Billionaire Birla Said to Eye Booming Global Carbon Fiber Market
(Bloomberg) -- Indian billionaire Kumar Mangalam Birla is exploring entry into the production of carbon fiber, a high-strength and light-weight composite material expected to be a $4.7 billion global business by 2022, according to a person familiar with his thinking.
The Aditya Birla Group, the $40 billion mining-to-mobile phone carrier conglomerate, may buy the technology to manufacture carbon fiber at one of its existing overseas manufacturing facilities, said the person, asking not to be identified because the plan is private. Another option is to buy a carbon fiber plant from another company if the technology is too complex to be adapted at Birla plants, the person said.
Carbon fiber is finding increasing traction among defense manufacturers and automobiles makers that seek strong, high-tensile, heat-resistant and light materials. The market for carbon fiber -- dubbed the ‘wonder material’ by The Guardian newspaper last month -- is estimated to more than double to about $4.7 billion by 2022 from $2.2 billion in 2015, according to an Allied Market Research report.
“The main positive is that it’s a much lighter material versus competitors such as steel or aluminium -- but is just as strong,” said Johnson Imode, a London-based analyst with Bloomberg Intelligence. “This makes for energy and efficiency savings for customers.”
The group’s consideration is still at an exploratory stage and there’s no timeline for entering this business, the person said. The demand from the automobile sector is particularly high as designers aim to make cars both lighter, stronger and less polluting, according to this person. The group doesn’t comment on “speculative stories,” spokeswoman Pragnya Ram said in an email response.
Thinner Than Hair
Carbon fiber is a thin long strand, far thinner than even a human hair, in which carbon atoms are bonded together in a crystal alignment that makes the fiber incredibly strong for its size. Thousands of these strands are entwined together to form a yarn, which can be then woven into a fabric or used as it is.
The applications for the material range from aircraft and spacecrafts to racing cars, sailboat masts, wind turbines and even golf clubs. The market could grow as much as 10 percent annually, Imode estimates.
Nearly half of the airframe of the Boeing 787 Dreamliner is comprised of carbon fiber reinforced plastic and other composites, according to the airline manufacturer.
Japan, U.S. and Europe are home to the bulk of the world’s carbon fiber manufacturers, making it one of the likely corporate hunting grounds for Birla to scout for a target. The biggest players include Toray Industries Inc., Hexcel Corporation, Mitsubishi Rayon Co., Teijin Ltd., SGL Group, Cytec Industries Inc., Nippon Graphite Fiber Corp. and Zoltek Companies, Inc.
The conglomerate, if it takes the plunge, would be the first large Indian player in the carbon fiber market.
Birla, 49, known for his penchant for dealmaking, has sealed two dozen mergers and acquisitions in the past two decades.
He’s in the process of combining his mobile-phone unit Idea Cellular Ltd. with Vodafone Group Plc’s Indian business to form the nation’s largest wireless carrier. UltraTech Cement Ltd. had bought cement units from debt-laden Jaiprakash Associates Ltd. last year. This month he received a nod from shareholders to merge two listed group firms, Aditya Birla Nuvo Ltd. and Grasim Industries Ltd., to create a behemoth with $9 billion in combined revenues.