FESA3: quote, dividends and indicators for Ferbasa

Companhia de Ferro Ligas da Bahia – Ferbasa S.A. is a Brazilian company with more than six decades of operations in the ferroalloys sector, having started its activities in 1961 under the leadership of its founder, José Corgosinho de Carvalho Filho. Over its history, it has consolidated itself as one of the largest industries in Bahia and a national benchmark in the production of chromium- and silicon-based alloys. A relevant milestone in its corporate history was the donation, in 1975, of a large portion of the company’s shares to Fundação José Carvalho, a philanthropic entity that has since been the controlling shareholder and directs the dividends received to educational projects serving thousands of children and adolescents. Ferbasa’s shares are traded on B3 under the tickers FESA3 and FESA4, in the Level 1 Corporate Governance segment.

Ferbasa’s business model is highly verticalized and integrated, covering the stages of mining, metallurgy, forest resources and renewable energy. The company is the national leader in ferroalloy production and stands out as the only producer of ferrochrome in the Americas, accounting for a relevant share of global supply of this input for the steel industry. Metallurgical production is supported by in-house operations for the extraction of chrome ore, quartz and production of quicklime, as well as eucalyptus plantation forests used to manufacture bioreducer, in addition to an ownership interest in a wind power asset to partially supply energy needs. This setup seeks to reduce dependence on third parties for strategic inputs, strengthen cost control and ensure greater operational stability in a power-intensive sector subject to international price cycles.

Ferbasa’s metallurgical activities focus on producing a portfolio of alloys aimed mainly at the steel industry and the manufacture of stainless and special steels. Its main products include high-carbon ferrochrome (FeCrAC), low-carbon ferrochrome (FeCrBC), ferrosilicon 75 (FeSi75), high-purity ferrosilicon 75 (FeSi HP) and ferrosilicon chrome (FeSiCr). FeCrAC and FeCrBC are used in the production of corrosion-resistant steels, high-alloy steels and stainless steels, with relevant applications in the automotive, consumer goods and industrial equipment industries. FeSiCr serves as an essential input in the manufacture of low-carbon ferrochrome, while FeSi75 is used as a deoxidizer and alloying element in steelmaking and as a graphitizing agent in foundries. FeSi HP, in turn, serves more specific niches, such as the manufacture of steels for transformers, hydroelectric power plants, hermetic compressors and refrigeration equipment, requiring a high standard of purity. Installed ferroalloy production capacity, distributed across 14 electric arc furnaces, is dimensioned based on energy consumption and the optimal mix of products per furnace, under a continuous operating regime.

In the mining segment, Ferbasa has two chrome ore extraction units in Bahia, one underground and the other open pit, as well as two quartz mines and a quicklime plant located in the Central-North and Northeast regions of the state. Most of the extracted ores are sent to the metallurgical unit in Pojuca (BA), where ferroalloys are produced in furnaces equipped with bag filters to control particulate emissions. Vertical integration also extends to forest resources, with a total area of approximately 64 thousand hectares, of which around 25 thousand are used for eucalyptus plantations intended for bioreducer production, a carbonaceous input used in ferrosilicon manufacturing. The remaining areas include legal reserve, native forests, firebreaks and a Private Natural Heritage Reserve (RPPN), forming a mosaic of use and conservation of forest assets.

Diversification into renewable energy is carried out through BW Guirapá, a wholly owned subsidiary acquired in 2018, which holds 100% of the capital of seven special purpose entities responsible for the implementation and operation of wind farms in the municipalities of Caetité and Pindaí, in Bahia. These wind assets were designed to operate as independent power producers, focused both on supplying the grid and supporting Ferbasa’s own energy consumption. The company’s strategy foresees that, from 2036 onward, the clean and renewable energy generated by the seven wind farms will be integrated into the electricity supply mix, with the possibility of allocation for self-consumption or commercialization in the market. The corporate structure also includes subsidiaries related to the commercialization of high-purity ferrosilicon, chrome exploration and mining, reforestation and charcoal production, as well as a subsidiary in Colombia, Ferbasa & CO S.A.S, focused on operations in coal and metallurgical coke chains, and an associate in the forestry sector, Bahia Minas Bioenergia Ltda., formed in partnership with Aperam to ensure long-term supply of renewable reducer.

Ferbasa’s commercial activities are split between the domestic and international markets, with significant presence in different regions of the world. Revenue from Brazil accounts for a relevant portion of consolidated net revenue, while exports are mainly destined for the European Union, Asia and the Americas, including countries such as Japan, China, the United States, Argentina, Chile, Mexico, Canada and others. In the domestic market, ferroalloy sales are usually made through monthly, quarterly or annual contracts, generally on an FOT basis, with delivery at the plant. In the international market, shipments are predominantly spot and carried out via the Port of Salvador (BA), on an FOB basis. Major customers include Aperam, in the chromium alloys segment, and Marubeni Corporation, in the silicon alloys segment, which represent significant shares of annual revenue. The company also adapts its logistics operations to specific regulatory requirements of importing countries, such as the mandatory use of big bags with safety instructions for products classified as hazardous in the European Union and the United States.

The competitive environment in ferroalloys is influenced both by global supply and by trade measures in large consumer markets. Ferbasa accounts for about 95% of apparent ferrochrome consumption in the Brazilian domestic market and holds an estimated share of approximately 2% of global production of this input, which positions it as a relevant supplier, although operating in a fragmented global market subject to international price fluctuations. In ferrosilicon, the company operates with installed capacity above one hundred thousand tons per year, with product quality aligned with the specifications required by the markets it serves. The company has reported impacts from recent protectionist actions, such as antidumping duties and additional tariffs imposed on silicon and chrome alloys in the United States, as well as quotas and minimum prices set by the European Union under safeguard measures and through the implementation of the Carbon Border Adjustment Mechanism (CBAM). This scenario has required redirecting sales, adapting logistics and maintaining strict risk management discipline in its commercial strategy.

In terms of corporate governance and ESG practices, Ferbasa operates with an Integrated Management System certified under ISO 9001 (quality), ISO 14001 (environment) and ISO 45001 (occupational health and safety), covering its metallurgy, mining and forest resources operations. The company states integrity, fairness, accountability, transparency and sustainability as its guiding principles, with a governance structure composed of a Board of Directors and advisory committees, a Fiscal Council and an Executive Board. Environmental management is based on operating licenses, water-use permits and regulatory conditions monitored by agencies of the National Water Resources Management System and the National Environmental System, at the municipal, state and federal levels. Recent initiatives include investments to mitigate atmospheric emissions through bag filters and gas burners, water reuse programs, integrated waste management with a focus on circularity and the recovery of degraded areas.

On the social front, in addition to the indirect impact resulting from the ownership structure linked to Fundação José Carvalho, Ferbasa maintains the “Aqui Tem Ferbasa” Social Responsibility program, active in education, culture, sports, rural development, environment and health, concentrating resources in municipalities in Bahia where it has operations. Initiatives such as Ferbasa Educa, aimed at increasing the educational level of employees and their families through Youth and Adult Education programs, school reinforcement projects, rural development actions for families in the semi-arid region of Bahia and programs to democratize access to culture highlight its focus on local development. In health and safety, the company implements structured programs for training safety leaders, audits of procedural compliance, engineering projects to eliminate unsafe conditions, and campaigns to promote physical and mental health across all units. These elements form Ferbasa’s ESG pillar and are part of how the company seeks to align its operating results with the management of social and environmental impacts.