Orion S.A. Invests to Upgrade Alpha Carbone Facility

Rhea-AI Summary

Orion S.A. (NYSE: OEC), a global specialty chemicals company, announced an investment in Alpha Carbone, a French tire recycling company. This partnership aims to scale up the production of tire pyrolysis oil and recovered carbon black. A long-term supply agreement will make Orion the exclusive customer for Alpha Carbone's tire pyrolysis oil, which will be used to manufacture circular carbon black for tire and rubber goods. The plant in Dole, France, is expected to start operations in late 2025. This initiative supports Orion's goal of advancing sustainable solutions and contributing to a circular economy.

Positive

• Orion S.A. has secured a long-term supply agreement for tire pyrolysis oil, ensuring a stable feedstock supply.
• The investment aligns with Orion’s strategy to produce sustainable, circular carbon black.
• Orion will be the exclusive customer for Alpha Carbone’s tire pyrolysis oil, strengthening its market position.
• Alpha Carbone’s facility will start operations in late 2025, potentially boosting production capacity.
• This initiative supports the recycling of 500,000 metric tons of discarded tires in France, addressing environmental concerns.
• Orion has demonstrated that its circular products can replace virgin carbon black in many applications, showcasing innovation.

Negative

• The plant in Dole, France, will not be operational until late 2025, delaying potential benefits.
• The investment in Alpha Carbone involves long-term financial commitments and potential risks if the project fails to meet expectations.
• There could be market risks if the demand for circular carbon black does not meet projections.

Insights

Financial Analyst

Orion S.A.'s investment in Alpha Carbone marks a significant strategic move in the specialty chemicals sector. This partnership not only strengthens Orion's supply chain but also demonstrates its commitment to sustainable practices. The long-term supply agreement ensures a steady stream of tire pyrolysis oil, a important input for producing circular carbon black. This could lead to cost efficiencies and higher profit margins in the long run.

From a financial perspective, this investment could have several implications. Firstly, the exclusive supply agreement mitigates supply chain risks and ensures a reliable source of raw materials. Secondly, the focus on circular carbon black can open up new revenue streams, especially given the increasing demand for sustainable products. Additionally, with the plant expected to start operations by late 2025, investors should anticipate capital expenditures in the short term but potential revenue growth thereafter.

Investors should closely monitor Orion's financial statements for changes in capital expenditure and any updates regarding the project's timeline. In the short term, there may be an impact on cash flow due to the investment, but the long-term benefits could outweigh these initial costs.

Market Research Analyst

The investment in Alpha Carbone aligns well with the growing market trend towards sustainability and circular economy solutions. With an estimated 500,000 metric tons of tires discarded annually in France alone, the potential for scaling up tire pyrolysis to produce recovered carbon black and pyrolysis oil is substantial. This move positions Orion as a leader in a niche market with significant growth potential.

One of the critical aspects to consider is the demand for sustainable products from tire and rubber goods manufacturers. As these industries face increasing regulatory pressures and consumer demand for eco-friendly products, Orion's circular carbon black could become a highly sought-after material. This investment can help Orion cater to a market that is likely to expand rapidly over the next few years.

Retail investors should note that while the market for circular carbon black is still emerging, Orion's proactive steps in securing a long-term supply agreement and investing in production capabilities place it in a favorable position to capitalize on this trend. However, it's essential to stay updated on industry developments and regulatory changes that could impact the demand for such sustainable materials.

Environmental Expert

Orion S.A.'s investment in Alpha Carbone is a noteworthy step towards addressing the environmental challenges posed by end-of-life tires. Tire pyrolysis is a proven technology for converting discarded tires into valuable materials like synthetic gas, recovered carbon black and pyrolysis oil. By utilizing these materials, Orion is contributing to reducing waste and promoting a circular economy, which is increasingly becoming a focal point for industries worldwide.

From an environmental perspective, the ability to produce circular carbon black from 100% tire pyrolysis oil is particularly significant. This not only reduces the reliance on virgin materials but also offers a solution to the growing problem of tire waste. The process employed by Alpha Carbone ensures that the environmental footprint is minimized by effectively recycling and repurposing waste materials.

For stakeholders concerned with sustainability, this investment exemplifies a responsible approach to business operations. The long-term impact on the environment and Orion’s sustainability credentials could enhance its reputation and attract environmentally conscious investors and customers. However, the actual environmental benefits will need to be monitored and validated through transparent reporting and compliance with environmental standards.

The plant will supply Orion with tire pyrolysis oil to produce sustainable carbon black

HOUSTON--(BUSINESS WIRE)-- Orion S.A. (NYSE: OEC), a global specialty chemicals company, announced today it is investing in Alpha Carbone, a French tire recycling company. The partnership will enable Alpha Carbone to scale up and produce commercial volumes of tire pyrolysis oil and recovered carbon black.

The cooperation also includes a long-term supply agreement with Orion as the exclusive customer for the tire pyrolysis oil produced by Alpha Carbone. The oil will be used by Orion to manufacture circular carbon black for tire and rubber goods customers.

“This investment enables Orion to make large-scale volumes of circular grades of carbon black for our rubber customers who are seeking sustainable solutions,” Orion CEO Corning Painter said. “It further strengthens Orion’s position as an innovator focused on the future and accelerating the transition to a circular economy.”

An estimated 500,000 metric tons of tires are discarded annually in France. For years, Orion has been working closely with major tire companies to develop circular carbon black. Tire pyrolysis is the only proven technology to produce circular carbon black that can be used in new tires.

Alpha Carbone’s tire pyrolysis process takes the discarded end-of-life tires and exposes them to high temperatures, removing wire, mesh and other materials. The process also reduces the tires to synthetic gas, recovered carbon black and tire pyrolysis oil.

Orion is the only company that has made circular carbon black from 100% tire pyrolysis oil as a feedstock. The company has also demonstrated that its circular products can replace virgin carbon black in many applications.

Alpha Carbone’s plant is expected to start up in late 2025. Besides the pyrolysis oil supplied to Orion, Alpha Carbone will sell the recovered carbon black to its own customers primarily under long-term contracts.

“This investment will allow Alpha Carbone to bring its Dole, France, facility to the best industrial level in order to supply the growing demands for quality recovered carbon black and tire pyrolysis oil to our customers. This new step aligns with the strategy of Alpha Carbone’s main shareholder, Alpha Recyclage Franche Comté, to offer the best possible solution for recycling end-of-life tires,” said Laura Pech, CEO of Alpha Carbone.

About Orion S.A.

Orion S.A. (NYSE: OEC) is a leading global supplier of carbon black, a solid form of carbon produced as powder or pellets. The material is made to customers’ exacting specifications for tires, coatings, ink, batteries, plastics and numerous other specialty, high-performance applications. Carbon black is used to tint, colorize, provide reinforcement, conduct electricity, increase durability and add UV protection. Orion has four innovation centers and produces carbon black at 15 plants worldwide, offering the most diverse variety of production processes in the industry. The company’s corporate lineage goes back more than 160 years to Germany, where it operates the world’s longest-running carbon black plant. Orion is a leading innovator, applying a deep understanding of customers’ needs to deliver sustainable solutions. For more information, please visit orioncarbons.com.

About Alpha Carbone:

Alpha Carbone is a steam-pyrolysis company, based in France, focusing for over 15 years on producing recovered carbon black and TPO from end-of-life tires. Alpha Carbone has its main plant in Dole, right next to the group‘s main facility for collection and recovery of end-of-life tires. Alpha Carbone has a joined laboratory with Ecole des Mines d’Albi for R&D purposes.

Forward-Looking Statements

This document contains certain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements of future expectations that are based on current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement. New risk factors and uncertainties emerge from time to time and it is not possible to predict all risk factors and uncertainties, nor can we assess the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information, other than as required by applicable law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240513477498/en/

Wendy Wilson

Orion S.A.

Head of Investor Relations

wendy.wilson@orioncarbons.com

+1 281-974-0155

William Foreman

Orion S.A.

Director of Corporate Communications and Government Affairs

william.foreman@orioncarbons.com

Direct: +1 832-445-3305

Mobile: +1 281-889-7833

Source: Orion Engineered Carbons S.A.

FAQ

What is the main objective of Orion S.A.'s investment in Alpha Carbone?

The main objective is to scale up production of tire pyrolysis oil and recovered carbon black, supporting the manufacture of sustainable, circular carbon black.

When will Alpha Carbone's plant in Dole, France, start operations?

Alpha Carbone's plant in Dole, France, is expected to start operations in late 2025.

What will be Orion S.A.'s role in the partnership with Alpha Carbone?

Orion S.A. will be the exclusive customer for Alpha Carbone's tire pyrolysis oil, using it to produce circular carbon black.

How does Orion S.A.'s investment support environmental sustainability?

The investment supports recycling 500,000 metric tons of discarded tires annually in France, contributing to a circular economy.

What technology is used by Alpha Carbone for tire recycling?

Alpha Carbone uses tire pyrolysis, a process that reduces end-of-life tires to synthetic gas, recovered carbon black, and tire pyrolysis oil.