Four key takeaways from the World Economic Forum 2023

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The World Economic Forum (WEF) held its annual meeting in Davos, Switzerland last week against a backdrop of global inflation and recessionary risks. However, despite the doom and gloom, there were some interesting takeaways.

– Australian miner Fortescue expects renewable energy to eventually outscale its iron ore business.
– The founder of Indian steel producer JSW wants to launch an EV that could rival Mercedes-Benz.
– Palantir CEO Alex Karp says the company will hire this year despite the economic downturn.

Breaking the reliance on oil and gas

A major topic of conversation at last week’s WEF meeting in Davos was the energy crisis and the need to transition to renewables. In its annual report on global risks published earlier this month, the WEF argued that while high cost of living will likely remain the biggest threat to global security in the short term, the climate crisis remains an existential challenge.

If the world is to limit warming to 1.5 degrees celsius, it will have to end its reliance on oil and gas. Spanish renewable energy giant Iberdrola [IBE.MC] used the event to launch ‘Electric, together’, a five-point manifesto outlining how to “break the cycle of crises driven by oil and gas” and accelerate the green transition in 2023.

The former CEO of iron ore producer Fortescue Metals Group [FMG.AX], Elizabeth Gaines, told the Reuters Global Markets Forum in Davos that “ultimately renewable energy will probably outscale our iron ore business significantly” and will “play a very big part of our overall earnings in the future”.

Last September, Fortescue announced a $6.2bn package to lower operating costs and eliminate fossil fuel usage.

India accelerates EV plans

Industry leaders also revved up their electric vehicle (EV) ambitions at the event. Sajjan Jindal, chairman and managing director of Indian steel producer JSW Steel [JSWSTEEL.NS], told Business Today in an interview that he aspires to launch an EV that could potentially rival Mercedes-Benz [MBG.DE] and Volkswagen’s [VOW.DE] Audi.

“I want to make a car that is on par with these cars but is made in India, sold in India, and also sold in international markets. Instead of us importing, other countries should import from us,” said Jindal.

The CEO of automotive manufacturer Mahindra Group [M&M.NS], Anish Shah, told CNBC that the Indian company expects EVs to account for a quarter of its car sales within the next five years, up from just 1% today.

Meanwhile, Taiwanese battery-swapping company Gogoro [GGR] and unlisted automotive system maker Belrise Industries signed a deal at Davos declaring that the two parties will invest $2.5bn in developing smart energy infrastructure to expedite battery-swapping in the Indian state of Maharashtra.

Green hydrogen push

India also has big plans for green hydrogen. ReNew Power, a subsidiary of the Nasdaq-listed ReNew Energy Global [RNW] is reportedly exploring green hydrogen opportunities, with a particular focus on India and Egypt.

“We are doing a lot of work in terms of studying the exact cost … I think we are about 12 [to] 18 months away from taking a final investment decision,” said ReNew Power’s managing director Sumant Sinha, speaking to Indian news site Moneycontrol on the sidelines of the event.

Sinha said countries like Egypt, Morocco, Oman and Saudi Arabia “have the advantage of cheap land”, despite not offering such generous subsidies.

Sinha also added that ReNew Power sees itself “more as a company for decarbonising rather than a company just to make clean electricity”. It aims to work with corporations that are coming under shareholder pressure to decarbonise their entire operations.

Palantir to buck the tech layoff trend

While the energy crisis, inflation and the economic downturn are putting pressure on the budgets of many businesses, Colorado-based data analytics software company Palantir [PLTR] is expecting to avoid mass layoffs like those announced by the big tech giants. During the conference in Davos, CEO Alex Karp told Reuters that the company plans to hire approximately 200 people, adding to its 3,500-strong workforce in 2023.

In a conversation with David Rubenstein, co-chair of private equity firm The Carlyle Group [CG], Karp also defended the company from criticism for selling software to governments, intelligence agencies and the military.

“You may not agree with that and, bless you, don’t work here,” was Karp’s message to those tech workers who are critical of what Palantir does.

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Source: Cmcmarkets.com

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