INVESTING IN CERAMICS
Positioned for Growth

May 30, 2003
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Pechiney’s reorganization plan is positioning the group to continue to provide superior products and customer service while paving the way for future expansion.

The history of the Pechiney group stretches back to the mid-19th century. Originally an aluminum producer, the group has broadened its focus in the ceramic and refractories markets over the years to include the specialty alumina business of Aluminium Pechiney’s Gardanne, France, plant; tabular alumina from the recently acquired Alufin plant in Germany; and white fused and brown fused aluminas from PEM Abrasifs-Refactaires.

All of these activities will be reorganized during 2003 into a single aluminas business group focused on serving the global needs of the ceramic, refractories, abrasives and polishing markets.

History and Growth

In 1871, the Salindres chemical plant in Gard, France, began producing aluminum using the Sainte-Claire Deville process, which made aluminum through the electrolysis of alumina. This process offered a substantial cost reduction and opened the way for the development of a new industry. For almost 20 years, Salindres was virtually the only plant in the world producing aluminum. In 1877, Alfred Rangod, known as A.R. Pechiney, became manager of the plant (the company would be officially renamed Pechiney in 1950).

In 1893, Pechiney founded an alumina plant in Gardanne, France, and by 1989, this plant had become the sole production facility for alumina in France. The period of 1988-1994 was marked by the increased importance of non-metallurgical grade aluminas in relation to metallurgical grade aluminas, which are used for the manufacture of aluminum.

In the 1990s, Pechiney moved away from the “non-metallurgical grade alumina” description and instead began using the term “technical alumina,” which was reflected in the registered trademark Altech. The company felt that technical alumina better reflected the complexity involved in producing aluminas with highly controlled chemical and physical properties, as well as the cultural changes necessary in manufacturing. This change also corresponded to the technological transformations required at the Gardanne plant to support the continuous improvements necessary to produce specialty aluminas.

The group’s new challenge became developing process improvements aimed at achieving the specifications required by its customers, who were requiring closer control of the chemical and physical properties of the aluminas used in their applications. The Gardanne facility subsequently obtained ISO 9002 certification on May 27, 1992.

Diversification

By 1995, the Pechiney group had become the world’s fourth largest aluminum producer and a leader in the production of aluminas for a wide range of ceramic and refractory applications. The development of high-performance monolithic refractories led to the use of a range of specialty calcines called “reactive aluminas,” which belong to the family of very low soda superground aluminas. This market development, coupled with the strong demand from the ceramic markets (driven by electronic, wear resistant and environmental ceramics), required a rapid increase in supergrinding capacity. Pechiney has increased supergrinding capacity threefold since 1997, and a new expansion is currently under review for 2003.

On February 1, 2002, Pechiney announced the acquisition of Alufin Tabularoxid GmbH, a company that specializes in the production of tabular alumina, which is used as a refractory aggregate for advanced refractory applications. Tabular alumina is especially useful in combination with calcined alumina for monolithic refractories. Its unique properties make it suitable for demanding applications in the steel industries, and its main use in ceramic applications is in the production of ceramic rollers. The acquisition allowed Pechiney to complement its alumina product range for the refractory industry in conjunction with ongoing developments in the specialty aluminas markets. “This acquisition is in line with our strategy of development in specialty alumina markets,” a company spokesperson said. “In the fast-growing sector of monolithic refractories, the pooling of Alufin and Pechiney’s know-how will enable us to offer expertise and innovation capabilities that meet our customers’ needs even more fully.”

Founded in 1992, Alufin currently employs over 40 people at its Teutschenthal, Germany, facility, which is located on the site of a former potash plant near Leipzig. In 2000, Alufin achieved production close to its nameplate capacity of 17,000 tons/year. Following the acquisition, plans were quickly approved to double Alufin’s production capacity, which was a key point of the development strategy leading to the acquisition. This production capacity increase is expected to come on stream during 2003.

On January 1, 2003, PEM Abrasifs-Refactaires (PEMAR), which had been a subsidiary of Pechiney Electro-Metallurgie, became a 100 percent subsidiary of Aluminium Pechiney. Over its 90-year history in the electrofusion process, PEMAR has developed a wide range of electrofused aluminas (corundum) and powders for many ceramic applications, including abrasives, refractories, surface preparation and technical ceramics. Products include a range of electrofused aluminas, as well as bubble alumina, alumina zirconia, and ferrous silicon nitrides for abrasives and refractories applications.

Looking to the Future

Pechiney is continuing its efforts to support its long-term commitment to the ceramic industry, striving to innovate with the production of high-performance materials for the refractories, abrasives, surface preparation and technical ceramics markets. Through investments, acquisitions and manufacturing capacity expansions, the group aims to meet the most demanding requirements of its customers. By combining the expertise of a diverse range of alumina operations and technical capabilities into a single business entity, Pechiney expects to continue to broaden its range of high-performance products, supported with vital technical expertise, well into the future.

For more information:

For more information about the Pechiney group, its products and services, contact Curtis Vaught at (330) 673-4566, fax (330) 673-4561, e-mail Curtis.Vaught@pechiney.com, or visit http://www.altech.pechiney.com or http://www.pemar.pechiney.com.

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