The history of industrial conglomerates in Spain is a long one. Through a series of bolt-on mergers and acquisitions, many family firms became national and even international leaders. Looking through the constituent firms of some of these conglomerates can reveal gems. FerroAtlántica, part of the Grupo Vila Mar industrial conglomerate, is one such firm. It has businesses in electrometallurgy, energy, mining and photovoltaic solar power.
The FerroAtlántica Group made major headlines earlier this year when it agreed to merge in an all-stock deal with Globe Speciality Metals to form a company worth $3.1 billion. The merger gives the FerroAtlántica Group a commanding market share of the market for silicon for solar panels. The combined company – still going by the name FerroAtlántica Group – a much larger combined footprint in Europe and North America.
The merger is just the latest in a series of mergers for the FerroAtlántica Group, which was founded in 1992, itself the conglomeration of several smaller Spanish and international firms. The transaction means that the group now has operations in North America, Spain, Venezuela, South Africa, France and China, where it intends to build the largest silicon metal factory in the world, near the city of Kanding in Sichuan Provence.
Currently, the combined firm has 26 production facilities and five mining sites. Globally, it employs 4,700 people. Its current structure allows for joint CEO’s: Globe’s chief executive, Jeff Bradly and FerroAtlántica CEO Pedro Paguaga. The company seems well-placed to take advantage of the world’s growing demand for silicon-based products, which range from everything from lipstick, to computer hard-drives to car parts. The newly-formed FerroAtlántica Group will have pro-forma revenues of approximately €2.3 billion and EBITA of €330 million. Instead of being two large firms, they have now become a behemoth of the silicon industry.
Corporate Social Responsibility
We can hope that one of the most valuable synergies that will come with the territory for the newly-expanded FerroAtlántica Group is an increased focus across the group in corporate social responsibility. The CSR agenda hasn’t been visibly high on the Globe Speciality Metals list of priorities until now but there’s every indication that the merger will bring a welcome change in that direction. FerroAtlántica has established a comprehensive CSR program across its companies. This program includes constantly updated safety regulations, a code of ethics as well as a new set of CSR regulations in 2013.
FerroAtlántica’s CSR program caters for its employees’ personal development and careers, their safety, health, training, equality and social integration. In 2013, the group provided just under 45,000 hours of training to 4,815 employees – a substantial investment which outlines the firm’s commitment to their development in the areas discussed. Tangible improvements can be seen in improvements for the group’s employees in social benefits, wage supplements for those with temporary disabilities and maternity leave, life and accident insurance, regular health checks, flexible renumeration plans and others.
FerroAtlántica’s areas of operation also demand that it pays particular attention to the environment. It continues to make investments in this area, achieving ISO 9001, ISO 14001 and OSHAS 188801 for the quality systems implemented by the group. In addition, it provides funds to several worthy social projects and activities, which totalled €700k in 2013. Among the beneficiaries were the Prodis Foundation in Spain for the mentally-handicapped, various schools in South Africa and the Guyana and San Félix regions of Venezuela, where the firm undertook a social integration program in conjunction with FundaBancoex (a Venezuelan charitable foundation).
A cleaner future
Although it faces intense competition from cheaper plastics and even a depressed market for world steel, the FerroAtlántica Group stands to gain from the seemingly insatiable demand among technology products for silicon. In such an environment, being the producer of the market’s purest silicon will do it no harm.
Group chairman Juan-Miguel Villar Mir points out that the group has proprietary technology in place to manufacture cheaper and cleaner photovoltaic silicon metal. Called FerroSolar, this technology allows it to produce enough silicon while dramatically reducing the cost, energy consumption and environmental impact of the production, which has traditionally been an expensive chemical process that yielded small quantities.
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.” This ensures that the company’s sustainability in the electrometallurgical industry – hitherto highly energy intensive, often environmentally unfriendly and dependent on high energy prices.
FerroAtlántica has significantly diversified its production to shield itself to the headwinds of low energy prices and innovated extremely well in an industry not renowned for innovation. It has set itself up well to achieve its goal of producing silicon which generates more energy than the amount of energy required to produce it in the first place.
Written by Michael O’Byrne
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10 January 2017