Termomecanica eyes bigger presence with new aluminum products

Friday, October 13, 2017

Brazilian metals producer Termomecanica's aluminum products output increased to 35t/m following the ramp-up of a new line, and the company expects to reach the 500t/y mark by the end of the year.

The increase comes after a 27mn-real (US$8.46mn) investment in the line at its manufacturing facilities (pictured) in São Bernardo do Campo, São Paulo state.

Production is expected to grow gradually to 1,000t/y during 2018 when the second phase of the project will be underway and new equipment will be in operation.

Once the second phase is consolidated, capacity could reach 19,000t/y under normal conditions, the company says.

BNamericas spoke with Termomecanica's commercial and marketing manager Paulo Cezar Martins Pereira about plans for the new aluminum line and the company's quest for a larger international presence.

BNamericas: Termomecanica, which is a leader in the transformation of copper and its alloys, now focuses on aluminum products too. What are the reasons for the company to direct its efforts to this new market?

Martins Pereira: Joining a new market and diversifying our operations is part of our growth strategy. We chose aluminum due to its physical and chemical characteristics, which makes it a very versatile material.

It's a very light metal, with a good level of electrical and thermal conductivity, not magnetic, with good reflectivity, and inert in contact with food. And with the development of some new alloys, it has mechanical strength comparable to that of steel. These characteristics give the metal an extensive range of applications, from power cable lines to cans for soft drinks and beer.

BNamericas: What are the current production figures and what capacity does the company intend to achieve in the coming years?

Martins Pereira: Six months after starting to manufacture aluminum products, about 35t/m are being produced by the company, and the expectation is that by the end of 2017 this volume will reach 500t.

Production is expected to grow gradually, reaching 1,000t throughout 2018, when the second phase of the project will be underway and new equipment will be operational. Once the second phase has been consolidated, and under normal conditions, output could reach 19,000t/y.

BNamericas: Could you detail the company's investment strategy for the production of aluminum products?

Martins Pereira: Resources are being invested in the order of 27mn reais and the project was divided into two phases. As we already had consolidated infrastructure, technical qualifications and, above all, due to the synergies in the production of copper and aluminum, we made small adjustments to the project to make it feasible, and we'll make others, according to demand growth.

Two of our warehouses were adapted and new equipment and technologies were acquired to enable the new business. The investments included the acquisition of extrusion machinery, wire drawing machines, and accessory equipment. Phase two, in progress, includes the acquisition of a set of furnaces, and a bar melting station, among other equipment.

BNamericas: Does Termomecanica target the external market for processed aluminum? Is part of production already being exported?

Martins Pereira: Initially, aluminum tubes for cooling, condensers, radiators and other applications are being manufactured, as well as a manufacturing line of electric busbars for residential, building, industrial and major projects.

The versatility of the newly acquired resources will also enable the manufacture of light and medium aluminum profiles for use in the food, electrical, clothing and automotive industries. In stage two, other products will be manufactured.

In addition, as with copper, the company will also serve customers' special needs with the production of more complex and larger value-added aluminum alloys.

BNamericas: The company had gross revenues of 1bn reais in 2016. How has Termomecanica managed to cope with the economic recession of the last few years in Brazil? Is there room for further growth in the short term?

Martins Pereira: The Brazilian industrial sector, due to a combination of factors such as adverse economic times, fragile sector policies, poor infrastructure and intense international competition, faces major challenges.

Faced with this complex scenario, the ability of national industries to remain competitive, productive, profitable and able to manufacture advanced products is put to the test.

To cope with that, about 150mn reais were spent in the last five years on equipment, technology and R&D for our factories in São Bernardo do Campo, in the installation of a new industrial unit in Manaus [Amazonas state] and a distribution hub in Joinville [Santa Catarina state], in addition to the new aluminum production line.

In recent years, the company has reported a jump in export volumes, which have risen above double digits annually. In 2010, only 1.7% of production was exported. In 2016, 15% of sales were destined abroad. The export growth curve is expected to continue rising, reaching about 20% by the end of 2017.

Termomecanica ships to several countries, but its main consumer market outside Brazil is the US, responsible for 50% of external sales.

This result can be attributed to the high technical capacity achieved through investments, mainly in the modernization of manufacturing processes and equipment, especially in our pipe and rolling lines.

Thus, entering new markets and further expanding our international presence are among our next goals.

About the company

Copper and copper alloy product manufacturer Termomecanica ranks among the largest Brazilian manufacturers of finished and semi-finished non-ferrous metals products.