< PreviousF or Abu Dhabi-based artifi cial intelligence company G, “AI” could well stand for “Africa investment.” at’s certainly what the company has been up to in . In May, G and Microsoft announced an agreement with the Republic of Kenya’s Ministry of Information, Communications and the Digital Economy that involves $ billion invested in a package of digital economy projects that includes a new data center that will be built by G and its partners to run Microsoft Azure in a new East Africa Cloud Region. A letter of intent formalizing the partnership was signed in May as part of Kenyan President William Ruto’s visit to the United States, the fi rst state visit to Washington, D.C., by a sitting African head of state in nearly two decades. “ is partnership is bigger than technology itself,” said President Ruto in a release. “It is about coming together of three countries with a common vision of a nation empowered by technology, where every citizen has the opportunity to thrive in the global digital landscape.” “ is represents the single largest and broadest digital investment in Kenya’s history and refl ects our confi dence in the country, the government, its people and the future of East Africa,” said Brad Smith, vice chair and president of Microsoft. e Olkaria data center campus will become operational within months of the signing of defi nitive agreements, according to the announcement. e Olkaria geothermal fi eld is located near Lake Naivasha around miles northwest of Nairobi in the Great Rift Valley. Earlier in the year, President Ruto was present at the signing of an MoU between G and Kenya-based data center developer EcoCloud to construct the mega data center powered by Kenya’s gigawatts of geothermal energy. e facility is planned to have initial capacity of MW, but with the potential to build up to gigawatt. by ADAM BRUNS adam.bruns@siteselection.com AFRICA 16 JULY 2024 SITE SELECTION Digital Giants Unveil Billion-Dollar Data and Skills Plan for Kenya and East Africa Peng Xiao, Group CEO of G42 (l.), shook hands with President William Samoei Ruto of Kenya in March 2024. Photo courtesy of G42 SITE SELECTION JULY 2024 17 When EcoCloud and G42 signed their agreement in March, they noted that their partnership “is not just about erecting a digital infrastructure; it’s a foundation for a comprehensive ecosystem that includes cloud services and artificial intelligence, catering to the vibrant and youthful population of Kenya.” The Federation of Kenya Employers says young people aged 15 to 34, who make up 35% of the Kenyan population, have the highest unemployment rate of any age cohort at 67% (the overall national rate is 12.7%). “Africa has a population of almost 200 million people aged between 15 and 24,” says the Federation. “This category makes up 40% of the workforce, and 60% of the unemployed active labor force. This number is expected to double by 2045, bringing a big challenge on African economies since high youth unemployment is an impending threat to stability in Africa.” Skills and Connectivity Microsoft and G42 aim to turn those numbers into an impending opportunity. G42 has begun work to train an open-source large language AI model in Swahili and English. “To build on this and help accelerate advanced research in Kenya,” the companies said, “Microsoft and G42 will increase their combined collaboration and support for local universities, through the Microsoft Africa Research Institute, the Microsoft AI for Good Lab, the Mohammed Bin Zayed University of Artificial Intelligence in Abu Dhabi and select universities from Kenya and East Africa.” An East African Innovation Lab in Nairobi will aim to “help Kenyan and other East African startups, entrepreneurs, companies and organizations develop and implement cloud and AI services, making use of support from Microsoft developers who work in the company’s Africa Development Center, which has 500 employees in Nairobi. The partnership’s skills training plank will include offering digital and AI skilling programs to all government employees, a cybersecurity skilling program for more than 2,000 people per year, and a business skilling program for young entrepreneurs aged 18 to 24. And Microsoft says it will “continue to expand its work to bring last- mile wireless internet access to 20 million people in Kenya and 50 million people across East Africa by the end of 2025.” 18 JULY 2024 SITE SELECTION WORLD REPORTS by ALEXIS ELMORE alexis.elmore@siteselection.com Iceland Cleans Up T he largest direct air capture (DAC) project, appropriately named Mammoth, began its work in Hellisheiði, Iceland, in May 2024. The project comes from Switzerland-based climate technology company Climeworks, looking to replicate DAC operations that found success in the United States. This project refl ects Climeworks’ second DAC location in the country after its initial Orca site, which began production in 2021. Mammoth will have the power to capture 10 times more carbon emissions than its predecessor, resulting in 36,000 tons of CO2 captured annually. The regions geothermal energy and natural underground storage capabilities made the location feasible for long-term operations. Morocco’s First EV Charge T hanks to a new $1.3 billion investment from Chinese battery manufacturing company Gotion, Morocco has just landed its fi rst EV battery gigafactory. Gotion will initially introduce a battery capacity of 20 gigawatt-hours (GWh) but plans to scale to 100 GWh in years to come. This news follows the company’s plans to look for a European site to expand its EV portfolio, which could include collaboration with another battery manufacturer, InoBat. Gotion has not yet stated whether or not this facility will be shared with InoBat. As the company expands its battery capacity in the future the total investment could come to nearly $6.5 billion, according to the Moroccan prime minister’s offi ce. It is currently undisclosed where in Morocco Gotion plans to build its new EV battery plant. Map: Getty Images Climeworks uses fans to suck CO2 out of the air and heats it to 212 degrees Fahrenheit to release the carbon dioxide. Photo courtesy of Climeworks Room to Grow A fter acquiring the Lokomotion technology center in the Lahdesjärvi neighborhood of Tampere, Finland, in 2021, Metso now plans to move all operations from Hatanpää to this site moving forward. The sustainable technology company will invest $162 million in the fi rst phase of construction for the initial 365,972 sq. ft. of the over-710,400-sq.-ft. new production facility. This phase will bring assembly and testing facilities spaces to manufacture mobile crushers, in addition to storage facilities for components and materials used for aggregates equipment. Metso produces equipment used for the construction of roads and railway tracks, among other infrastructure uses. Construction will begin in 2024 and the facility is expected to become operational by late 2027. The company plans to move its crusher factory, research center, maintenance workshop and offi ces to the site by the mid-2030s. The new Lokomotion Technology Center aims to enable sustainable production on over 56 acres in southern Finland. Rendering courtesy of Metso SITE SELECTION JULY 2024 19 Italy’s Full Integration S TMicroelectronics has chosen the Sicilian east coast port city of Catania as the location for a fully integrated 200-millimeter silicon carbide plant. This facility will be the largest of its kind globally and represents a $5 billion investment. Dubbed the Silicon Carbide Campus, the location will be a powerhouse in the company’s global portfolio. According to STMicroelectronics, the site will handle SiC substrate development, epitaxial growth processes, 200-mm front-end wafer fabrication, module back-end assembly, packaging and various R&D ventures. It is anticipated that this location will begin production in 2026, scaling capacity to 15,000 wafers per year in 2033. Time to Smelt F ollowing a meeting between Kazakhstan Prime Minister Olzhas Bektenov and China Nonferrous Metal Mining Co, Ltd. Board of Directors Chairman Xi Zhenping in early June 2024, the company will now move forward with a $1.5 billion copper smelter facility. Located in the country’s Abay region, in the village of Aktogay, the new facility will have the capacity to process 300,000 tons of copper annually and create 1,000 new jobs. When operations begin in 2028 this facility aims to meet domestic market demand for processing raw materials containing copper and copper cathode used in a variety of industries. “The construction of the new copper smelter is a major industrial project that will increase the processing of copper raw materials mined in the country and will make a great contribution to the economy of our country. Copper industry is one of the priority sectors of our industry and its dynamic development is very important for us,” said Bektenov. Rio Tinto to Turn Australian Ore into BioIron L ocated 38 minutes southwest of Perth in Western Australia, the city of Rockingham has been chosen for mining corporation Rio Tinto’s new $215 million BioIron Research and Development facility. Rockingham Strategic Industrial Area in the city’s eastern region will host the project, which plans to use raw biomass to turn Pilbara iron ore into metallic iron. This method allows the company to reduce its carbon emissions up to 95% and remove the need for coal coking. Once operational in 2026, the facility will welcome 30 new full-time roles. “The world needs low-carbon steel to reach net zero, and we are working to make this a reality by fi nding better ways to turn our Pilbara ores into steel,” says Rio Tinto Chief Executive, Iron Ore Simon Trott. “BioIron is a world-fi rst technology that has the potential to play a signifi cant role in a low-carbon steel future. This research and development facility will further test the BioIron process, showcase Western Australian innovation capability and further demonstrates Rio Tinto’s commitment to supporting and enabling the decarbonization of the steel industry.” On June 3, 2024, Kazakhstan Prime Minister Olzhas Bektenov signed an agreement to allow the copper smelting project to move forward. Photo courtesy of Prime Minister of the Republic of Kazakhstan The European Commission is supporting the investment with over $2 billion through the EU Chips Act. Photo courtesy of STMicroelectronics The BioIron Research and Development facility will be Rio Tinto’s ninth Australian operation to date. Photo courtesy of Rio Tinto20 JULY 2024 SITE SELECTION INVESTMENT INSOMNIA: APAC Executives’ Mixed Perceptions of U.S. Investment Climate ASIA T he United States continues to be the largest recipient of global foreign direct investment, attracting an estimated $ billion in . Europe is the largest regional source, accounting for approximately half of the cumulative FDI stock, with Asia Pacifi c (APAC) countries being the second largest, investing approximately one-fi fth of total FDI stock. Companies from Japan, China, Taiwan, and India represent those at the cutting edge of critical supply chains, from semiconductors to electric vehicles and pharmaceuticals, and are the focus of investment attraction for U.S. economic development organizations (EDOs). APAC executives commonly view the United States as central to their business strategies due to the size of the market and access to innovation, as well as the incentives off ered for investments in critical supply chains and the pull that these have on their major customers. e global investment landscape, however, remains competitive, and the United States is just one of many destinations off ering attractive packages. In a time of political and economic uncertainty, shifting supply chains, labor shortages and ineffi ciencies and infl ation, many executives are questioning whether the United States provides the optimal conditions for their future business strategies and are prioritizing other markets over the United States. In our capacity as the FDI representative for multiple American EDOs in China, Japan, Taiwan, and India that aim to attract investment from companies in these countries, Tractus has met with numerous executives to discuss their outbound investment strategies and perceptions of the U.S. investment climate. Decade of Diversifi cation Japan is the single largest source of FDI from APAC in the United States. As of , Japanese companies had invested a cumulative $ billion, accounting for % of investments from APAC countries. Yet a survey of , Japanese companies conducted by the Japan External Trade Organization (JETRO) found that % of Japanese companies are planning on overseas investments in the next one to two years, with the majority focused on emerging markets like India, Brazil, Mexico, and Vietnam. e United States ranked as the th most active recipient. Among Chinese fi rms, a survey conducted by the China General Chamber of Commerce - USA (CGCC) reported that % of respondents are planning overseas investments, but only % of companies are considering investing in the United States, continuing the slowdown that has been ongoing since . Lower cost and friendlier countries across Africa and Asia continue to be the focus of Chinese investments. Taiwanese fi rms are also prioritizing investments in lower-cost destinations, like the -country Association of Southeast Asian Nation (ASEAN) bloc, where investment has surged in the last year. Only % of Taiwanese companies are evaluating investments in North America. Uncertain Headwinds APAC executives considering investments in the SITE SELECTION JULY 2024 21 United States are closely monitoring rhetoric from presidential candidates and the shifts in economic policies that could come with a new administration, as well as pending congressional and court decisions in high-profile cases involving foreign businesses. The 2023 CGCC survey reported that 88% of companies expressed concern with the current state of U.S.-China relations, and 44% of these companies believe that the relationship will deteriorate in the coming year. Decisions involving TikTok and Chinese bio- tech companies such as BGI and WuXi AppTec will have a greater impact on Chinese sentiment than on other APAC investors, but all investors are looking for regulatory certainty during uncertain times. Japanese companies in particular are heavily focused on the impact a Trump administration could have on infrastructure and environmental policy. The Biden Administration’s policies and incentives were viewed as the topmost factor that had a positive impact on Japanese business in the United States, with 48% of companies surveyed by JETRO echoing this sentiment. If policies change, it could jeopardize the estimated $42 billion that Japanese automakers are predicted to invest in the United States by 2030, as well investments from Japanese funds in renewables, like Itochu’s $2 billion fund. Labor Shock Companies across the United States are experiencing labor force challenges in all sectors. The depth and quality of the labor pool, particularly for manufacturing workers, remains a persistent challenge that executives must evaluate in detail to make informed investment decisions and mitigate risks. You don’t have to go far to find examples of challenges. Through discussions with executives, Tractus learned of the challenges that one Japanese auto-parts manufacturer, Koito Manufacturing Company, faced when evaluating an investment in Indiana. During the analysis, the company determined that the location’s labor shortages presented too much risk to future operations and that the EDOs it was dealing with did not have a credible enough plan to mitigate the risk, ultimately forcing the company to choose another location. This company was not alone, as labor shortages have reportedly impacted 88% of Japanese automotive parts manufacturers. Inflation’s impact on wage rates has also continued with little signs of abating. APAC companies operating in the United States continue to raise wages to retain employees, and 56% of Japanese firms operating in the United States cited wage inflation as the most persistent challenge to their operations. Nearly half of Chinese firms in the United States also reported that labor was the largest contributor to higher costs, followed by raw materials. The structure and laws related to unions in the United States are also not well known to many APAC executives. Executives from India, Taiwan, Japan, and China have all expressed frustrations of trying to understand what they consider to be complex state labor laws and their impact on unionization. These challenges are impacting investment decisions, especially when coupled with the rising costs and limited depth of the labor pool. It is not surprising to see that investment is being focused into lower- cost countries, as well as in states with right-to-work laws on the books. APAC companies will continue to be impacted by global FDI trends during the “Decade of Diversification.” Having the right information to assuage investors’ concerns and strong policies that improve investment attractiveness will ensure that locations have positioned themselves with a competitive investment offering. Dennis Meseroll is Executive Director, James Meisenheimer is Consulting Manager, and Sarah Urtz is a Senior Research Analyst at Tractus Asia Ltd., (www.tractus-asia.com), a leading Asia- based global site selection firm. Tractus has been assisting companies to make informed decisions about where to invest and how to expand their businesses in Asia and beyond for more than 25 years.22 JULY 2024 SITE SELECTION THE NORDICS How Google Warms Up a Finnish Town I n , Google purchased a paper mill in Hamina, Finland, and converted it into a data center with an investment of $ million. Since opening in , it’s invested much more in the facility, the latest being a $ billion expansion announced in May that in part will support its growing AI business in Europe. Locations in Northern Europe have long been attractive for their cooler temperatures and widespread use of renewable energy. e Hamina data center uses % carbon-neutral energy. Among other locations in Europe, Google operates a data center in Denmark and is building one in Norway. But there is more to the story of the Hamina facility, which uses seawater from the Gulf of Finland to cool the center. Google is now embarking on a plan with Haminan Energia on a heat recovery project whereby heat generated by the center’s servers will be directed to homes and other consumers in the local community. When fully operational, the project will supply % of the area’s heat requirements. “When we started in , the challenge was to cool down the servers, and we found a creative solution in seawater,” says Olavi Kemppi, Google’s data center operational manager, in a company presentation explaining the project. “Data centers create a signifi cant amount of heat as a byproduct. At Hamina we have been recovering heat for almost a decade now, but we wanted to do more.” Microsoft is doing the same elsewhere in Finland, directing data center heat to the cities of Espoo and Kauniainen. A similar project from Amazon channels heat to the community in Dublin, Ireland. Apple and Facebook data centers in Denmark also supply district heating to communities. “We’ve long wanted to channel our recovered heat off site for use by the local community,” adds Jukka Vainonen, Google’s site operations manager. “After years of extensive work, we are fi nally able to make our dream a reality right here in Hamina. But Hamina is only the start. Heat recovery is a major opportunity for energy conservation and transition, and Google is working to make it a reality in our data centers worldwide.” by MARK AREND mark.arend@siteselection.com Google’s data center in Hamina, Finland Photo courtesy of GoogleNext >