The last quarter of 2020 was intensive and exciting, with many activities and events that will have a large impact on our development in our three primary areas of focus in the coming years, i.e. 1) Full commercial rollout in South Africa. 2) New market launches. 3) Start of serial production.
During the period, we have maintained a very constructive and positive dialogue with the three ferrochrome producers in South Africa, Samancor, Richards Bay Alloys and Glencore with whom we have signed declarations of intent during the summer for orders of up to 241 PWR BLOK units. Our new head of sales, Dennis Andersson, is in continuous discussions with all of them, and he actually had the chance to visit and introduce himself to the South African ferrochrome industry on site for a week in early November. As I have mentioned before, I am convinced that negotiations leading up to a signed deal, despite the pandemic, will pick up speed. Especially considering that the South African government in November decided to levy an export tax on chrome ore to boost the domestic ferrochrome production, and to require the industry to reduce its dependence on purchased electricity in return. On top of this, the increased requirements to reduce carbon emissions also strengthen Swedish Stirling’s bargaining position considerably.
The interest in the PWR BLOK technology has also continued to grow during the last quarter, and we are receiving more serious and interesting requests from several sectors, not only from the metal industry, and from countries around the world. Since the launch, we have been focused on South Africa. However, we have intensified our efforts during the year to identify the next market, to allow us time to prepare for new launches once the commercial rollout in South Africa has begun. In the last quarter alone, we have had meetings to discuss potential partnerships with several interesting operators in Europe, among others. But it is still a little early to go into details or make definitive decisions.
During the period, work on the PWR BLOK generation 3, which is the version with which we will start serial production towards the end of the year, followed the revised plan laid out during the outbreak of the corona pandemic in the spring. Among other things, we have started different long test runs of new subsystems. We have also entered into a partnership with ABB, where our primary objective is to lower production costs for serial production. We estimate that we will soon be able to go into production of the first PWR BLOK generation 3 for customer delivery towards the end of 2021.
A strong financial position is a prerequisite for achieving the company’s goals and ambitions in the coming years. Swedish Stirling is well funded and has further strengthened its position in the quarter. By means of agreements, in which 100 percent and 68 percent of KV3 and KV2 owners respectively pledged early on to convert all their convertible bonds into new shares, any uncertainties about share conversion were swept aside at an early stage, and with the directed new issue to institutional investors the company’s balance sheet reflects an increase of approximately SEK 63 million. The interest in the directed issue was high, and the investors included BNP Paribas, Energy Transmission and Spotify founder Daniel Ek (indirectly through company). We now have the financial strength required for the next phase of the company’s development, and with the move to Nasdaq First North Growth Premier that took place in November, share turnover has increased, as well as the ownership spread, which is very positive.
At the end of last year’s final quarter, we also got an interesting and clear indication that the PWR BLOK technology can play a much greater and more important role in climate change than most people may have actually realised. As our technology is new and our focus initially was limited to one sector and one market, we have not been featured much in the media or social debate. But our time is coming. When Glencore’s resigning CEO, Ivan Glasenberg, at the end of the quarter presented how the world’s largest commodities company plans to become globally carbon-neutral by 2050, and mentions the PWR BLOK technology as a part of their solution, it is yet another clear acknowledgement that the PWR BLOK is going to play a major role in industry’s and society’s long-term climate shift. Things are looking up for the years to come.
Swedish Stirling AB