Afternoon, everybody. Your next presentation will be Ferroglobe PLC, traded on NASDAQ, ticker GSM. We have Internal IR Alex Rotonen speaking.
Good morning. Oh, I guess it's afternoon. Good morning, everyone. Feel free to interrupt me if you have any questions. It makes it more fun for everyone. Let's see if I can operate this. The forward-looking statements. Some of you may not be familiar, so I have a kind of a high-level summary slide of what Ferroglobe PLC is. We're technically a U.K. company. We're listed on the NASDAQ, but our main office, head office, is in Madrid, Spain. I spend most of my time there. We are a major producer of metallurgical products, whether it's silicon metal, ferrosilicon, manganese-based alloys, etc. Our market cap is about $800 million, roughly. We have 3,300 employees throughout the world. We are in several countries: U.S., Canada. We do have operations in Venezuela, which hasn't operated for years, but we do apparently own something there.
Argentina, South Africa, France, Spain, and also in Norway. We do electrodes in China for internal use only. We are the largest producer of silicon metal, and I'll get into the details a little bit later. We have operations, like I said, in different continents, different countries. We have about $1.6 billion in sales. The company was formed in 2015 with the merger between Ferroatlántica in Spain and Globe Specialty Materials in the U.S. Went through a very significant struggle in 2021, which is why Marco was brought on. He cleaned up the operations with Beatriz, our CFO. Marco Levi is our CEO. Disposed a lot of assets, cleaned up. We had about $550 million of debt at that time. We have since then deleveraged significantly and paid off the remaining senior secured notes first quarter last year. Today we have about $100 million of debt, a very manageable amount.
We're fairly well diversified from revenue mix, whether it's through different products or by geographical. You can see the numbers there, but manganese-based alloys, about a quarter of our revenues. Silicon-based alloys, ferrosilicon mainly, about the same, and about half our revenues are from silicon metal. From a geographic perspective, we have 35% of our sales from North America, about 40% in Europe, and then the rest of the world is about 25%. Obviously, these vary year to year. Our main products there on the bottom right: silicon metal, silicon-based alloys, and manganese-based alloys. Our end markets, where our products go into, are solar, EV batteries, automotive, consumer products, construction, energy. Our customers tend to be chemical companies on the silicon side or aluminum on ferrosilicon and manganese-based alloys. Those go into the steel industry. Those are our customers. Let's go to the next slide.
At a very high level, why Ferroglobe? A couple of things. It's been a difficult market environment, but longer term, there's really attractive opportunities in the EV. We have an investment in a company called CorShell, who is, I want to say, perfecting, but enhancing the silicon use in the anode in the EV batteries, which has significant benefits over graphite. It has 10x the energy capacity, and they are overcoming some of the technical challenges with swelling, with nanocoating. That's a very exciting opportunity. Solar is in a somewhat challenging environment right now, given the lack of subsidies and the trade turmoil. That environment is a bit challenging at the moment, but we think the long-term opportunity is there. We are very good at managing our balance sheet. We deleveraged completely. We have a net cash position, and we started paying dividends first quarter last year.
We increased it 8% in the first quarter of 2025. Like I said, we're a leading Western producer. We're number one in silicon metal in Europe and the U.S. We are back integrated. We mine quartz, which is a key ingredient. We really are self-sufficient on the quartz side, as on the silicon and ferrosilicon side. We do purchase manganese ore, so we are not back integrated in manganese. It's more of a spread business for us, less leverage to price moves. Global customer base, global operations. One of our key focuses is really operational excellence. Through the difficult time the company went through 2020, 2021, significant focus on working capital enhancements and just improving overall operations. Energy is a big thing. We're very energy intensive. We also have a lot of contracts on the energy side to manage our cost and make it more predictable.
With all countries having energy contracts, basically covering 75%+ of our needs, except Spain. We're only about 20% covered on energy in Spain. We do fluctuate production in Spain based on energy. Back to the EV and solar, and that is the silicon metal side of our business. Went through a pretty challenging period. This year, Chinese, they were dumping silicon metal to Europe, to EU, which is our main market, in addition to the U.S. Drove prices below Chinese costs. Obviously, that had a significant impact. That's why there are a lot of trade measures. There are safeguards that Europe is working. U.S. already has implemented certain actions on ferrosilicon, but also the silicon metal case is ongoing, and I'll cover those a little bit more in detail.
Again, as I mentioned, on the EV side, the silicon is superior to graphite, but that development is still ongoing because of the swelling. What happens when the anode is silicon? It's like a sponge. It shrinks and expands and makes it structurally weak. With the expansions or the cycle counts, without any modification, are poor. What Coreshell has done is they've developed nanocoating for the battery. It allows a little bit of flexing, but it maintains the structural integrity. It becomes very effective. The cycle counts are excellent, and we expect to start shipping, or Coreshell technically will start shipping to OEMs test batteries in the third quarter, this quarter, or next quarter. We're very excited about that. It's still something that is going to take some time because clearly it has to be tested thoroughly. We have very good feedback from certain German manufacturers and also U.S.
manufacturers of EVs. Lastly, we were actually added to Russell 3000 and 2000 Indices at the end of June this year, which is quite nice for us. It gets us more recognition and visibility. As I mentioned on the trade measures, I don't want to go through all the details here, but you can see what the duty rates are on the FESI, the top left box, ranging from 17% to a little over 1,000% for Russia. Not a whole lot of Russian ferrosilicon coming to the U.S. at this point. The solar cells, a lot of product was coming in from Cambodia, Malaysia, etc., to the U.S., and you can see those rates. That has created a challenge for the solar industry. This is part of what I mentioned earlier, that the solar market at the moment is challenging.
EU safeguards, this covers all our products, and this is an ongoing investigation. The preliminary decision was rumored to come out in August of this year, originally April, May, and the decision never came. They're going straight to the final decision, which by law they have to do no later than November 20th. This, like I said, covers all our products. We don't know exactly what the format is. There's been some rumors of, you know, price floor or it can be quota. We don't know, and I don't necessarily want to speculate, but we'd prefer quotas. That's probably easier to maintain a clean process. Price floors would be pretty challenging for commodity business. Over the last five, six years, EU internal production market share has gone from about 40%- 15%, and the goal of the measures is to try to get it back to about 40%.
Again, we'll see how effective those are and what the measures will be, but that's the ultimate goal, which would be significant for us. We're the largest producer, so we clearly benefit along with the other quote domestic European producers or EU producers. The silicon metal case I mentioned that in the U.S., that's going to happen in September. Preliminary decision for the CVD, that stands for countervailing duty, and the AD is the anti-dumping. It's one case, but they're two different time frames. As you can see, it was filed in April this year, and five months later, we expect at least a preliminary decision, and then seven months later for the anti-dumping. Europe, the safeguard case, has been going on for about two years, just to give you the, our government may not be that efficient. EU is much less efficient.
These are all going to be positives for us, depending on, obviously, what the levels are and what the duties and penalties are. We use CRU group for kind of our silicon data, and here are some numbers. Global silicon demand for solar and electronics, they're lumped together. That's why they're in one, pretty robust growth, and same for total silicon demand globally. Nice growth projections, and we expect to benefit from these. U.S. is growing faster than Europe. Europe is pretty stagnant. Overall, we don't really expect a lot of growth in Europe for silicon, but U.S., we expect meaningful growth based on the CRU information. Here is our, you know, balance sheet a little bit. You know, we deleveraged significantly, and at the end of the second quarter, we were down to $125 million of gross debt and had a positive net cash position.
We had about $135 million of cash, but you can see how we were $400 million in the negative on the debt side. Free cash flow, obviously, 2022 stands out. That was an exceptional year. I would say that is not normal. That was due to COVID events that took place. Supply was really constrained, and we were able to take advantage of it. That clearly helped us pay off a lot of the debt, but we still continued to make strong cash flow the last couple of years. This year has been more difficult. Like I said, the Chinese dumping of silicon to Europe is definitely a headwind, but it is starting to look better. The prices in China have increased for silicon, so we expect to benefit from that. They're curtailing production, not only in China, but also Brazil is restricting production.
We are seeing a little better dynamics. Clearly, the pain level is quite high. Even us, we switched two furnaces, one in Europe and one in the U.S., from silicon to ferrosilicon because of better economics. We do have that flexibility. It makes us somewhat unique that we can switch back and forth, and we can go back to silicon. Significant enhancement in our performance and de-risking the balance sheet has been meaningful. Just a capital return program. We pay a dividend about $0.014 a share. That was increased from, I believe, $0.013. It is a small dividend, but that's a quarterly dividend. A little over 1%. We plan to keep it modest and continue to grow it over time. We have done share buybacks. Done about $7 million since, I guess, third quarter last year. Measured buybacks. We have invested in Coreshell.
As I mentioned, that's the EV battery development company. We've invested $10 million in total. Mo i Rana is an industrial park, and we really invested to keep a private equity firm from buying the industrial park. They had plans to increase fees and transportation costs significantly. This was really a protective measure with not only us, but also with Elkem and another producer. We spend about $60 million in maintenance CapEx a year, $50- $60 million. You know, we can flex that a little bit if need be. Any questions so far? Here's a map where our operations are. Significant operations in North America. We have Quebec, a significant silicon plant there. Our total capacity is in the bottom right, the table there. Silicon metal, we can produce about 330,000 tons. Silicon-based alloys, about 300,000 tons. Manganese-based alloys, about 560,000 tons. The manganese-based alloys are all in Europe.
It's essentially a European product produced there and largely sold in Europe. We're vertically integrated. Charcoal and coal, we have about 40% of our internal needs. We mine or produce electrodes. We do 15%, that's about 15%. That's the plant in China. Quartz, which is the key ingredient. High-quality quartz. Quartz is very common. High-quality quartz that has very few impurities is much harder to find. We opened a new mine in South Carolina, and we're about 80% self-reliant on that. Wood chips as well. Basically, that's the inputs. We smelt it. We use a smelter, and at high heat, produce it, separate, and then you get the end products there. Our customers are aluminum producers, steel producers, chemical, solar, etc. Nice diversity.
Some of the customers that we have, I don't want to go through all of them, but Tata Steel, Rio Tinto, Dow, LONGi, a Chinese solar player, AK Steel, ArcelorMittal, Alcoa. All the big producers are our customers. In a commodity business, it's very important to be effectively managing your working capital, especially inventory, whether it's raw materials or especially in manganese, where we don't produce it. We have to buy it ahead of time. We've been really working on reducing working capital. From last, I think third quarter last year to end of this year, we're looking at $100 million reduction, and we're probably $70 million on the way there. Usually, we have lowest inventory in the fourth quarter when France has been idled for a couple of months, and then France is also idled in the first quarter.
Fourth and first quarters are usually the low inventory levels, and then we fully ramp up France in the second quarter and fully produce third quarter. We usually build inventory in those periods. We have various sources of energy. We try to be as green as possible. We like hydro, solar, wind when possible. Obviously, it's not always feasible, but that's our preference. It's something we manage very actively. We have a contract in France that's been very favorable to us, and we're renegotiating a new contract starting next year. It's a five to ten-year contract, and it's going to be very competitive as well. We're positive on that. It also allows us to produce more in France throughout the year because now we're basically producing in France eight months or less a year.
We are, in essence, compensated for not producing from December through March, and that's because of the peak energy cost. We, in essence, get rebates that can be meaningful. It's going to be a different mechanism going forward, but we can increase our production as a result and leverage our fixed operating costs a little bit better going forward in France. To summarize, we are well positioned. The trade measures are going to be significant. We don't know exactly what shape or form they are, but we are optimistic that they'll really help us gain market share, and hopefully have some better economic metrics as well as a result. Long-term growth is still strong in solar and EV, while we're in a lull at the moment.
One of the benefits we have is that regardless of how the tariffs that our current administration is imposing or not, it depends which day it is, we are a domestic producer in Europe, and we're a domestic producer in the U.S. as well. We feel like we're ideally positioned. Meaning silicon, U.S. has two producers, us and Mississippi Silicon, which is owned by RIMA out of Brazil. In Europe, we're the biggest producer as well on silicon metal and ferrosilicon as well. We really are quite well positioned regardless of what happens. We have a strong balance sheet, and also, we are paying dividends, and we will continue to engage in opportunistic share buybacks. We think that makes sense. We obviously feel our shares are undervalued, shocking, but it is, we are pretty inexpensive, and we do have a strong balance sheet now.
Very different company than it was five years ago. That's it. Questions?
Yeah, you're sort of the biggest one of these things, and you're sort of.
There really aren't a lot of littler guys, but the trade situation has really changed the dynamics because typically silicon metal is our highest margin business, and it has significantly been impacted by a couple of things. The Chinese dumping of silicon metal to Europe, the prices are down about 30% in the last six months. In Europe, it's, I believe, EUR 1,600- EUR 1,700 per ton. It was $24.50 midpoint a few months ago. We clearly, you know, have been significantly impacted by that. That's obviously hurting us, you know, at the moment. Also, there's a siloxane, which goes into the chemical process. Our chemical side of the business is, you know, both Europe and the U.S. have also been impacted by that, and that's also coming from China. China is a material player and overproducer. China cannot ship silicon metal to the U.S.
They can, but there's a 125% duty on it, whereas siloxane, apparently, there isn't. Again, you know, that's probably going to happen at some point, and you know, we'll see what happens with the trade negotiations in general. There has been a lot of trade uncertainty. That has affected our business overall. A lot of uncertainty. People are not committed to buying the same levels as they were in the past. Plus, Europe is struggling a little bit. Germany's steel production is down about 10% year to date. Now, they've committed to, you know, investing significantly in the infrastructure. I think $500 billion plus all the NATO spending in Europe as well are going to be positives for us. Currently, it is, and that's why we pulled guidance after, you know, the second quarter earnings call, because there are so many of these uncertainties and anomalies.
China typically wouldn't dump silicon to EU, but the polysilicon market cratered in China from, let's say, $30- $35/k- $5/k . That obviously, so in other words, you know, no one is producing polysilicon at the moment, you know, in any quantities like they were before. Hence the dumping of silicon metal. Silicon metal is used to make polysilicon. These things are a little bit anomalies, you know, and that's why a lot of the trade cases, in addition to what Trump is doing, are pretty prevalent. I actually follow it. I did not realize how many trade cases there are in the U.S. It's an incredible number, like not just our industry, but in general.
There is a lot of unfair, in China's case, I can say it's unfair competition because they have such different regulations and rules and other cost advantages, subsidies that they just play by different rules. They are starting to get more. There has been a lot of noise coming out of China that they are going to curtail production, not only in our industry, but in others, because they have kind of killed their own markets. I was reading about EV companies in China. I don't remember what the number is. There are like 20 of them. There are like 14 new companies, and seven went out of business. It's like, you know, they are selling it at crazy levels in China. They can't make money doing it. China is trying to fix that to some extent. They are trying to do circumvention.
For example, silicon metal, 125% duty to the U.S. We just started hearing that Angola is shipping silicon metal to the U.S. Angola is not known for silicon metal, but apparently, Chinese are setting up operations there. Our silicon metal case in the U.S. includes Angola. They haven't shipped very much at all, but clearly, that's a Chinese way of circumventing the rules. Their goal is pretty clear to dominate on the materials, whether it's rare earths, which we are not in that business, but they are definitely an influential player.
If there are really large duties that are put on China and the restrictions are so onerous that that simplifies the European market, is there the capacity available to make up for that, or would that extreme scenario create a level of disruption?
Yes, there is. That's one of the things that the EU or the European Commission is studying. It's part of the, we obviously provide information. Our CEO, Marco , is also head of EFTA , which is the trade group in Europe. We are very closely in touch, and we kind of know exactly what they're looking at. They came to visit our offices, the European Commission, and that's one of the criteria is that they want to balance it, right? Yes, if you can get back to that 40%, let's say it's even 30%, we can easily do that as an industry. In Spain, we produce not in winter or summer all that much. I mean, we might be down to one furnace or a couple of furnaces on silicon metal. Obviously, the pricing is weak, so that's affecting it too.
The energy cost, so energy is something we look at too. Overall, I think there is enough capacity to supply nearly all of it. I can't remember the number exactly, but we have probably 200,000 tons of manganese alloy capacity, and it's all in Europe, so we could easily do that. For silicon metal globally, and I think Europe is roughly the same, we probably are operating at 60% capacity. We have maybe 70%. We do have significant ability to meet a lot of those needs.
Where are you on your SG&A spend? You did a great job from 2020 and 2021. I guess my question is, is there more to go or is it in this downturn? You ate out of it.
We took a lot out. I started two years ago, so I wasn't there, but they took a lot out, got rid of inefficient operations. Starting maybe early this year, we have a hiring freeze. Maybe it started late last year, but we have a hiring freeze. If it's not essential, we're not replacing. It's not a huge, like it's not from a dollar perspective, but it's the discipline to just run it frugally as much as possible. We continue to focus on it. We're focusing a lot on working capital. That's why we have that S&OP, that sales and operations planning, to really have a truly integrated supply chain management because we have our net working capital is like $500 million. That's a lot, right? Beatriz brings it up all the time. So does our operations guy, our COO. He's very focused.
We actually have an internal group that meets every month. I dial in for the calls just so I can know what's going on. There's significant focus on just increasing that efficiency. We take that really seriously. There's a balance, right? The goal is not to get really low on working capital to a point where you start losing sales and opportunities because usually when you get to the lowest level is probably the bottom of the market. That happened to us in the first quarter. Part of it was that we ran our inventories pretty low in the fourth quarter, especially in manganese ore. We had some hiccups because our supplier couldn't deliver. A lot of our manganese ore comes from South Africa and Gabon. They had some hiccups on delivery. Prices were quite good and we weren't able to deliver. It's a balancing act.
It's really fine-tuning it and getting better at forecasting. It's not like you go next door and buy something. You have to figure out how to deal with Africa and get the shipments. It's a big challenge. Anything else? That's it. Thank you.