FESA4

Founded on February 23, 1961 by engineer José Corgosinho de Carvalho Filho, Companhia de Ferro Ligas da Bahia – Ferbasa was established in Campo Formoso (BA) with a focus on chromite mining to supply the domestic industry. Within a few years, it expanded its operations with the start-up, in 1963, of the metallurgical industrial complex in Pojuca (BA), dedicated to the production of ferrochrome for the steel industry, especially for the manufacture of special and stainless steels. Over the course of its history, the company has consolidated a vertically integrated business model, combining mining, metallurgy, forest assets and, more recently, renewable electric power generation. Ferbasa’s shares, traded on B3 under the tickers FESA3 and FESA4, are tied to a company that combines heavy industrial operations, natural assets and energy projects.

The core of Ferbasa’s business model is the production of ferroalloys, strategic inputs for the steel industry. The company is the only domestic producer of ferrochrome and supplies approximately 95% of the apparent consumption of the domestic market, in addition to accounting for about 2% of global production of this input. Its main portfolio includes high-carbon ferrochrome (FeCrAC), low-carbon ferrochrome (FeCrBC), ferrosilicon chrome (FeSiCr) and ferrosilicon 75 (FeSi75), in both standard and high-purity versions. The operation is power-intensive and based on electric arc furnaces, with 14 furnaces installed in Pojuca, which receive chrome ore, quartz, quicklime and other inputs from the company’s own mines and plants in Bahia.

Ferbasa structures its operations into three business segments: ferroalloys, wind power and others. The ferroalloys segment concentrates the production and sale of chrome and silicon alloys, representing the main revenue source, with net sales combining the domestic market and exports to several countries. The wind power segment encompasses the operations of subsidiary BW Guirapá, which brings together seven special purpose entities dedicated to the generation and sale of electric power from wind farms in Bahia, with current firm energy of 73.5 MW for the 2022–2026 period. “Others” include forest activities – such as standing timber and bioreducer sales – and mining with the sale of chrome ore, chromite sand, quicklime and hydrated lime. This structure highlights an integrated chain that combines mineral extraction, metallurgical processing, the supply of renewable inputs and (partial and future) self-sufficiency in energy.

On the production front, Ferbasa holds about 95% of Brazil’s chromite resources, with two important mining clusters in the North-Central region of Bahia: the Pedrinhas mine in Campo Formoso, an open-pit operation, and the Ipueira mine in Andorinha, an underground operation considered one of the most advanced in the country in terms of technology and safety. In addition, the company operates a quicklime plant and two quartz mines in northeastern Bahia, which supply the Pojuca metallurgical unit. This vertical integration makes it possible to control a significant part of the ferroalloys value chain, from exploration and mining (through subsidiaries such as Mineração Vale do Jacurici and Damacal) to final production, including Silbasa, focused on high-purity ferrosilicon alloys, and Reflora, dedicated to reforestation and charcoal.

Geographically, operations are strongly based in Bahia, but Ferbasa has developed an international presence both in revenues and corporate structure. In 2024, approximately half of net revenue came from Brazil, while the other half was generated by exports to Europe, the Americas and Asia, with emphasis on countries such as Japan, the United States and members of the European Union. The company has a wholly owned subsidiary in Colombia, Ferbasa & Co S.A.S, created in 2021, whose corporate purpose includes the manufacture and sale of ferroalloys, mineral exploration and mining, and activities related to coal and coke. In the forestry segment, Ferbasa owns around 64 thousand hectares, with approximately 25 thousand hectares of planted eucalyptus, and is the majority partner in Bahia Minas Bioenergia Ltda., a company focused on acquiring rural properties for eucalyptus cultivation and supplying charcoal under a long-term contract.

Ferbasa’s client base is concentrated in large industrial groups. In 2024, Aperam, in the domestic market, accounted for about 40% of revenue, mainly in chrome alloys, while Marubeni Corporation, in the foreign market, represented about 32% of revenue, primarily related to silicon alloys. Domestic sales are carried out through monthly, quarterly or annual contracts, generally under the FOT model (product delivered loaded on a truck at the plant). In the foreign market, shipments are negotiated both on a regular and spot basis, with FOB sales via the Port of Salvador. Ferbasa also complies with specific transport safety regulations for markets such as the European Union and the United States, packaging products classified as hazardous, such as FeSi75 and FeSiCr, in big bags with safety instructions.

On the regulatory side, Ferbasa reports that its core activities are not in a market subject to specific concessions, but they are heavily conditioned by environmental licensing. Agencies of the National Environmental System (SISNAMA), at the municipal, state and federal levels, act as oversight authorities, with emphasis on operating licenses, water use permits and various conditions. The company manages its social and environmental obligations through an Integrated Management System certified under ISO 9001, 14001 and 45001, covering metallurgy, mining and forest resources. In 2024, around R$ 50 million was invested in health, safety and the environment, including projects for air emissions control, waste management, stormwater drainage and expanded water reuse, as well as the first independent assurance of its greenhouse gas emissions inventory.

In terms of environmental, social and governance practices, Ferbasa highlights an ESG agenda structured around both environmental management and social responsibility. On the environmental front, the company preserves approximately 45% of its forest areas as native vegetation, above the legal minimum, including private natural heritage reserves (RPPNs), and invests in the recovery of degraded areas, gas burners in bioreducer furnaces and projects to reuse slag as soil conditioner, currently under review by the Ministry of Agriculture. In social responsibility, the “Aqui Tem Ferbasa” program benefited more than 100 thousand people in 24 municipalities in Bahia in 2024, with about R$ 17 million allocated to education, culture, sports, rural development, environmental and health projects. An important governance differentiator is the fact that its controlling shareholder is Fundação José Carvalho, a philanthropic organization that maintains six own schools and socio-educational programs, funded largely by Ferbasa’s dividends. For investors following FESA3 and FESA4 on B3, these elements make up the profile of an integrated industrial company, with a strong base in natural resources, significant export presence and structured social and environmental policies.