www.ferroatlantica.es

FerroAtlánticAThe meTals of energy

The meTals of energyGrupo FerroAtlántica combines bewildering diversity with simple principles, sticking firmly to its objective of remaining the world leader in silicon metal and other diverse alloys, developing downstream technologies for the energy industry

written by: John o’hanlonresearch by: louisa adcock

The meTals of energy

ferroAtlánticA

The nuevo Pindo hydroelectric plant

The Spanish industrial minerals group FerroAtlántica dates back to 1992, when Juan-Miguel Villar Mir acquired the Ferroalloys Division of Carburos Metálicos.

He added a number of businesses, till in 2007 the business had arrived at a critical mass that enabled itself to launch itself as today’s Grupo FerroAtlántica: since then it has continued to grow through acquisition within the silicon and ferroalloys sector, but also setting up a number of new businesses around the world, as dictated by the growing market in these commodities.

Today it employs 3,000 people in five countries and four continents. Starting with four factories in Spain in 1992, it now operates fifteen factories in Spain, France, South Africa, Venezuela and China, and produces over 1 million tons of a diversified array of alloys.

The parent group (Grupo Villar Mir), says Chairman Juan-Miguel Villar Mir, has the unusual distinction of being made up from companies that were in difficulties, were turned around and are now thriving – it is now the 14th largest Spanish corporation. A former Finance Minister, he was ennobled by the King of Spain in 2011 and in recognition of the work the group has done in France he was awarded France’s highest honour when he was installed Chevalier de la Légion d’honneur in 2010.

Grupo FerroAtlántica itself, having grown in this manner, says Group Chairman and CEO Pedro Larrea, has also proved the success of the model, demonstrated by a turnover of more than €1.1 billion in 2012. Following a

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difficult trading period, the strategy will be continued. “Our strategy continues to be based on ensuring operational excellence, maintaining a portfolio of worldwide growth projects and promoting technological innovation to be able to maximise profits when recovery comes, which we hope will happen throughout 2013. In a market environment that we hope will improve this year, and especially from the start of 2014, we will continue to look for sites for future factories, as well as launching and driving new product sales management, and improving our competitiveness.”

The competitive scenario is an increasingly demanding one, he points out, in a market driven by demand for efficient energy production. “To maintain our current market position, we will need to be able to incorporate a new production plant every two or three years. Given that we are talking about completely globalised markets, we look for the most efficient location with regards to the cost of energy, raw materials and transport, and we are confident of providing our technological and operational capacity to make them the most efficient in the world. Without being too specific, I can say that we are at an advanced stage in developing new projects on five continents.” At the same time, he adds, FerroAtlántica is keeping a close watch on mineral exploration developments group Chairman and Ceo Pedro larrea

FerroAtlánticA

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with a view to improving the supply of raw materials – and will also consider entering the electricity generation market.

When asked about the challenges silicon technology faces from advanced plastics and other materials, he is quick to point out that silicon remains the key material for new technologies. FerroAtlántica’s Elsa electrode, which offers significant energy savings and avoids contamination with iron, has been sold to the world’s main silicon metal producers and is used in the manufacture of 30 percent of all silicon metal produced today in the western world. “We also have proprietary technology to manufacture cheaper and cleaner photovoltaic quality silicon metal more efficiently,” he enthuses, drawing attention to the market fundamentals: demand from photovoltaic cell manufactures for this material is still surging at an annual rate of 20-25 percent. And nobody can trump the achievement of the group’s technology in developing a low cost way to produce silicon at 99.9999 percent purity!

FerroSolar is the name of this technology: solar grade silicon has hitherto been produced by expensive chemical processes which only yield small quantities – so the main bottleneck in making solar energy feasible has been producing enough solar grade The monzón factory in spain

€1.1 Billion+

2012 group turnover

“We Also hAve proprietAry technology to mAnuFActure cheAper

And cleAner photovoltAic quAlity silicon metAl more eFFiciently”

silicon. “It’s 100 percent our own technology and will allow us to considerably reduce the cost, energy consumption and environmental impact, while greatly increasing production capacity,” Larrea predicts.

One of the most recent additions to the FerroAtlántica family, the largest quartz mine in South Africa with an annual production capacity of 1.3 million tonnes and reserves of 60 million tonnes, was acquired in July 2012 for €25.7 million. SamQuartz, founded in 1955 and now the largest producer of high quality silica in South Africa, is of

vital strategic importance for the group says Larrea. The mine is the biggest quartz mine in South Africa and one of the biggest in the world. “With its purchase we have achieved vertical integration of our industrial assets in South Africa and at the same time guaranteed silicon metal production of the highest purity as well as special ferroalloys for a period of no less than forty years.

The South Africa operations managed by wholly owned subsidiary Silicon Smelters include the arc furnaces of Polokwane Smelters and Rand Carbide, the mining operations

The serrabal quartz mine

FerroAtlánticA

“the group hAs trAnsFerred World clAss business principles And skills

to its employees in south AFricA”

of Thaba Chueu Mining (TCM) including SamQuarz, and 9,584 hectares of sustainable tree farms that provide the smelters with charcoal. South Africa’s economy is badly in need of investment to develop its mineral resources, says Jan Coetzee, Marketing and Commercial manager for Silicon Smelters. “All the investments by FerroAtlántica have supported production of value added products from domestic resources. We employ over

1,000 people directly but to that you can add a further 6,000 indirect jobs. We have calculated that the economic benefit from our operations extends to more than 30,000 people across South Africa.”

The benefit of having multiple local and global facilities is that knowledge and best practices can be shared, says Coetzee. Silicon Smelters is a South African company, but is fully integrated into the FerroAtlántica group.

Working at the monzón facility in spain

“Activities like marketing, sourcing, financing and benchmarking are done at an international level, and the domestic operations reap the benefit from these activities. The group has transferred world class business principles and skills to its employees in South Africa.”

Needless to say the most active silicon market in the world is China. FerroAtlántica entered this market in 2008 with a JV that created the Ganzi project in Tibet, which is constructing the world’s largest silicon metal factory. In addition to this project, in 2010, it acquired the Mangshi Sinice Silicon Industry Company Limited in Yunnan province, out of administration. The plant was a new one, completed in 2008, but had never run at capacity. Following FerroAtlántica’s purchase of the factory in November 2010, a two-year

investment program of close to €25 million was launched aiming at upgrading the plant, including the introduction of FerroAtlántica proprietary electrode technology and the increase of the nominal capacity of each furnace to 23/24 MW as well as bringing all plant operations to compliance in every respect (health and safety, environmental and technological standards).

The plant restarted operations on schedule in May 2011 and has, according to finance manager Junhua Shen been performing as efficiently as any in the group. Like the South African operation, it will be developing sustainable forestry to feed the furnaces, additionally acquiring land to allow expansion – this factory alone will provide 250 jobs, he says. “With the nearest high school 650

Worker at the rand Carbide factory in south africa

FerroAtlánticA

The Clavaux facility in france

“it is quite diFFicult to AttrAct young educAted people in remote AreAs like

mAngshi but they Are AttrActed by the trAining opportunities We oFFer”

kilometres away in Kunming it is quite difficult to attract young educated people in remote areas like Mangshi but they are attracted by the training opportunities we offer.” In 2011 when the plant started up, 15 technicians came over from Europe for six months to train local employees.

Unlike the western silicon market, Junhua Shen points out, the Chinese market consists of more than a hundred producers, and hundreds of agents/traders, creating a great deal of competition. The Chinese market accounts for around half of all global production of silicon, and China’s strategy is to control 50 percent of this supply within its borders – being an indigenous player is not an option for the number one global producer.

Mangshi, a spanking new operation, contrasts with the oldest in the group, acquired in 2005 when their subsidiary FerroAtlántica acquired the French company Pechiney Electrométallurgie, now Ferropem. The Montricher plant in south-western France was established in 1914 and has been specialising in the production of Silicon Metal through carbothermal reduction of quartz since 1984. The arrival of FerroAtlántica led to a complete revival of its industrial activities says plant director Francis Rateau: “Grupo FerroAtlántica gave us a very clear directions

and objectives, which motivated everyone to improve our plant’s performance.” Through investment, process optimisation, employee empowerment, quick decision making all contributed to the turnaround, he says. Among the improvements seen as a result of more than €10 million invested in this specific plant were an increase in production capacity through upgrading the furnaces, better raw materials handling in a new input facility close to the rail link and reduced emissions through the installation of a new baghouse.

Montricher is a reminder that the hub of FerroAtlántica’s activities lies in Europe, serving European customers. “However our two South African plants serve the Americas and Asia. Furthermore, our Chinese plant gives us great strength in China and reasserts

silicomanganese

FerroAtlánticA

The monzón factory in spain has two silicomanganese furnaces and two ferromanganese furnaces

our position as the world leader in silicon production”, asserts Rateau with pride. He places his finger on one of the most intractable facts relating to the electrometallurgical industry – that it is highly energy intensive and still relies on competitive energy prices. “The main challenge is to produce silicon with a positive net energy balance. We consume significant amounts of electricity to produce silicon from quartz extracted from the earth. Our goal is that silicon will ultimately generate a lot more energy than the amount required to produce it initially.”

Nevertheless, faced with an adverse economic situation in the industry and electrometallurgy in particular, a fall in global demand, the pressure of competition or the high cost of electricity, FerroAtlántica Group has done its homework, says Pedro Larrea. “We have diversified our production, we have invested in our own technology and we continue to invest in international expansion whilst maintaining a 100 percent Spanish identity. We are confident we can continue along our path of growth, diversification and development, we aim to consolidate our global leadership position and continue improving the service we provide to our customers. We are also committed to the professional and personal development of all our employees – and with the rooting of our activities in the social, economic and industrial environment in which they work.”

FerroAtlánticA

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