FMC Corp.records higher minerals revenue and earnings in Q4 2014

By Adam Page
Published: Thursday, 05 February 2015

FMC has been a leading global producer of lithium and soda ash for several years. With the sale of its soda ash arm it has now concentrated its mineral focus onto lithium which it believes will enjoy an uptake in prices as interest in energy storage picks up.

US-based FMC Corp. has reported record soda ash production for the final quarter of 2014, while its lithium operations continue to improve, despite the challenges it faces at its facilities in Argentina.

According to its full year 2014 results, released late yesterday, FMC’s minerals segment recorded earnings of $166.7m in 2014, a 30% rise on 2013. During Q4 2014, earnings reached $47.9m, a 32% rise compared to Q4 2013.

Lithium revenues for the three months ending December 2014 were 3% lower when compared to Q4 2013. However, revenues for the full year were up 15% and earnings in the business were up approximately 125%, due to strong operational performance and higher volumes.

Last year, restructuring cost the lithium segment $9.1m, while the continued work at an environmental site incurred a corporate charge of $6.2m.

Speaking during a conference call today, Pierre Brondeau, CEO of FMC, said that its lithium portfolio had been "mixed" in 2014. He stated that there was an increasing interest in lithium, leading to a "tightening in carbonate supply and demand."

FMC did not disclose its lithium and soda ash production levels in its quarterly results.

Overall, the company posted revenue of $1.1bn in Q4 2014, a 3% decline on the previous year.

Shifting focus

With the agreed sale of its Alkali Chemicals business — the largest natural soda ash producer in the world — to Tronox, FMC will change its name to FMC Lithium.

Brondeau said that this was part of a wider company strategy to create "a more focused portfolio."

"In Lithium, we are optimistic that demand for downstream products, particularly for energy storage applications, will continue to grow rapidly," said Brondeau.

FMC anticipates higher prices for lithium hydroxide and carbonate based on the fact that the energy storage sector is growing at double digit rates. It expects earnings to be in the range of $15m to $25m in 2015.

The company produces a variety of lithium chemicals at its Hombre Muerto operation in northern Argentina. It noted that operational costs have been hit by Argentina’s import restrictions, which make it difficult to deliver certain critical engineering components.

"Despite strong underlying performance in our lithium business, we are unable to produce consistent results across multiple years due to the challenges of operating in Argentina's high-inflation environment," Brondeau said.

"We want to reduce costs as much as possible," Brondeau added, noting that, "adverse currency conditions in Argentina could be a significant headwind to earnings".

Brondeau also said that FMC would continue to take an interest in the electric vehicles (EVs) market despite a decline in energy prices.

"Gas prices are not the drive when you decide to buy a Telsa; it is part of it but it is not the driver," Brondeau said, pointing out that those who were likely to be interested, "will look beyond one year gas prices".

FMC expects the agreed sale of Alkali Chemicals and the agreed purchase of Denmark-based agricultural supplier Cheminova to be completed in Q1 2015. FMC believes that the sale can cut its debt pile following its $1.8bn purchase of Cheminova in September 2014.

€9.5bn EU glass industry still robust market for industrial minerals

FEVE say that while glass may be regarded as an “old-fashioned” industry continues to attract major investment, offers unique recycling opportunities and is very resilient in terms of supply and demand. Europe’s glass industry continues to be a strong market for industrial minerals, including silica sand and soda ash, particularly in container glass, as the latest figures from the FEVE show.

The European Union’s (EU) glass container industry contributes €9.5bn ($10.6bn*) annually to EU gross domestic product (GDP), according to an Ernst & Young study commissioned by FEVE.

Although the raw materials used in glass, which include silica sand, carbonates, quartz and soda ash, are easily available to European manufacturers, Feve believes that the supply concentration of these minerals could pose a risk for downstream consumers.

The industry invests up to €610m per year to innovate and maintain a network for 155 container glass plants across the EU, equaling 10% of the industry’s operational costs every year.

"For sand and soda ash in Europe we have a situation which is close to a monopoly," Fabrice Rivet, FEVE’s technical director, told IM.

"We have Solvay for soda ash and we have Sibelco for sand and so this maybe a challenge for the glass industry, it is not a pure monopoly but it is close," Rivet added.

Resilience in end markets 

Food and drink packaging is the main end market for container glass, often
finding buyers in the alcohol and perfume industry.

"We have seen a slight decrease in production, especially in 2009, [when it] decreased by about 4%," Michael Delle Selve, FEVE’s senior communications manager, told IM.

Delle Selve said that compared to flat glass and fibreglass, which are primarily used in construction, container glass can largely maintain its appeal despite competition from plastics, metal cans and Tetra Pak in the packaging sector.

"So we can say that we are quite resilient and, okay, we are not growing at a high pace but let’s say that with the crisis, there was an effect but it was acceptable," Delle Selve said.

Delle Selve feels that one of the main challenges the glass industry faces is its "old-fashioned" image, which he believes is in need of renewal.

Challenges

Delle Selve says that the glass container industry wants to work in a "friendly framework" in the EU.

"One of the main challenges is to keep this circular economy competitive and that is where we also need the support from policy-makers, we need their help in decreasing the cost of energy, the legislative burden for said industries," Delle Selve said.

"We see more and more [legislation on] energy consumption, carbon dioxide (CO₂) emissions," Rivet told IM.

"That adds an additional burden in terms of cost to our members and that is really very difficult to cope."

FEVE says that it is looking at ways to reduce its CO₂ footprint, by using biomass as an energy source in processing as opposed to fossil fuels and producing lightweight bottles to reduce energy usage.

Recycling

FEVE celebrates the fact that container glass’ reusability allow it to function within a circular economy.

According to Ernst & Young’s study, seven out of every ten bottles gets recycled in the EU, meaning one tonne of recycled glass saves 1.2 tonnes of virgin raw materials and cuts CO2 emissions by 60%.

"So the future for us is to put into the loop the remaining 30% in the bottle-to-bottle loop because we actually want to recycle more glass," says Delle Selve.

"But again we need the support of other actors because the bottle-to-bottle loop does not just involve the glass industry but also consumers, the local authorities, the collection organisations, it is really a loop."

FEVE argue that this and the fact glass is the most inert packaging material according to science, appeals to consumer’s desire for safe and reliable materials.

*Conversion made January 2015

Originally published at: http://www.indmin.com/Article/3420703/95bn-EU-glass-industry-still-robust-market-for-industrial-minerals.html