When the company Freyr launched the plans for Mo i Rana, many people rolled their eyes. A gigantic investment in battery factories. A total of 1,500 people were to get jobs. An adventure, perhaps without equal, in Northern Norway. Earlier this week, business leaders and politicians from Northern Norway heard Prime Minister Støre praise what he called a “green industrial adventure”. – Where a battery factory is built and where people come to see what the circular economy means in practice, said Støre. The following day, the news came that Freyr is cutting heavily in Rana – and is turning his face towards the USA. CEO of the company, Birger Steen, insists that the adventure is not over. But the market seems to disagree. Now the share price is falling like a stone to the bottom of the sea. In the near future, not a single battery will be produced in what was to be the first of several giga factories in Rana. Photo: DRONEFOTO The stock market has given up on the adventure Long before the project set foot in the ground at Mo i Rana, it was called a castle in the air by some. But as time went on, things started to happen. The pilot factory and test center with 30 employees was completed in March 2023, half a year behind schedule. The construction of the first giga factory also started – and the government provided a guarantee in the form of NOK 4 billion. Jonas Gahr Støre gave a speech during Agenda Northern Norway. There he paid tribute to the battery factory adventure in Rana. Photo: Screen dump In July two years ago, the company also went public – and the market welcomed the company. The share price rose steadily. But in recent months, the wind has turned. And yesterday’s news means that a strong headwind is blowing. In two days, the price per share has fallen by almost 60 per cent. Dagens Næringsliv, which mentioned the price drop first, writes that the share has now fallen by over 90 per cent since the peak. Great pomp during the opening of the pilot factory. Now it may seem that the market has lost faith. Photo: Marius Guttormsen / news Investment director at Nordea, Robert Næss, says Freyr is a company that has been valued based on something they might achieve in the future. Now it may seem that few have faith that they will achieve anything. – The market has reached a situation where they believe that everything that has been invested so far is worthless. They even think that they are going to waste more money in the future, says Næss to news. He adds: – Only a few months ago, the financial market thought that this would be good. That it was an industrial adventure. Now the stock market has given up on it. Halve spending in Norway until next year Thursday’s quarterly figures also sent a grim message to the local community in Mo i Rana. Next year, Freyr will halve its spending compared to this year. This means redundancies among the approximately 70 employees that Freyr has in Rana today. They rather bet in Georgia. – We have said that we will more than halve what is our cash outlay from 2024. How many will have to go, and where it will happen, we have not determined yet, says Freyr CEO Birger Steen to news. CEO of Freyr, Birger Steen. Photo: Lars-Petter Kalkenberg / news – Will there be more of a halving of the staff? – There will be no more than a halving of the staff. I don’t think it will be anywhere. The reason why Freyr is cutting back heavily on the battery investment in Rana lies in the USA. Because after the company launched its plans for battery production in Norway, President Joe Biden in the USA came up with the support scheme Inflation Reduction Act (IRA). According to the company, this package makes profitability significantly better in the USA than in Norway. Freyr will focus on building its first gigafactory in Georgia. Photo: FREYR – As the Americans have introduced a package of measures that lack parallel in modern industrial history, it is actually the case that it is not possible to finance this type of project in our part of the world, says Freyr CEO Birger Steen and adds: – For that reason, we will concentrate on the project in Georgia as Freyr’s first gigafactory. – We will continue to develop our technology department in Mo i Rana. CEO of Freyr, Birger Steen, is very clear that they will continue to develop products from Mo i Rana. – We will continue to develop our technology department in Mo i Rana. Then we will not continue the work around Giga Arctic, which is the scaling of our battery production here for the time being. We will do it in Georgia in the USA. The main reason why they move the lion’s share of investment to the USA is their measures packages that make it more profitable. – How surprising was the package of measures? – It was so surprising that many, including us. We have spent some time taking in all the consequences of the package. It lacks parallels, and one probably has to go back to Roosevelt’s original New Deal to find something similar, he replies and adds: – The effect is dramatic. In the start-up phase, the Americans put in more than 1/3 of the costs in the form of support. This is support that disappears after a while. So there is start-up aid for new industry. Steen explains that the support in the USA is given by paying less tax. If this is transferred to Norway, it will not be an expenditure item in the national budget. – And if we don’t have this industry, then there is no tax that can be lost. – The alternative is that in the 30s we will be 90 per cent dependent on imports from China of infrastructure critical to society. We have seen that situation in connection with the pandemic and around Russian gas after the invasion of Ukraine. It is not a sensible situation to find yourself in. – Are you giving the government an ultimatum for a similar package? – No, by no means. We are very grateful for the support we have already received. We have received NOK 183 million in support from the public. We have used them to develop the company, and brought in 10 billion from the private capital market. Then we have invested 10 billion back in Mo i Rana, in both Giga Arctic and CQC. – The discussion we must have now is about capital that works in the scaling phase, so that we can not only develop world-leading technology, but also scale it in Europe. – Where is the threshold? – It is determined by the global capital market. When someone puts such start-up support in the pot, the capital is drawn in the direction of American projects. There are a dozen projects that have already announced their move from Europe to the US. Experienced that things take time Former mayor of Rana municipality, Geir Waage, is clear that they will continue to work to ensure that Freyr gets good framework conditions in Norway and Europe. – What we are experiencing now, we have experienced before. We have experienced that it has taken a long time in the past, longer than expected. Mayor of Rana municipality, Geir Waage. Photo: Frank Nygård / news Waage continues: – The municipality and Rana development will work together with Freyr. We are in contact with LO and NHO, the county council, the Storting and the government. The overarching goal is that Norway must have the same competitive conditions as in Europe, and one must match the approach that is in the USA. – The battery strategy in Norway is good, but it was created before Biden presented his package in the USA. Freyr CEO Birger Steen spoke to business, the press and others at Mo on Friday. Photo: Lars-Petter Kalkenberg / news Private capital must take the lead news has put a number of questions to the Ministry of Business and Industry on Friday. Industry Minister Jan Christian Vestre believes that batteries are still one of the major new areas of opportunity that stand out for Norway. – This is against the background of the strong growth in demand that is expected going forward and the need to develop green and better batteries than current standards. In the battery industry, NOK 18 billion has been mobilized from private investors in the last two years. Private capital must lead the way and the progress of the individual projects must mainly be determined by the owners and players in the market, says Vestre. Minister of Industry Jan Christian Vestre (Ap). Photo: Lars Os – However, the government must actively facilitate the triggering of private initiatives through good framework conditions and an active business and industry policy, where the state and the business world play as a team to realize the opportunities in the green shift, adds Vestre. Plenty of capital measures in the toolbox Birger Steen in Freyr points out that the measures packages in the USA are so good that it is not profitable to build in Europe at the moment. Jan Christian Vestre tells news that there are many opportunities for subsidies and guarantees on the NCS. – The Norwegian bottom plank is solid, and there are plenty of capital instruments in the toolbox related to loans, grants and guarantees. At the latest this autumn, we have strengthened our efforts with NOK 15 billion in connection with roadmap 2.0 for Green Industry Lift. We do this through a historic increase in the framework for Nysnø and Siva, and by strengthening the frameworks for Eksfin, Innovation Norge and Investinor. We have also set aside NOK one billion for innovation grants for larger battery projects of IPCEI nature, i.e. projects for the development of tomorrow’s battery solutions. Our tools will particularly build on our strengths and promote projects that are at the forefront and are ground-breaking in terms of technology, sustainability and performance. The aim of the government’s policy is to mobilize as much private capital as possible for the green shift, he says to news. Vestre emphasizes that they are cheering for Freyr and all other industrial entrepreneurs who are leading the way with innovative projects. – It is up to the industry to seize the opportunities and solve the challenges of the green shift. Therefore, there will be a need for different types of batteries and there is room for many actors in the battery value chain. All battery projects that have been announced in Europe will not necessarily be realized in Europe, and it is natural that some players will change their project plans along the way, he says and adds: – At the same time, I am glad that Freyr is clear that they still has ambitions to build a battery value chain with a center of gravity in Mo.
ttn-69
The shares plunge after quarterly figures – bets in the USA – news Nordland
