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3M Will Stop Producing "Forever Chemicals" At A Cost Of Up To $2.3 Billion

3M Will Stop Producing "Forever Chemicals" At A Cost Of Up To $2.3 Billion
The "forever chemicals" PFAS, which are used in everything from cell phones to semiconductors and have been linked to cancers, heart issues, and low birth weights, have a 2025 deadline for ceasing production, according to US industrial conglomerate 3M Co.
Due to their slow rate of decomposition, perfluoralkyl and polyfluoroalkyl substances (PFAS) have recently been discovered in foods, soils, and drinking water in potentially harmful concentrations.
Legal pressure regarding the harm PFAS caused has risen. A number of businesses, including 3M and DuPont de Nemours Inc., were sued by the attorney general of California last month to recoup clean-up expenses.
Shareholders have also demanded a halt to chemical production. Earlier this year, 54 companies received letters from investors managing $8 trillion in assets pleading with them to stop using them.
"3M has been facing a raft of litigation that has prompted the move," Victoria Scholar, head of investment at abrdn's Interactive Investor, said of 3M's deadline.
Other chemical manufacturers are anticipated to follow 3M's lead as investors prioritize environmental concerns.
"With 3M's scale and position as one of the world's largest producers of PFAS, we feel this could represent a turning point in the transition towards a more sustainable chemical industry," said Victoria Lidén, sustainability analyst with Storebrand Asset Management.
With estimated earnings before interest, tax, and depreciation (EBITDA) margins of about 16%, 3M reported that its manufactured PFAS sales are about $1.3 billion annually.
The sales amount equates to about 3.7% of the $35.4 billion in projected group revenues for 3M in 2021.
Over the course of its PFAS exit, 3M anticipates related total pre-tax charges of between $1.3 billion and $2.3 billion.
It anticipates taking a pre-tax charge in the fourth quarter of between $0.7 billion and $1.0 billion, mostly non-cash and related to asset impairments.
On Tuesday, 3M stock fell 0.4% to $121.53.
The Biden administration announced in August that it would propose designating some chemicals as hazardous substances under the American Superfund program.
According to DuPont, it would only use PFAS in "essential industrial applications" and would work with clients to find substitutes.
Danish, German, Norwegian, Swedish, and Dutch officials have been working on a proposal to limit the use of PFAS, which they hope to present by the end of January.
In March of next year, two scientific committees within the European Chemicals Agency of the EU are expected to publish assessments of potential restrictions on the use of PFAS in firefighting foams.

Christopher J. Mitchell

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