Ferroglobe PLC Ordinary Shares Conference

Good morning, and thank you all for joining us today. My name is Jacopo Gaspardone, and I'm with Freeport Advisors. Next up, we have Ferroglobe, a global producer of silicon and specialty metals, trading under the ticker GSM on the Nasdaq Exchange. I would now like to introduce Alex Rotonen, VP of Investor Relations, who will be presenting today on behalf of the company.

Thank you. Thank you. I need to lower that.

I'm vertically challenged. How is everyone doing today? Sorry for being late, by the way. I didn't realize I was I don't want to read that. I'll start with who we are. I want to give a general introduction of what we are for people that don't know us. We're about a $750 million, $800 million market cap company. We're the number one producer of certain alloys in the West. In some cases, we're the only producer, like Silicon Metal in Europe. The company was created by a merger of a U.S. company called Globe Specialty Metals, and that's why the symbol GSM. This was in 2015. A Spanish company called Ferroatlántica, a private company. That kind of generated the footprint. That's why we have operations in various locations. We are on five different continents.

We have more than 50 furnaces around the world. Last year, we had $1.3 billion in sales. Below what we had hoped. Our main products, we really have three main products. We have Silicon Metal, silicon-based alloys, and manganese alloys, and they're each roughly a third of our business. So very good mix, very diversified. Majority of our sales take place in the U.S. and Europe, accounting for 85%, roughly. Rest of the world really is Middle East and also Asia. Asia, we hope to get a little bit more market share at some point, but certain products, it's going to be pretty difficult. What are these products used? There's a picture there in the bottom and shows what the products look like.

There are a lot of uses for it, but I'll make it simpler by saying that if you look at the silicon-based alloys and manganese alloys, those essentially go to the steel industry. They enhance the characteristics of the steel, strengthening, lightweight, et cetera, certain characteristics. Silicon Metal is the most complicated product, is the most energy-intensive product we have. As an anecdote, we were number two user of electricity in France. So it just shows how energy is important to us, and so is the cost of it. End markets are solar. You need Silicon Metal to produce solar panels. EV batteries, that's more the future, using in the anode instead of using graphite, 100% of which comes from China. We can substitute it and use Silicon Metal.

Has higher intense capacity, about 10 times the capacity, and also it's probably 10 minutes to charge an EV battery versus about 30 minutes, so charging times are much more advantaged, and it's also much more capable of being used in very cold climates like Chicago at some points in time. We do also other automotive. We sell to aluminum guys, Silicon Metal, so auto industry, consumer products, construction, semiconductor, energy. Also increasingly, there's interest from the defense industry for drones and all that, and we have a partnership with a company on EV batteries that just sells to the drone market and also to robotics. So that's the very high level view to give sense of what we are and where we are. Some of this is a little bit repetitious, so we are the leading Western producer of many of these materials.

Where we're going next is really, it's been a difficult environment business-wise, especially in Europe. Where we're going next strategically is we're pushing more into the critical materials, especially on the processing side where we have expertise. We've done it in the past, and we have capacity, and in some cases, we can use our existing furnaces. In some cases, the CapEx is very minimal. At the same time, we are going through a portfolio optimization and looking at costs, which we always do, but especially now because there's a lot of dumping from Asia, specifically China. We've got to make sure that we optimize those operations. Some of them may be, at some point, we might utilize them for other purposes than metal production, especially with energy contracts we have. So we have potential ability to sell energy to certain data centers, et cetera.

That's something that we're evaluating. One of the things I mentioned, anti-dumping, also countervailing duties or subsidies. Certain countries are providing a lot of subsidies makes them very competitive, but also predatory on pricing. So we've been working in Europe and the U.S. on safeguards and also anti-dumping duties. That's gone quite well. We still have a little bit more work to do. One opportunity where we have to grow is Venezuela. We own a plant in Venezuela with four furnaces, with 120,000 of capacity, historically highly cost competitive. Energy is nearby. You have a lot of hydro, and energy, in general, is quite cheap. Labor is cheap, plus all the raw materials and inputs are right next door. We had a quartz mine, which we use in production. Also there's a coal which we use as a reductant to process, is in Colombia.

All the raw material inputs are essentially next door. So a fantastic location. We're working on getting farther with the U.S. government on that because we need to get permission to operate there. From the balance sheet perspective, we've cleaned the balance sheet up a lot. I'll cover that more in a little bit. So here's a snapshot of what we do. We have raw materials, coal, charcoal is the reductant. We use electrodes in our furnaces. Quartz is obviously a key material, especially on the silicon side, silicon alloys and Silicon Metal. Sometimes we use wood chips as a reductant instead of coal. We're trying to go more into the wood chips and charcoal because it's obviously cleaner, but only if it makes economic sense. Then we smelt it, high energy capacity.

We own and operate all these plants, and we produce those three key materials that I mentioned. I do not want to talk about the end products again, but it is similar as I mentioned earlier. A lot of steel, a lot of aluminum players also goes into solar panels and other more advanced materials. Even CPUs, we do something in the semiconductor, but we are not the ultra-high premium product, so it does not go into the Taiwan Semiconductor Manufacturing Company or Apple Inc. products. The critical materials is something I want to spend more time on because we already produce some of them. Silicon metal and manganese alloys are considered critical materials and are essential for a lot of production of steel and aluminum. We do have a coal mine in the U.S. that we use, again, for reductant. Those are considered critical materials. What we are really doing is we are expanding.

Our capacity utilization is suboptimal, and so we want to increase capacity utilization. We are branching into some of the critical materials that we have historically produced, have capability of producing, and we have successfully test-produced. I will talk about that a little bit more in the next slides. We have the technical know-how, we have the footprint globally. We have operations in U.S., obviously significant, also in Europe, significant, also in Canada, as well as South Africa, and maybe Venezuela in the future. We will see. Also Argentina, we have a small plant in Argentina, and we do electrodes in China. That is a small business for us, and it is for internal use. Here is the process we went through. We started earlier. We met with the Department of Defense in February in Florida, and they were very keen on certain products.

We produce some of it already in silicon metal and manganese, but really the interest was more into the magnesium, which there is no Western production. We have produced it in the past. Antimony, silver, gallium, and then the ferromolybdenum, ferrochromium, and ferrovanadium. Those are really kind of the products where we are looking further. We have successfully produced magnesium and ferromolybdenum. Magnesium is one where for us to go forward with that, we would need a new plant in the U.S., and this would only make sense in the U.S. It would not make sense in Europe. Magnesium is already protected in the U.S. China controls 95% of the magnesium market. Obviously, Department of Defense is highly interested in that. It would probably take a couple of years to get up and running, and the CapEx would be $180 million-$200 million to get it up and running.

The bottom three there on the right, the ferro critical materials, we could essentially produce them all at our existing furnaces, so no CapEx or very minimal CapEx. Silver and gallium would be in Europe, and it would be recycled, would probably take EUR 20 million each to get those up and running. Antimony, we potentially do it in South Africa, but we need to get an energy contract there. We have been fighting with the government for months and months, as have other high energy-intensive producers. A lot of opportunities, a lot of interest. Department of Defense has been very proactive. We are in the final stages of sending our final request list to them and asking for certain assistance, help, guarantees, et cetera. I do not want to get too much into it, but it looks quite promising. We will have to see what they come back with.

They are certainly not going to give everything we ask, but they are quite willing, especially in the magnesium. We feel very good because, again, it is highly critical, and there is no Western production. So makes sense for them. We still have the core business to deal with, and one of the measures we have done is to attack on the trade front. China started dumping Silicon Metal to EU at the beginning of 2025 after they had a lot of internal issues on the polysilicon side. Also their subsidiary country, Angola, which is Chinese furnaces, Chinese employees largely, also started producing. They doubled imports of Silicon Metal to Europe from 2024 to 2025. At the same time, the price of Silicon Metal dropped by about 40%. So clearly you can see that creates a major challenge for us, and which has resulted in weak results. We have attacked on specific trade measures.