RHI Refractories establishes new smelting plant in South Africa

10. October 2006

The development of RHI Refractories has traditionally been based on the availability of self-produced raw materials. The roots lie in the magnesite of the Austrian Alps, where RHI has operated its own mines for over 125 years. In 2005, RHI produced more than 1.1 million tonnes of magnesite and dolomite, of which 600,000 tonnes were mined in Austria and nearly 300,000 tonnes in Turkey and Italy respectively, from the group’s own deposits with sufficient reserves. In March 2006, RHI signed a contract with a Chinese partner regarding the establishment of a joint venture to produce top-quality magnesia, in which RHI will hold an 80% share. From 2008, RHI will be able to cover more than 50% of the Chinese plants’ raw material requirements from its own resources. Only few of RHI’s competitors have the know-how and the experience to use such potential for their own refractories strategy.

RHI Refractories also uses special melting raw materials in the production of refractories solutions. Roughly half of the amount required is covered by RHI’s own production. In order to meet the increasing demand for these very high-grade raw materials optimally in logistical and economical terms, RHI will establish a smelting plant with initially two electric arc furnaces and an annual capacity of 30,000 tonnes in Isithebe/South Africa. In addition to inexpensive electrical power and locally available raw materials, this location is situated very close to the harbours of Richards Bay and Durban. The plants will be established at a site leased for the long term. Capital expenditure in the amount of EUR 9 million will be completed by the summer of 2007. RHI’s existing production in South Africa will also be integrated in the Isithebe plant.

Following the successfully completed restructuring, the RHI Group will in the future focus exclusively on extending its position as the world market leader in refractories under the RHI Refractories brand. Worldwide, there are good opportunities to sustainably expand the excellent market position and earnings power of RHI Refractories in the coming years. The objective is to increase the revenue of approx. € 1.2 billion recorded in 2005 to € 2.0 billion by the year 2010 through organic growth and acquisitions and to achieve an EBIT margin of at least 10%.