FERROGLOBE: Ferroglobe strongly focused on positioning the Company for long-term success

The mineral products world is changing alongside the global energy transition. What we mine, how we do it, how we process, and where it goes has been a tried and tested route for decades. But the journey is changing as the international community looks to the future. Global mineral demand is likely to undergo significant changes as countries and businesses work to achieve climate targets. In general, the shift towards a low-carbon economy is likely to result in a more diverse and complex mineral demand landscape. Minerals that are expected to see increased demand include those that are used in renewable energy technologies such as the production of electric vehicles, wind turbines, and solar panels. Here, Ferroglobe is an industry leader, with an international presence and a supreme product range.

Nasdaq-listed, with a workforce of around 3,500 employees spread over more than 25 sites, and production centres and mines located in Spain, France, Norway, Canada, the United States, Argentina, South Africa, and China, Ferroglobe’s product range includes silicon metal and ferroalloys based on silicon and manganese. Vital in consumer and industrial applications and supporting the sustainable advancement of society, these metallurgical products are carefully created utilising the company’s more than 100 years’ experience.

But it hasn’t been easy, and there have been challenges, hurdles, changes, and adjustments to bring the company to its position today as an industry leader.

TRANSFORMATION STORY

In 2019, the company posted -$29 million Adjusted EBITDA. This was a problem for all stakeholders and a transformation plan was put in place that embraced future aspirations, setting the company on a solid footing.

“In 2020, we embarked on an ambitious strategic transformation plan known as the Value Creation Program, aimed at achieving three main objectives: regaining global competitiveness and efficiency; ensuring long-term sustainable profitability; and strengthening trust with all its stakeholders,” explains Marco Levi, CEO Ferroglobe.

The turnaround plan covered all the functional areas of the company, targeting operations, commercial, procurement, supply chain, and working capital. The creation of a single strategic objective – to become the reference in silicon metal and ferroalloys by innovating and creating value to all our stakeholders – has helped this large corporate pull in a single direction.

After three years, significant progress has been made and the company is well positioned to drive the multiple critical industries it serves.

In 2022, financial results were presented by a jubilant CEO, Dr Marco Levi, who said: “The prospects for Ferroglobe have never been stronger. We have optimised the cost structure of the company to enable us to outperform throughout the cycle. In addition, we are well positioned to capitalize on several trends taking place in the market that will drive growth in the coming years.”

Posting revenue of $2.6 billion – the best in the company’s century-long history – and +$860 million Adjusted EBITDA have helped the business to retake control of the market and poise for future growth.

Success in financial results, high-quality products, first-class standards around health and safety across operations, strong focus on environmental impact, and positive contributions in the communities in which it is active shows that the strategy is working.

“These efforts make Ferroglobe a value-creating company that strives to generate sustainable profit and add value to all our stakeholders, positioning us closer to becoming the global reference in silicon metal and ferroalloys,” says Marco Levi. “Together, with everyone’s support, we have made great progress in building the new Ferroglobe and the 2022 financial results show that we are moving in the right direction.”

The aim of the transformation plan was for Ferroglobe to address competitiveness and efficiency issues. “After three years of transformation, we have shown that our strategic plan works,” says Levi.

She highlights the creation of a sustainable and clearly understood culture as a key element in the company’s strategy.

ONE TEAM

In 2015, Ferroglobe became the business we know today through a merger between Grupo FerroAtlantica and Globe Speciality Metals. A major global corporate was the end result, headquartered from London and Madrid. Ensuring a thriving company culture came out of the merger was difficult, but it was achieved, and this allowed for the implementation of the strategic plan underway now.

“Mergers are always complex, because they involve reorganising different business projects, with different corporate environments and legacies, and this is always a challenge at the operational, financial and people management levels. This complexity is even greater in global companies,” admits Levi.

“With everyone’s efforts, we have worked on reaching the necessary internal engagement to achieve the desire for the new Ferroglobe cultural change with a fundamental principle: we are One Company, One Brand, One Team. In the last three years, the Communication and People & Culture departments have promoted multiple initiatives to achieve this objective, related to the engagement of our people and their active participation in the company.”

Both Grupo FerroAtlantica and Globe Speciality Metals saw the potential for significant growth in the renewable energy space – specifically silicon used in solar panels. Used as a semiconductor material in solar cells and computer chips, silicon is immensely popular but requires an expensive manufacturing process. When complete, this process turns raw materials into products in high demand, at high value. For example, ferro alloys products are used to strengthen steel products while also reducing fatigue and improving corrosion resistance. Manganese is used for similar reasons but has applications across rubber, glass, ceramics, fertiliser and more. The range of uses for Ferroglobe products, and the global appeal from manufacturers and end-users is one of the key elements in the company’s attractiveness. Internally, the importance of operations is not lost on those on the front line.

“We have made sure to generate awareness among our employees of how Ferroglobe’s advanced metallurgical products are contributing to create a greener industry and a more sustainable society,” highlights Levi.

“Thanks to a fluid relationship with all employees on a global level, we believe to have managed a new perception that we are a company that creates value in major industries such as aluminium, chemical and steel, which are then destined to crucial end-products for the energy transition such as lithium batteries, semi-conductors and solar photovoltaics.”

Clearly, the new strategy and the Value Creation Program has been embraced by employees, customers, suppliers, shareholders, and all stakeholders. The plan now is to achieve further growth and make the most of positive momentum.

“Although we find ourselves in a challenging global context, our strategy is meeting our financial targets, positioning Ferroglobe in a strong financial position to keep growing,” confirms Levi.

AMBITION: SUSTAINABILITY

Growth for Ferroglobe will be aligned with the development of new industries in power, automotive, construction, manufacturing, and others – all with the energy transition and sustainability in mind. The company is keen on not only market share improvement and leadership, but also becoming the reference in health and safety and innovation.

“Innovation and sustainability were established as crucial commitments within Ferroglobe’s transformation and strategic plan, aligned with the historical commitment of our company,” details Levi.

She adds that a current focus is the production of high-purity silicon metal to assist in becoming the market-leading supplier for batteries and solar. “Through innovation and our expertise, we are producing a critical material for the advancement of cost-effective and low-carbon footprint solutions, which are contributing to accelerate the energy transition in sectors such as electric mobility and solar power.”

To aid this growth, two previously idled plants have been restarted, the first in Alabama, USA, in early 2022, and the second in Polokwane, South Africa at the end of 2022. The company is also busy starting silicon production at its Puertollano facility in Spain, using advanced technology and robotic automation.

Also at the end of 2022, Ferroglobe signed a partnership agreement with Trinseo – a specialist materials solutions provider – to develop high-silicon anode solutions for electric vehicle batteries together. Sales of EVs were up by 75% in the first quarter of 2022 against the same period in 2021. That year, sales doubled on 2020. The market is booming, and the supply chain is adapting to meet demand and drive performance.

“Since our MOU with Trinseo, we have commissioned and started up our first industrial milling facility, enabling us to produce and deliver samples, of up to several tons, to major partners to continue the path towards commercialisation of new silicon-containing materials for the anode of lithium-ion batteries,” explains Levi.

“At the same time, steady progress on our R&D program is being made to use micrometric silicon in silicon dominant anodes, which is grabbing the attention of main cell and EV players. We are enhancing electrochemical capabilities with our local partners and developing new materials within the partnership with Trinseo and ongoing funded research projects.”

Recently, the company finalised its ESG strategy – a five-year plan which promotes Ferroglobe’s sustainability focus as a fundamental strategic pillar within the fabric of the business globally. Part of this means reducing CO₂ emissions, become more energy efficient, supplying into energy transition-based industries, and investing ethically.

“As part of our path to become a more sustainable company, we are working on different primary levers to lower our CO₂ emissions without compromising our growth objectives,” says Levi. “As part of our decarbonisation ambition project, reducing CO₂ emissions is our main objective via replacing coal by using charcoal or biocarbon in our production processes across the plants.

“We are also implementing key technical metrics in all our plants, to systematise and boost energy efficiency. In our European plants, we have ongoing projects of heat recovery which are already reducing energy specific consumption by 10%, which we intend to extend to our other high indirect emissions countries in the future.”

HISTORY OF CHANGE

The future looks bright for Ferroglobe. Embracing change and looking to do things differently, this is a business that has proven its commitment to a different outlook. Through its history, change has been constant. Acquisitions, mergers, divestitures, economic and political ups and downs, and financial challenges that blight many have been effectively traversed by Ferroglobe for a long time. “We have a strong track record of successfully navigating economic downturns thanks to operational flexibility and the settlement of plants in competitive locations, in terms of cost and reliability. This experience has provided the company with the skills and knowledge needed to succeed in challenging economic environments,” suggest Levi.

“Although we are facing challenging market conditions, we believe that investing in the development of high-quality, innovative products for growing end markets, such as green mobility or solar photovoltaics, will bring great long-term benefits not only for Ferroglobe, but also for society as a whole,” he adds.

If the past three years is anything to go by, Ferroglobe is not only embracing change but actively driving it. A new strategy, new clients, new industries, new materials; fantastic financials – it’s a positive journey.

“Together, with everyone’s support, we have made great progress in building the new Ferroglobe and the 2022 financial results show that we are moving in the right direction,” he concludes.