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Chemours changes course on hydrogen investment

November 14, 2024 |By Katie Tabeling

Chemours has announced it will be slowing down planned investments in hydrogen, citing slower growth projections. | DBT PHOTO BY KATIE TABELING

WILMINGTON — Chemours will be slowing down investments in hydrogen, including a planned $200 million expansion at a French factory, as part of its new corporate strategy. Citing third-party projections that show a smaller market for hydrogen and a slower growth trajectory than first expected, Chemours will put a pause on related projects, including the

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WILMINGTON — Chemours will be slowing down investments in hydrogen, including a planned $200 million expansion at a French factory, as part of its new corporate strategy. Citing third-party projections that show a smaller market for hydrogen and a slower growth trajectory than first expected, Chemours will put a pause on related projects, including the investment at its Villers-Saint-Paul plant to manufacture its membranes in hydrogen fuel cells. The company first announced the investment in the factory in France in early 2023 as it planned to increase manufacturing capabilities for its Nafion ion exchange membrane which is often used in fuel cells. “We are leaders in this space and continue to believe in the long-term potential. But we believe, for now, we can satisfy demand with our existing assets,” Chemours CEO and President Denise Dignam told investors on a call. “Going forward, our investments must be guided by a disciplined capital allocation program and will prioritize high growth areas.” In recent years, Chemours had been eyeing the future hydrogen market that it had previously estimated to hit $900 million by 2030. It was also one of a coalition of Delaware companies that have been working membranes that were key to electrolysis, as Chemours had inherited Nafion from DuPont when it broke off as its own company. In 2022, Chemours inked a joint-venture agreement to study Nafion in next-generation vehicles. The decision to pause additional investments into hydrogen was driven by macroeconomic trends but also a complete look at the company’s balance sheet. Chemours’ Advance Performance Materials division, which has Nafion in its portfolio, is seeing slower sales, as it recorded $348 million in the third quarter— or a 1% increase compared to the third quarter of 2023. As Chemours considered the hydrogen investment, it recorded a $56 million non-cash impairment charge against the goodwill of the Advance Performance Materials division. Goodwill assessments are typically done at the end of the year, but Chemours Chief Financial Officer Shane Hostetter said the change in direction - and the fair value of the business segment - was what drove the decision. “As we looked at the hydrogen investment, it’s still very important to us. However, the market shifted on us, and the future cash flows associated with us were a little bit delayed,” Hostetter said. Chemours representatives told the Delaware Business Times that it remained committed to the growth of the hydrogen economy, and that fluoropolymers are essential for the hydrogen economy and the clean energy transition. Dignam, who has served in the top job at the chemical company for seven months, has also announced a new strategy in early November. Coined “the Pathway to Thrive,” Chemours will focus on cutting $250 million in costs and growing revenue by 5% annually through 2027. The new plan includes finding more cost savings in its Titanium Transformation Plan as well as millions more for other business and corporate costs, as well as doubling down on data center cooling fluids, refrigerants and semiconductors. “Our recently completed Teflon PFA line investment is a great example,” she told investors. “Our high purity resins serve as a key component in semiconductor fabs. We also remain strongly committed to moving into data center cooling for the continued development of our specialty two-phase immersion cooling product, Opteon 2P50.” In September, Chemours had ramped up production for its high-grade Teflon PFA resin production line to meet the rising interest in semiconductor manufacturing. The chemical company is the only domestic producer of this coating, and it’s used to avoid contamination in the chip manufacturing process. As for Opteon 2P250, which is designed to reduce data center cooling energy consumption by 90% by submerging the equipment directly in a manufactured cooling fluid, Chemours has also reported strong sales. In the third quarter, the company reported sales hit a record with a 21% year-over-year increase.