Sustainable businesses are good investment options – but clarity around the impacts is needed

Sustainability in investor discussions is driven by legislation, but also because sustainability is seen as a profitable growth factor for companies. Forthcoming sustainability regulation drives to raise sustainability reporting to the same level as financial reporting which will also support the investor demand. Here are some of the most common questions we are being asked about sustainability and our answers to them.

How do you think customer reception of Metso’s sustainable Planet Positive solutions has changed recently?

Growth in Planet Positive has been very strong – we think it’s because the market is receptive to distinctive sustainable products. None of our peers have an equivalent green product label, and Planet Positive is starting to be a well-known concept amongst our customers.

Is the target still to grow Planet Positive business by double-digit percentages as you highlighted in your last Capital Markets Day in September 2022?

We target growing our Planet Positive sales faster than overall group sales. So our Planet Positive sales target is not absolute - if sales were to grow slowly or start declining, Planet Positive sales could increase at a lower rate, while still be in line with the target. Our R&D and innovation processes are crucial to support future Planet Positive sales growth. Eventually, Planet Positive sales is expected to exceed the sales of non-Planet Positive products.  Planet Positive is also linked to management incentives, building commitment to grow these sales.

Are you able to give us a sense of the pricing dynamics for the Planet Positive portfolio relative to traditional technologies?

We cannot go into detail on pricing for individual product categories, but it is fair to say that Planet Positive and/or sustainability is part of the mix when we discuss pricing. It is becoming more important, but not the main factor – as before, the main focus is on functionality and quality i.e. the normal commercial drivers. However, Planet Positive products are products that are very often meaningfully better than the market benchmark on factors that also drive total lifetime cost of ownership, e.g. energy efficiency. This should help with pricing and margins.

What distinction can be seen in the cost profile of your Planet Positive products, be it from the composition of a mix of labor vs. raw materials, supply-chain locations, or the R&D amortization from new technologies?

In terms of production costs, the Planet Positive portfolio is a good cross-section of the overall product portfolio so there should be no major differences. In terms of R&D, we look to grow the Planet Positive portfolio and R&D is focused on Planet Positive projects. Because we think new Planet Positive products are likely to be received favorably in the market, we would expect to be able to recover R&D costs at least in line with returns on the broader portfolio.

Can you point to any instances where design specifications that include your Planet Positive offering have supported customers’ ability to receive permit approvals either on brownfield or greenfield investments?

We would point out that there has been relatively few major copper discoveries i.e. finding it even before you get to permitting is a challenge. Probably the best concrete example of how Planet Positive can help is when a customer used Planet Positive as part of an application for project financing, and this helped provide the banks with the ESG credentials needed. More generally, Planet Positive products helping to reduce the footprint of projects (e.g. tailings/water usage) should help with permit approval, but in addition many other factors also go into these approval processes.

Can you talk about your battery minerals commercial growth strategy concerning your product offering and route-to-market?

We envisage growth in battery minerals, and high odds of real supply shortages in battery metals such as copper, nickel, etc. Our product strategy is to ensure a comprehensive offering across full, and often complex, flowsheets for battery minerals producers, and a capacity to support in growth locations – e.g. South America.  We also recognize that given the need for rapid growth and difficult projects, i.e. technically challenging, small scale or lower grade, smaller customers in particular may need more technical support.

With declining ore grades globally - how are you seeing the adoption of new material recovery solutions, such as automation and flotation? What is the typical ROI for customers in improving their material recovery versus the CAPEX required? 

Declining ore grades will drive innovation, including automation and increased use of digital solutions. It is difficult to generalise about ROI on these investments, partly because automation is becoming a standard part of the “package” rather than an add-on, but we would expect automated solutions to become the norm across the industry for new investments (i.e. solutions where the returns exceed the cost of capital).