Mr Stefan Borgas, CEO of RHI AG
Refwin: Announced on 5 October 2016, RHI and Magnesita combined to create a leading refractory company named RHI Magnesita. What reason facilitates this combination?
Mr Stefan Borgas: Once the combination of RHI and Magnesita receives approval by the authorities, RHI Magnesita will become a leading refractory company. This combination would enable a complementary asset portfolio (high-quality magnesite and dolomite-based products) and regional complementarity, efficient cost structures in important operative areas and an optimized working capital. Strategically, the broader production footprint would mean faster delivery service, shorter lead times and more flexibility. Further, the combination would allow to continue drawing on the strengths of global R&D laboratories and resources, in order to ensure distinctive solutions for our customers.
Refwin: How would the combinations affect global refractories and steel industry?
Mr Stefan Borgas: Once the combination of RHI and Magnesita receives approval by the authorities, the new company will create a global number one. RHI Magnesita will combine its refractory producing facilities and refractory raw material resources. The combined company will present a complementary asset portfolio and a global presence. The resulting cost improvement will allow the continuation of the best service for its steel and non-steel customers possible despite the tremendous cost pressure in the refractory industry.
Refwin: Recently, more and more steel companies in China prefer to collaborate with whole refractories contractors to reduce their costs. Please tell us some RHI’s experience in steel industry.
Mr Stefan Borgas: Steel plants have full focus on refractory costs. Some of them have in-house refractory suppliers themselves. Refractory installation and maintenance are some of the last bastions of hard labour in steel plants. This is why we collaborate closely with steel producers to find solutions aiming at reducing exposure of workers to these severe working conditions, requiring a mutual trust of both, customers and suppliers. The huge benefit for our steel customers in collaborating with our company is not so much in the price reduction of refractory material buying, but in the dramatic reduction of total operating cost due to integrated services, longer usage times and world class technical analytics that we can provide inside our customers operations.
Refwin: Material self-sufficiency is obviously an important topic. What are you doing to further improve the self-sufficiency in your plants?
Mr Stefan Borgas: Material self-sufficiency is not a goal in and by itself. But raw materials are a substantial part of production costs. The access to and availability of high-quality raw materials are essential for refractory products, since they influence their performance. The strategic focus is set to optimize the balancing of in-house supply and external purchases.
Refwin: What is the RHI’s general strategy in the refractories segment? How do you see developments in the medium term? Will there be investments in new markets?
Mr Stefan Borgas: RHI has a clear strategy. First, aiming at selective business expansion, with a focus on growth regions and attractive market niches. Second, RHI continuously aligns its offer to specific customer requirements. This means differentiation based on technology leadership and service in strategically important segments. Moreover, RHI aligns to structural market changes. Third, RHI will focus on balancing in-house supply and external purchases. The priority is balancing the strategic use of internal magnesia supply and external purchasing and selling options. Fourth, RHI will continue to drive its cost competitiveness in order to continue to invest into new technologies with the help of its in-house R&D teams and together with technology partnerships around the world.
Should the combination of RHI and Magnesita be approved by authorities, the combined company will be a leading refractory company with an enhanced growth profile due to improved regional presence and complementary asset portfolios. RHI Magnesita will be in an advantageous position to serve its customers even better than before for the very long term.
Refwin: Thanks you very much for talking to us!