Global ferroniobium supply in 2021 returns to normal
----Interview with Gustavo Macedo
General Manager of European Market
CBMM
Founded in 1955, in Araxa, Minas Gerais, CBMM has a technology program that expands niobium applications and contributes to the growth and diversification of this market and it supplies cutting-edge products and technology to the infrastructure, mobility, aerospace and energy sectors.
Asian Metal: Hi Gustavo, please share with us about your current operating situation first.
Gustavo: Currently, the company has an industrial plant in the city of Araxa, state of Minas Gerais, with a production capacity of 150,000 tons of niobium products per year. The company also has offices and subsidiaries in China, the Netherlands, Singapore, Switzerland and the United States. As the world's leader in the production and commercialization of niobium products, CBMM has more than 400 customers in 50 countries. In 2019, the company invested in 2DM, a Singapore-based company dedicated to the production of graphene. In 2020, CBMM presented an EBITDA of R$5.1 billion. CBMM's net income totaled R$ 2.5 billion and net revenue was R$ 6.98 billion. CBMM holds a 75% share of the global niobium market. Besides that, CBMM has a new business area that works to diversify niobium applications. The company is evaluating investments in startups to accelerate innovations in the electric battery segment. In September, 2021, CBMM announced an investment to acquire 13% of the British company Echion, focusing on the development of technologies to ultra-fast charging batteries.
Asian Metal: Discouraged by COVID-19, many Brazilian producers faced output reductions. Do you face the same problem?
Gustavo: CBMM’s logistics and experience can attend to any client worldwide and ensured a continuous supply to our warehouses and logistics centers, even with changes enforced by the pandemic. In other words, the distribution of niobium products from Araxa to the company's warehouses around the world has normally taken place, since the beginning of the pandemic, by land and through Brazilian ports, which operate without restrictions. In addition to three commercial subsidiaries and one representative office, the company keeps its products in an extensive network of outsourced warehouses, strategically positioned to serve clients around the world. Deposits keep enough stocks to meet clients' immediate needs, ensuring access to an uninterrupted flow of high-quality products. Discouraged by COVID-19, our clients had to readjust to a new reality and a diminish of demand. CBMM's has acted as a partner to help them adapt. We have honored every deadline and working with clients to be flexible with new contracts, deadlines and conditions imposed by the moment. Total sales of niobium products (including ferroniobium and specialty products) in 2021 expect to drop by around 20% YoY, in line with the market's reduction expectation, totaling 72,000 tons. The drop was motivated by the impact of the pandemic in all sectors in which CBMM operates.
Asian Metal: European market continued to see tight supply in the spot market in H1, do you have special policy on European market to improve the situation?
Gustavo: CBMM has a logistics policy that provides the warehouses with 4 months of supply to address the responsibilities to our clients. Our policies haven't been altered due to the pandemic or its effects and have been able to provide old and new clients with their exact demands.
Asian Metal: Demand from Chinese market grows in a steady speed recently. What about your idea regarding Chinese market?
Gustavo: In the first half of 2021, steel production in China grew 12% in volume, compared to the previous period, pushing niobium sales in the country. We could observe an increase in demand for niobium in the flat structural segments (production of structural flat steel); stainless (stainless steel for applications in vehicle exhaust systems); and in the automotive sector. China is a strategic market for CBMM, as it is the largest steel producer in the world and has great potential for development and insertion of niobium. For over 40 years, the company has had a technical cooperation program in the country, with the objective of developing and promoting applications, mainly in the steel industry.
Asian Metal: As you know, there are some new niobium projects in the world in the recent years, do you think it would bring a new change on current supply and demand balance?
Gustavo: Historically, CBMM works to have its production capacity always above market demand. We believe that niobium is a key element for the industry in various segments and CBMM is prepared to serve the world market, as it has a consolidated logistical infrastructure on five continents. Our experience and planning have made it possible to address new demands and maintain the supply chain always in balance. We see new players and business as a positive increment to the market contributing to make it grow and evolve as a more mature and established product in the industry.
Asian Metal: As niobium is widely used in steel industry, which kinds of steel products would have more consumption for ferroniobium?
Gustavo: Steel industry is CBMM's core business, accounting for around 90% of its revenue. We work in mainly 3 markets: Structural, Mobility and Energy. Today only 10% of all steels produced worldwide contain ferroniobium alloys. Our forecast is to double this volume in the next decade. Niobium applications are in metallic structures of micro alloyed steel with niobium, which gives more resistance and tenacity to the material, making constructions safer. In addition, the use of niobium contributes to dematerialization, that is, less use of raw materials, making the entire production chain more sustainable. As an example, ferroniobium is used in infrastructure projects such as buildings, bridges, and viaducts. In mobility, it's used in chassis, automotive structures and metal parts, such as breaks and suspensions. For energy, applications of steel with niobium are used in pipelines for the transportation of gas.
Asian Metal: Besides steel industry, which industries would use ferroniobium? Which industry would be most promising?
Gustavo: The company supplies products and technology to the infrastructure, mobility, aerospace, and energy sectors. CBMM is the only one to produce all niobium products: ferroniobium, niobium oxide, metal alloys and vacuum grade alloys. We understand that the electric battery sector is very promising for the coming years, mainly due to the decarbonization plans of several governments that are encouraging the adoption of electric cars. Therefore, CBMM has invested in new technologies for lithium-ion batteries that feature ultra-fast recharge, durability, and longer life. Currently, the company has more than 40 projects with universities, research centers and startups around the world to accelerate innovations in this segment. For 2030, CBMM forecasts that sales of niobium oxides for electric batteries will exceed 45,000 tons. Currently, this volume is at 100 tons (2021). In addition, 25% of the company's revenue is expected to be represented by business in electric batteries in 2030.
Asian Metal: As innovation and new markets are a key part of the company's strategy, with R&D in batteries and new niobium applications, do you have any new improvement which could share with insiders?
Gustavo: CBMM has a constant investment in R&D of R$150 to 200 million per year. This investment is made with a focus on consolidating the company's operations with the steel industry, as well as diversifying its market. For this diversification, the new businesses front evaluates investments in startups around the world, which can accelerate the company's innovations and have synergy with niobium. Other niobium products, such as niobium metal and nickel niobium, can be used in the health and aerospace industries, applications range from MRI machines to airplane and rockets turbines and revetments.
Asian Metal: What do you expect about the total production volume of ferroniobium in 2021? How about the volume in 2022?
Gustavo: The expectation is that the market will return to the levels of 2019, when our sales were 85,500 tons of ferroniobium. The forecast for 2021 is to achieve 84,400 tons of the product, which puts us on the same growth rhythm from before the COVID-19. Each region and market is having a particular recovery plan and rhythm. In China, to exemplify, we're having a faster recovery and demand’s growing faster than in Europe, but we're working effortlessly to ensure a sustainable recovery plan to all our partners and clients, in every region we work. We're yet to establish a forecast for 2022.
Asian Metal: How about your plan of the future development about the ferroniobium business?
Gustavo: CBMM will continue to invest in ferroniobium. This is the company's main product and will continue to be over the next few years. We believe in niobium's potential to help lead the way towards a greener and more sustainable future. R&D is an essential part of our company, but we know that every new market has its own challenges and characteristics.
Asian Metal: Thank you and wish a better future for your company.
