Elkem reports a strong first quarter with solid growth in revenue and profit, benefitting from good market conditions in all segments. The improved result is in particular driven by favourable market conditions in China, but the development is strong also in the other regions.

Elkem successfully completed its initial public offering (IPO) and returned as a listed company on Oslo Stock Exchange on 22 March 2018. In connection with the IPO, Elkem completed the acquisition of two Chinese plants, Xinghuo Silicones and Yongdeng Silicon Materials from its principal shareholder Bluestar.

Elkem reports a strong first quarter with significant growth in revenue and EBITDA driven by favourable market conditions and capacity ramp-up, particularly in China. Total operating income for the first quarter of 2018 amounts to NOK 6,447 million, which is 41% higher than the first quarter of 2017. EBITDA for first quarter 2018 amounts to NOK 1,450 million, up from NOK 441 million in the corresponding quarter last year. Earnings per share amounts to NOK 1.24 in 1Q-2018 on an adjusted, fully diluted basis.

- We are very satisfied with this solid start of 2018, with revenue growth in all divisions and improved profitability in the three largest divisions. The strong market fundamentals combined with a number of interesting specialisation initiatives bode well for further improvements going forward, says Helge Aasen in a comment.


ArcelorMittal has begun construction of new premises at its site in Ghent, Belgium, to house a pioneering new installation which will convert carbon- containing gas from its blast furnaces into bioethanol. If proved successful, the new concept has the potential to revolutionise blast furnace carbon emissions capture and support the decarbonisation of the transport sector.

The technology in the gas conversion process was pioneered by Chicago- based company, LanzaTech, with whom ArcelorMittal has entered a long- term partnership. The technology licensed by LanzaTech uses microbes that feed on carbon monoxide to produce bioethanol. The bioethanol will be used as transport fuel or potentially in the production of plastics.

This is the first installation of its kind on an industrial scale in Europe and once complete, annual production of bioethanol at Ghent is expected to reach around 80 million litres, which will yield an annual CO2 saving equivalent to putting 100,000 electrical cars on the road. The new installation will create up to 500 construction jobs over the next two years and 20 to 30 new permanent direct jobs. Commissioning and first production is expected by mid-2020.

The application of this microbial gas conversion system significantly advances ArcelorMittal’s carbon capture and storage (CCS) and carbon capture and utilisation (CCU) capabilities and enhances steel’s role in the circular economy. ArcelorMittal’s long-term aspiration is to become a zero- waste business, with all materials used or generated during steel production recuperated, treated and reused in the production chain or becoming the raw materials for other industries.


"We are excited that after several years of research and engineering, we are now progressing with the largest project of its kind within the ArcelorMittal group. This is the first application of a viable new business case where re- use of carbon is possible at large scale. We will achieve significant carbon reduction and we hope that this will lead us to a lower carbon economy," says Carl De Maré, vice president of Technology Strategy at ArcelorMittal. "This new Carbon Smart technology illustrates ArcelorMittal’s commitment to transforming steel production and it will also further strengthen steel’s standing in the circular economy, particularly compared to other higher carbon metals like aluminium.”

"Single use carbon must become a thing of the past,” said Jennifer Holmgren, CEO of LanzaTech. “In order to succeed in decarbonizing our economy, we will need the commitment of large companies and governments from around the world to ensure carbon reuse is part of the solution. This facility in Europe embodies the key principles of the circular economy and drives to a zero-waste steel production world. We are excited to work with ArcelorMittal and are grateful for the support of the European Commission.”

ArcelorMittal will work with specialized partners to roll out this bioethanol technology. Funding was obtained from various sources, including the European Union's Horizon 2020 program, to carry out further research and development and scale up the project.

The strong result is mainly driven by higher sales prices and higher sales volumes supported by strong market fundamentals. In addition, increased sales of specialty products have contributed positively to the margin improvements. A weaker Norwegian krone versus Euro has also impacted the result for the Norwegian plants positively.

Elkem signed a new loan facilities agreement in February 2018 totalling EUR 1,150 million, to refinance the outstanding debt for the group. The refinancing of Xinghuo Silicones and Yongdeng Silicon

Materials is

expected to be completed in the second quarter of 2018, upon required approval from relevant Chinese regulatory authorities.

The market sentiment is still strong for all divisions, particularly Silicones. The result for the second quarter is therefore expected to be in line with the first quarter. Market prices for silicones, silicon and ferrosilicon are expected to soften going forward, as supply will likely increase, particularly in China. Based on this, management’s outlook for the second half of 2018 is more cautious.


July 2018 Issue

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