Global foreign direct investment (FDI) announcements remained at pre-pandemic levels in October, as companies outlined capacity expansions related to the transition to lower-carbon technologies.
The fDi Index, which tracks foreign investors’ sentiment, stood at 872 points in October, up by 24% from a year earlier, according to the latest figures from fDi Markets. This is 7.1% lower than the 22-month high index score recorded in September 2021.
Foreign investors announced 1046 greenfield FDI projects globally in October, down slightly from 1163 a month earlier, but still the third-highest number of projects recorded since February 2020.
Signs of international expansion on the horizon were particularly strong in October too. Investor signals — a major component of the fDi Index that gives an early indication of future investment plans — stood at 466, marking the second-highest number ever tracked in a single month.
Renewable energy reclaimed its top spot as the leading sector in terms of capital expenditure (capex) in October, with more than $11.4bn worth of FDI projects announced globally.
Norwegian renewables developer Statkraft was awarded a tender from the Chilean Ministry of National Assets to develop 400MW of installed power, which will combine wind and battery storage. This is the company’s first greenfield project in the Latin American country and will involve an investment of about $500m.
“We are working decisively on our growth strategy in Chile, to have more clean energy that responds to the requirements of customers increasingly concerned about having sustainable processes,” María Teresa González, general manager of Statkraft Chile, said in a statement.
In the Baltic Sea, off the coast of Germany, Spanish utility Iberdrola announced plans to invest €800m to develop a 300-megawatt (MW) wind farm. Meanwhile Malaysia’s Solarvest Holdings intends to develop up to 500MW of solar power capacity in Taiwan by 2025.
This surge in renewables investment marks a step change from September, which was the first month in 2021 with more foreign capital deployed into fossil fuels than renewables.
But as ongoing energy shortages demonstrate the need for new capex across the energy matrix, FDI into fossil fuel was still more than $2.4bn in October. This was down from over $7bn in September, but higher than any other month since September 2020.
Investors in the chemicals sector announced FDI projects worth more than $5.8bn in October, the highest monthly total since June 2020, according to the latest fDi Markets figures.
Sabic, the petrochemicals subsidiary of Saudi Aramco, set out plans to invest £850m into its chemical plant in Wilton, a village in North Yorkshire, UK. The investment will safeguard 1000 jobs at the site, which had been shut for planned maintenance since September 2020.
Other chemical giants set out plans to increase green hydrogen production, such as Switzerland-based Ineos, which announced more than €2bn of investment into electrolysis projects across Europe.
“Green hydrogen represents one of our best chances to create a more sustainable and low-carbon world,” Jim Ratcliffe, Ineos’s chairman, said in a statement.
In the Norrbotten region of Sweden, Spanish fertiliser and agricultural chemical manufacturer Fertiberia will invest €1bn into its ‘Green Wolverine’ project. Once operational in 2026, Fertiberia’s plant will produce up to 500,000 tonnes of green ammonia per year, create 500 new jobs and reduce Sweden’s reliance on fertiliser imports.
Meanwhile other companies announced other first-of-their-kind projects. Canada-based Rock Tech Lithium is set to invest €470m to open Europe’s first lithium converter at the Guben South industrial park, Germany. The plant is planned to enable the production of 24,000 metric tonnes of battery-grade lithium hydroxide per year.
The most capital-intensive project announced in October was by a semiconductor company amid the ongoing chip shortage. US-based Micron’s announced plans to set up a Y800bn ($7bn) fabrication plant in Hiroshima, according to local Japanese newspaper Nikkan Kogyo.
This project is the largest FDI project announced in Japan since records began in 2003, according to fDi Markets, followed by another recent $7bn partnership in Kumamoto between Taiwan’s TSMC and Japanese conglomerate Sony.
Several other countries saw a spike in capex in October 2021, compared with the same month of 2020. This included the UK ($4.65bn) and the US ($4.16bn), as well as South Africa ($2.34bn), which attracted FDI after a large renewable energy independent power procurement programme (REIPPP).
Global wind and solar power company Mainstream Renewables plans to deliver 1.27 gigawatts of new clean energy in South Africa after being awarded 50% of the total allocation in the REIPPP.
“We know that there is a wall of money looking to invest in clean energy infrastructure; we know that next year that there will be more markets to invest in than in 2020; and we know that the market knows that it no longer makes sense to invest in oil or coal,” Mainstream’s CEO, Mary Quaney, wrote in fDi in December 2020. This was just a few weeks before the Norwegian renewable energy investment firm Aker Horizons acquired a 75% stake in the company, in a deal that valued Mainstream at about €1bn.
Meanwhile, US-based investors were balanced in their pursuit of opportunities at home and abroad in October. They announced 201 projects in foreign markets, compared with 211 interstate projects (domestic investments made by a company based in another US state).