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Metaleurop S.A.


58, rue Roger Salengro
94126 Fontenay-sous-bois Cedex

Telephone: (01) 32 94 47 00
Fax: (01) 48 73 47 26

Public Company
Incorporated: 1881 as Société Minière et Métallurgique de Pe&ntilderoya
Employees: 3,354
Sales: FFr 4.29 billion (1996)
Stock Exchanges: Paris
SICs: 1031 Lead and Zinc Ores; 1099 Metal Ores, Not Elsewhere Classified

Company Perspectives:

Metaleurop's mission is to offer a broad product line and to provide its clients with the benefit of its experience in metallurgy and metal transformation techniques. To this end, Metaleurop provides technical solutions to its clients' materials and recycling needs.

Company History:

Metaleurop S.A. is a world-leading metallurgy concern with a primary focus on lead and zinc smelting, recycling, and related products and byproducts. With a production level of 310,000 tons of lead in 1996, Metaleurop is the world's second-largest producer of this metal, used especially in automobile and other batteries. The company operates seven primary and secondary (recycling) smelting works and foundries, principally in France and Germany, but also in Spain, Morocco, and Belgium. Metaleurop's 1996 production of 252,000 tons of zinc, through four primary and secondary smelting works, placed the company as the world's seventh-largest producer of this metal, primarily used in galvanizing, but also in the chemical industry and in the manufacture of cables. The primary and secondary production of lead and zinc account for the bulk of Metaleurop's annual sales, at 30 percent and 39 percent, respectively.

Another of Metaleurop's primary areas of activity is its Downstream products category, which includes the production of lead and zinc oxides and galvanization services. In this area, which provides some 20 percent of Metaleurop's annual sales, the company operates three plants in Germany and one in France. The last of Metaleurop's operational divisions is the production of special metals, generated as byproducts of the smelting process, including germanium (used especially for the manufacture of fiber optic cabling), indium (used for the production of flat screen displays found in laptop computers), and high-grade arsenic (for the semiconductor industry). Special metals contributed six percent of the company's 1996 annual sales. Rounding out the company's operations is its plant for the production of polypropylene beads, recovered as part of its other recycling processes.

In 1996, Metaleurop posted its first net profit--of FFr 42 million on sales of FFr 4.29 billion--since the 1988 fusion of France's Société Minière et Métallurgique de Pe&ntilderoya and the non-ferrous metals division of Germany's Preussag AG Metall. This fusion also gave rise to the company's present name and structure. Preussag is also Metaleurop's primary shareholder, with nearly 36 percent of the company stock (and more than 52 percent of voting rights). Metaleurop is led by Dr. Helmut Stodieck, as president.

Mining Origins in the 1880s

In the second half of the 19th century, the Spanish monarchy turned to foreign capital to develop the area around Pe&ntilderoya and Belmez, near the Sierra Morena, some 300 kilometers southwest of Madrid. This area had long been known to be rich in coal and other minerals, especially lead. But as late as the 1860s, these deposits remained largely undeveloped, exploited simply as a local cottage industry. The opening of the area to foreign development, and the construction of the railroad linking Spain and France, prompted the formation of Société Houillère et Métallurgique de Belmez (SHMB), led by Bazile Parent, for the exploitation of Belmez's coal deposits. SHMB also established a small lead mining operation, but this remained as only a side interest to the company's coal mining operations.

Joining SHMB in 1874 was Charles Ledoux, who had established a career as a mining engineer and a position as a authority on mining of some high regard, serving as director of the Ecole des Maîtres Mineurs in Alès. Ledoux saw a greater opportunity in the region's lead deposits than in coal, and convinced SHMB's leadership to link its coal mining activities to the mining and smelting of lead, using, in effect, SHMB's coal to fuel its lead production. SHMB agreed to purchase a lead mine near the village of Pe&ntilderoya and to build a lead and silver foundry next to its coal mine. Nevertheless, SHMB's focus remained on coal.

By the end of the 1880s, Ledoux, eager to develop the region's metals deposits, saw the opportunity to go into business for himself. In 1881, after raising capital from France's Rothschild family, Ledoux established the Société Minière et Métallurgique de Pe&ntilderoya (Pe&ntilderoya) and reached an agreement with SHMB to purchase that company's lead mining and smelting activities. The agreement, which created Pe&ntilderoya as a subsidiary to SHMB, also gave Ledoux the lease to four other important Spanish lead mining operations, as well as a 50-year noncompeting contract between SHMB and the new Pe&ntilderoya company. Ledoux would serve as the company's director-general until 1898, when he was succeeded by protégé Paul Gal. Also joining the company, in 1898, was Ledoux's son Frédéric Ledoux, who would serve as director-general from 1909 to 1918. Pe&ntilderoya's headquarters were at the famed Place Vendôme in Paris, where the company would remain for more than 80 years.

Pe&ntilderoya's first years of operation proved difficult. While the company succeeded in producing some 8,000 tons of lead and 10,000 kilos of silver between 1881 and 1884, the company's operational costs remained too high. In order to maintain its production levels and achieve a level of profitability, Pe&ntilderoya determined to expand not only its mining activities, but also to develop its technical infrastructure, in particular toward the sale and transportation of its products to third parties. In 1885, the company created a subsidiary providing tramp shipping services along the Spanish coast to Malaga, Seville, and elsewhere. The company's transportation capacity was further increased early in the next decade, when the Pe&ntilderoya received authorization from the Spanish government to begin constructing a railway linking the village of Pe&ntilderoya to Fuente del Arco, near the company's Triunfo lead mine, and then to San Quintin.

Pe&ntilderoya's production increased to the extent that, by 1891, the company had shipped some 200,000 tons of concentrated ore, 80,000 tons of commercial-ready lead, and 100,000 kilos of silver. The company's prosperity, due in large part to its Tiunfo and San Quintin lead mines, as well as to its proximity to the region's coal production, soon led the company to make its first acquisition: that of its parent, SHMB. The acquisition gave Pe&ntilderoya the ability to supply its own coal needs for its mining, foundry, and railroad operations, and soon led the company into new areas, including electrical power generation and coal supplies for the region's railroads. As Pe&ntilderoya grew to become one of southern Spain's leading industrial concerns, the company continued to expand its infrastructure, purchasing land for the planting and cutting of eucalyptus and pine trees (used to construct the underground supports for the company's mines) and establishing water and electrical distribution to supply the company's operations and also as a commercial service to outside customers.

Expansion Before the Second World War

During the first decade of the 20th century, Pe&ntilderoya continued to construct the railroad network linking the company's products to its customers. By then, however, the company was also coming under pressure to expand its mining and foundry operations, as a number of its mines were fast reaching the exhaustion of their deposits. In 1912, the company absorbed the Compagnie Fran&ccedilse des Mines et Usines d'Escombreras, acquiring that company's Carthagena-based foundry. The following year, the company merged with Société G. et A. Figuerroa, taking over the latter company's plants and mines in San Luis and Santa Lucia. A third acquisition in 1914, merging Pe&ntilderoya with Compagnie des Charbonnages de Puertollano, added a fresh coal basin to the company's deposits. During this period, also, the company had been expanding its metals activities, adding zinc mining and smelting to its operations.

Despite its prosperity, Pe&ntilderoya faced a troubled future on the eve of the First World War. For one thing, its operations were localized entirely in a single country, and the company found itself and its revenues and earnings at the mercy of the already unstable Spanish political environment. At the same time, Pe&ntilderoya's earnings had become dependent for the most part on only two mines--in Villanueva del Duque and Santa Barbara--both of which inevitably faced exhaustion.

Pe&ntilderoya resolved to rectify this situation by expanding its mining and smelting operations across the Spanish border. The company's first target was its home country of France. In 1913, the company had established itself in L'Estaque, a part of Marseilles, with the acquisition of Produits Chimiques de Marseilles, which also included the French factories and lead smelting works of Société G. and A. Figueroa. Soon thereafter, the company acquired another plant in the Marseilles area, in Chartreux, dedicated to the production of lead oxide and to the fabrication of gunshot. This last product proved especially important; with the outbreak of World War I, the company was called upon to supply the French war effort's lead requirements.

The First World War brought the company into a new area. Whereas its commercial sales operations had previously been provided for by an association with a German firm, with much of its production going to that country, the outbreak of hostilities between France and Germany placed Pe&ntilderoya in the untenable position of providing bullets to the enemy. The company was forced to bring its commercial sales operations in-house. This activity, however, proved incompatible with the company's mining and smelting focus, and in 1915, Pe&ntilderoya transferred its activity to the Société Minerais et Métaux (SMM), a metals and ores marketing syndicate established by the French government to supply its war needs. By the end of the war, Pe&ntilderoya's participation in SMM had increased to full control. Through SMM, Pe&ntilderoya would see its mining interests expand throughout much of the world.

Following the Armistice--and with the civil war looming in Spain--Pe&ntilderoya began deepening its French-based activities, building, in particular, its factory complex in Noyelles-Godault, near Lille in the north of France, which would soon become the company's primary base of operations. The company also began developing its French-based mining operations, starting with the acquisition of the Pierrefitte mining concession in 1917, which was soon joined by the company's Isère valley La Plagne mine.

As the heart of Pe&ntilderoya's operations shifted to France during the years between the two world wars, the company was also pursuing an aggressive international expansion, aided by its controlling interest in Société Minerais et Métaux (SMM), which would bring the company's mining and smelting operations to Italy, North Africa, Greece, Turkey, Chile, Argentina, Brazil, Mexico, Tunisia, and Iran. Back in Spain, however, the company's prospects seemed to be dwindling; the company closed a several of its mines, as these had reached exhaustion. The outbreak of the Spanish Civil War also threatened the company's operations. Nevertheless, despite the hostilities, the company was able to continue a reasonable level of production.

Such would not be the case several years later. With the outbreak of the Second World War and the initial successes of the German army, Pe&ntilderoya soon found nearly all of its operations under German occupation. Forced to turn its production to supply the German army, Pe&ntilderoya--which had lost much of its work force to German forced labor demands--found itself engaged less in lead and zinc production than in sabotage, that is, deliberately reducing the production levels of its factories under German control.

Postwar Developments

With the liberation of France, Pe&ntilderoya began rebuilding its operations. The company's focus now switched more firmly to its complex in Noyelles-Godault. Pe&ntilderoya's smelting and foundry operations began to take on greater prominence among the company's activities, particularly with the rising demand for zinc and lead products during the postwar boom in the automobile and construction industries. By 1949, the Noyelles-Godault plant had regained its prewar production levels; within the next decade, that site would become the largest European producer of lead. The company also began updating its technology, building new plants to house emerging zinc processing technologies. By the mid-1960s, its zinc production levels at the Noyelles-Godault site had nearly tripled, from 16,000 tons to 45,000 tons.

During the 1960s, Pe&ntilderoya also began diversifying its operations. In 1967, the company acquired the Société des Métaux et Alliages Blancs, a company based primarily in the Paris region that had been involved in recycling since the early 1920s. Pe&ntilderoya's recycling efforts would eventually concentrate primarily on the recovery of lead and zinc, as well as other materials, from automobile batteries and other automobile components. To this end, the company opened a new factory in the early 1970s, in Villefranche-sur-Saône, with a production capacity of 75,000 tons of lead per year.

Another area of growing importance for Pe&ntilderoya was the production of lead oxide, used for the production of crystal and lead-based paints, as well as in radiator and heater grilles. While the company's involvement in lead oxide production stemmed from the 1930s, Pe&ntilderoya stepped up its production during the 1960s, becoming France's leading producer of lead oxide. A major part in this development was played by Pe&ntilderoya's acquisition of Société Gamichon-Carette, and that company's plant in Rieux, in 1965. In the mid-1970s, Pe&ntilderoya expanded the Rieux site, and transferred there the entirety of its lead oxide production of some 75,000 tons per year. During this period, the company also established a subsidiary, Penamet, in order to develop various lead and zinc-based products, including shot, lead pipes, zinc roofing materials, and lead wiring and sheeting. In the early 1970s, Penamet was merged with the commercial network of Compagnie Royale Asturienne des Mines, to form the independent company, Astu-Penamet.

Pe&ntilderoya had also continued to develop its mining interests, both in France and abroad. By the end of the 1970s, the company held mining concessions in France, Spain, Italy, Portugal, Greece, Brazil, Peru, and Australia. Apart from its core lead and zinc mining operations, the company was also mining silver, germanium, fluorine, copper, uranium, and coal. By the early 1980s, Pe&ntilderoya employed more than 9,000 people, and had attained consolidated sales of nearly FFr 4 billion.

Metaleurop for the 1990s

Pe&ntilderoya would change dramatically by the end of the 1980s. Whereas the company's name had always survived its many acquisitions and mergers over the first 100 years of the company's history, Pe&ntilderoya would not survive the difficult years of the 1980s. Despite a promising start at the beginning of the decade, Pe&ntilderoya soon faced a worldwide recession and a slump in the international metals market, culminating in the stock market crash of 1987. Struggling with losses, Pe&ntilderoya finally agreed to merge its operations with the non-ferrous metals divisions of Germany's Preussag AG Metall. The merged company, based in France, took the new name of Metaleurop S.A.

Metaleurop adopted as its strategy the focus on its combined lead and zinc smelting operations and the development of its recycling and downstream products activities. To this end, the company abandoned its unprofitable and increasingly noncompetitive mining operations, selling off all of its mining concessions by the early 1990s. The new group's industrial activities now centered around its northern France and German plants, while maintaining a reduced presence in Spain, Italy, Belgium, and Morocco.

Metaleurop would find itself struggling through the first half of the 1990s. Hit by the recession of the early 1990s, a depressed metals market, and the lingering economic crisis that would affect much of Europe through the middle of the decade, Metaleurop's would post losses ranging from nearly FFr 600 million for its first full year of operation to FFr 348 million in 1993. Meanwhile, the company's revenues slumped as well, from FFr 4.8 billion in 1990 to a low for the period of FFr 3.6 billion in 1993. Yet, as the company worked to restructure itself, and as the European economic crisis began to ease in the mid-1990s, Metaleurop appeared to be on the way to its own recovery. In 1996, Metaleurop posted its first profit--of FFr 46 million--since the merger, on sales of nearly FFr 4.3 billion.

Principal Subsidiaries: Metaleurop GmbH (Germany); Metaleurop Commercial SAS (France); Metaleurop Handel GmbH (Germany); ME Trade España SA (Spain); Metaleurop Commerciale Italia Spa (Italy); Metaleurop Nord SAS (France); Metaleurop Weser Biel GmbH (Germany); Metaleurop villefranche (France); SAMAB SA (Morocco); Penarroya Oxide SA (France); Coplosa SA (Spain); Fondrie et Manufacture des Métaux SA (Belgium).

Source: International Directory of Company Histories, Vol. 21. St. James Press, 1998.

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