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Koch Industries, built on oil, is making a big bet on U.S. batteries

Koch Industries Inc.,

The energy-based conglomerate, whose CEO went against environmental regulations and funded groups questioning climate change, has been one of the biggest sponsors of the battery industry.

A Koch Industries unit has made at least $ 10 million worth of investments in the U.S. battery supply chain and electric vehicles over the past 18 months, according to regulatory filings, news releases and FactSet data. Koch’s battery investments are among the largest outside the auto industry, analysts say.

Founded more than 80 years ago as an oil refiner, Koch Industries is now the most diversified battery investor in the U.S., said former Tesla Vivas Kumar. Inc.

last year he launched a battery parts launch as CEO and industry analyst. “It’s amazing how many different players in the battery supply chain have taken part,” he said.

Koch Industries is now a major shareholder in startups like Freyr Battery SA,

FREY – 2.02%

Aspen Air Rooms Inc.

ASPN 0.39%

and standard lithium Ltd.

SLI 2.51%

Money comes at a crucial time for many of these companies because they have to spend a lot to market their products. Koch seems to be focused on promoting the U.S. battery industry

“The speed of the energy transition is directly related to companies like Koch involved in it,” said Tom Jensen, CEO of Freyr, a Norwegian company working to make sustainable low-cost batteries. Koch Industries owns a 10% stake in Frey and was valued at about $ 120 million at the end of last year, according to FactSet. The companies have a joint venture to make batteries in the US

Koch Industries, based in Wichita, Canada, declined to comment on its battery investment. He has said little about his battery strategy publicly. The company has made investments through Koch Strategic Platforms, an investment subsidiary of its investment group launched at the end of 2020 to invest in energy transition, computing, automation and healthcare.

A Kint-owned Flint Hills Resources refinery in Minnesota. Koch is a major operator of refineries and pipelines moving oil and gas across the United States


Photo:

Jaida Gray Eagle / Bloomberg

Koch Industries uses thousands of miles of oil and gas to move around the country and several large refineries. The company makes $ 120 billion a year in sales through brands such as Brawny paper towels and Dixie glasses, fertilizers and textiles.

CEO Charles Koch and his late brother David have given billions of dollars to conservative and libertarian political causes, including some who oppose environmental regulation and questioned whether climate change is an issue.

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One of the groups they support, Americans for Prosperity, has fought the efforts of the Environmental Protection Agency to regulate carbon emissions. Both the Competitive Business Institute and the CO2 Coalition, both of which helped former President Donald Trump withdraw from the Paris climate agreement in 2017, argue against the benefits of electric vehicles and question the global warming caused by burning fossil fuels. a major issue.

In late 2020, Charles Koch, then 85, wrote in a book that his partisanship was a mistake and said he hoped to address the problems of society. His company’s political action committee has continued to make large donations to Republican candidates.

Koch Industries has targeted companies that target the supply of battery raw materials, including Standard Lithium lithium producer and Li-Cycle Holdings battery recycling company. Corp.

LICY – 8.22%

Most battery materials are produced abroad, often in China, and shortages have raised prices.

The company has also backed startups to make batteries better, such as Solid Power Inc.,

SLDP 1.97%

Manufacturer of Ford Motor-protected solid state batteries Co.

and Bayerische Motoren Werke AG

. Aspen Aerogels manufactures products that increase battery performance.

Koch has made bets on a combination of shares and convertible debt that would turn into shares if stock prices rose.

Koch-backed Solid Power is one of the startups that aims to use solid state battery cells in cars that may be more powerful and safer than current technology.


Photo:

will mckenna / solid power / Reuters

The shares of many companies have been volatile, with Russia’s recent invasion of Ukraine, rising interest rates and many disruptions in the supply chain that have disrupted the market for many clean technology startups. Short sellers betting on falling stock prices have opted against Standard Lithium, arguing that the company’s technology doesn’t work. Koch said he did a lot of diligence before investing and is excited about Standard’s potential. Standard has found the allegations false and misleading.

Some analysts hope that Koch Industries’ investments will encourage others to follow suit.

“When you see these big players jumping in the pool, you have to ask, ‘What do they see that I don’t have?’ ”Said Chris Berry, founder of House Mountain Partners LLC, a consultant for battery metal companies and investors.

Lithium prices are rising as demand for the key component of electric car batteries grows, amid a wider push to move away from oil and gas. But metal extraction takes a long time and can be harmful to the environment, and plans to produce more have sparked protests. Photo: STR / Getty Images, Oliver Bunic / AFP / Getty Images

Write Amrith Ramkumar at amrith.ramkumar@wsj.com

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Koch Industries, built on oil, is making a big bet on U.S. batteries

Source link Koch Industries, built on oil, is making a big bet on U.S. batteries

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