=Date&filters%5BLocation%5D=&filters%5BLocalAuthority%5D=&SortRelated=Date
Looks like good news on the habitats front:
"In light of the conclusions of an appropriate assessment, and taking account of the advice received from protected sites advisors, it has been established that the project will not adversely affect the integrity of any Natura 2000/Ramsar site, taking into account any conditions or restrictions as applicable, either alone or in-combination with other plans and projects."
N+P have a good break down of SRF, RDF and Subcoal for anyone interested:
https://www.np-recycling.nl/en/alternative-fuels/srf.html
I don't have an authoritative source that WKE only use SRF (and hence take lower gate fees for their pellets), but it says so here:
https://www.letsrecycle.com/news/latest-news/funding-secured-for-teeside-pellet-plant/
"Waste Knot Energy says it will use solid recovered fuel (SRF) as a raw material, sourced from regional suppliers."
As far as I can see, it doesn't say explicitly what raw materials WKE use on their own website, though I assume the letsrecycle story was taken from a WKE press release. In reality, the market is probably so far from being saturated that it doesn't really matter: for as long as both companies can undercut wood pellets and coal, they can presumably charge whatever they like?
Thanks dall, I knew I'd seen it somewhere. I have a copy on my computer. As you say, on page 20 we have:
"Uskmouth’s waste-derived fuel pellets will cost £4/MT (increasing annually at the rate of inflation). This compares with a cost of c. £70/MT for coal and c. £100/MT for biomass wood pellets.
"The reason waste-derived fuel pellets are cheapest is that pellet manufacturer SIMEC Subcoal Fuels (SSF) will be paid a gate fee to take non-recyclable plastic waste and paper industry waste (cardboard and paper) used to make the pellets, which would otherwise be disposed of in a landfill or an incinerator. Pellet manufacturing and delivery costs are approximately £50/MT. As a result, the pellet fuel manufacturer will make a substantial margin and can afford to charge a relatively low price for the pellets."
I suspect (though I have no way of knowing) that the business case for WKE pellets is similar: they sell the pellets at roughly cost-price and pocket the gate fees.
Speculatively, it's possible that the gate fees are slightly higher for Subcoal than for the WKE pellets because WKE uses only SRF (read: low-volume, high-caloric) material in its pellets and Subcoal uses a mixture of SRF and RDF (higher-volume, lower-calorie) material. As I understand it, gate fees are paid by volume rather than by caloric-content so that taking RDF as well as SRF should mean you're paid more. Indeed, traditional waste to energy incinerators don't make money from generating heat/power, but from gate fees if I remember correctly; the real business case for UPS comes from the fact that it makes money at both ends: from gate fees (since it part-owns N+P from whom it buys Subcoal), and from electricity generation.
Anyway, if this speculation is correct - and it may well not be if WKE also take RDF and just don't mention it - then Subcoal may be more profitable than WKE pellets. My guess is that N+P would sell Subcoal for a figure closer to £50/MT than £4/MT to companies other than SAE and pocket the difference.
Thanks OHS, I saw that go up a couple of days ago but it wouldn't load before - it's loading now.
In some sense FoE are right here, but what they haven't grasped (or aren't mentioning) is that the baseline in the environmental statement is the continued use of UPS as a coal power plant (for which it has an EP). Against that baseline - what they have termed an " ‘agree or we will do something even worse’ scenario" the proposed conversion produces "negative emissions" (emissions reductions).
Their skepticism of the unrecyclable material is ridiculous, although I think there is some moral weight to some of their argument. I don't think they'll achieve much though - FoE have too much of a reputation for opposing anything unquestioningly. I'm pretty sure it was FoE who were complaining about offshore wind turbines off the east coast last year because they disturb marine habitats -_-
For me, the main purpose of UPS is proof-of-concept; I don't particularly see the environmental benefit of converting a disused coal power station to burn unrecyclable waste, but if it enables them to export it across the world, it could have enormous positive environmental impact. In the phrasing of offsetting, I honestly think that subcoal could provide 'additionality' - I think there are coal power plants throughout the world that SAE could convert to run on subcoal but which would otherwise be burning coal.
Hi OHS and Dall,
I have it written in my notes that N+P are selling the subcoal to UPS (SAE) for £4/ton, but I can't find the document where that comes from. Please can someone link to the document where it says how much SAE will pay for Subcoal?
https://wasteknotenergy.com/web/wp-content/uploads/2020/11/WKE-FUEL-PROSPECTUS-v2.pdf
From what I can see, the WasteKnotEnergy fuel is priced per GJ not per ton. At a per ton basis (they claim >21GJ/t) I make it closer to £50 than £2, which would make Subcoal very competitive.
Thanks for replying BR. Given the PR disaster that is the Cumbria coal mine happening right now, I can see why that might be the case. A case of waiting and seeing I guess - only 2 weeks before we'll know for sure if it will be decided locally or nationally,