HomeGAA in the MediaNewsArchiveRyan's Notes 10/29/2012

Ryan’s Notes

GAA/CCMA discusses takeover and future

October 29, 2012

 Following the internal takeover of CCMA by Georgian American Alloys (GAA), Ryan’s Notes sat down with Gary Joiner, CCMA plant manager and Barry Nuss, GAA’s CFO, to discuss the ferrosilicon market and GAA/CCMA.

 RN: What do you foresee the future of CC Metals and Alloys to be under your control?

 Barry Nuss: Prior to the acquisition, when CCMA and GAA existed as separate legal entities, it was difficult to realize all of the potential supply chain, transportation and production synergies between the companies. Now that CCMA joins Felman Production and Felman Trading under the GAA umbrella, we can further leverage the combined production and distribution resources of the companies to better serve our customers with cost-efficient, technically proficient streamlined operations.

 

 RN: What is Calvert City’s current production of ferrosilicon? How much is specialty ferroalloy silicon alloys and how much is commodity grade 50% and 75%?

 Gary Joiner: CCMA’s current production is approximately 80,000 mtpy. The majority of the material produced at the plant is specialty ferroalloy, but the exact amount depends on market conditions so the number could vary. Overall, nonspecialty ferroalloys account for less than 20% of our total production.

 RN: What specialty ferrosilicon products do you now produce and what are your plans in the future? Can and will the Calvert City plant be expanded to produce more commodity and specialty products?

 Joiner: Our production levels of the 50% and 75% base ferrosilicon make us the leading supplier of high-purity ferrosilicon to the North American steel industry. Additionally, as a major producer of specialty ferroalloys for the global iron foundry industry, we offer a diverse range of specialty ferroalloy products such as Noduloy, welding products and powdered alloys, Calsifer 50% and 75%, Inoculoy 63 and SB5,

Inocuchrome, VP 216, CG Alloys and CSF-10, Graphidox, low-calcium Graphidox, and SRF 50 and SRF 75.

The plant will continue producing these ferroalloy products to meet the exact dimensions and chemical specifications that our customers require. There is ample space and infrastructure in place for the facility to expand and for the plant to produce additional ferrosilicon. Our executive management team is currently reviewing the factors involved in such an expansion, and whether or not it is strategically advantageous to increase the size of the Calvert City plant at the present time.  

RN: Other than ferrosilicon and specialty products, do you foresee producing other ferroalloys such as ferrochrome, ferrovanadium, ferromoly, and even some refined manganese alloys? 

Joiner: While the plant is capable of producing those additional specialty ferroalloys, for now we have concluded that our customers and the company will be best served if we continue to focus on our existing specialty alloys such as 75% high-purity ferrosilicon. 

RN: Does Georgian American Alloys see itself as the largest ferroalloy supplier in the North American market? 

Nuss: We generally do not comment on market share figures at any given time. GAA does consider itself one of the leading suppliers of ferroalloys, a very critical industrial material, to the North American market. 

RN: What are the advantages in using Felman Trading as the sole distributor for Felman Production and CC Metals and Alloys? 

Nuss: Having Felman Trading serve as the sole distributor of Felman Production and CCMA goods provides significant benefits for all companies involved. Felman Trading has the necessary personnel in place to manage and sell the ferroalloys, therefore allowing the plants to focus on maintaining production levels of high-quality materials. In addition, Felman Trading can increase its consumer base by offering an even wider range of ferrosilicon, silicomanganese and ferromanganese products. Felman Trading also offers significant market insights to Felman Production and CCMA, including what exactly the market requires at any given time. 

RN: Are there any environment concerns at Calvert City? 

Joiner: There are currently no environmental concerns for the plant, as we have continually upgraded our facilities to ensure that we address any potential concerns. Over the past two years, we have spent over $2-million in repairs and upgrades to the APC (air pollution control) for the furnaces. Back in 2005, $42-million was spent on important environmental initiatives such as replacing the water and sewage lines, and improving methods for the containment, treatment and discharge of storm water and other waste material. 

RN: In a period of slow and/or low growth in the North American ferroalloy market, Georgian American Alloys has chosen a strong growth path, why? What future do you see? 

Nuss: GAA has adopted a long-term perspective on the market. While the North American ferroalloy market may currently be experiencing a period of relatively slow growth, GAA and its subsidiaries offer a diverse range of products to a global market of customers. This enables us to stay competitive in the domestic market; in fact, current market conditions have presented us with new opportunities for expansion and growth. We have confidence in the strength and durability of the manufacturing sector of the American economy, and want to maintain our position as the industry leader, both in the short and long term as the North American ferroalloys market recovers and demand ultimately increases.