Imetal S.A.

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Imetal S.A.

Tour Maine-Montparnasse
33, avenue du Maine
75755 Paris Cedex 15
France
(1) 45 38 48 48
Fax: (1) 45 38 74 78

Public Company
Incorporated: 1880 as Société Le Nickel
Employees: 6,000
Sales: FFr20.00 billion (US$3.93 billion)
Stock Exchange: Paris

Imetal, a French holding company, was founded in 1974 to control three major companies: Société Le Nickel, Peñarroya, and Compagnie de Mokta. Although it was then a major participant in the nonferrous sector, Imetal gradually moved away from this field of activity in order to concentrate on construction materials, now the company’s largest profit-earner.

Established in 29 countries, the industrial group has four main divisions: construction materials, industrial minerals, international trading, and metal processing. Although it has redefined and modified its targets since 1986, Imetal’s history dates back to the 19th century and is associated with one of the most famous dynasties of French bankers and industrialists, the Rothschild family. Guy de Rothschild, Imetal#x2018;s chairman for almost 20 years, was responsible for the company’s direction and reputation before the present chairman, Bernard de Villeméjane, oversaw the company’s next incarnation.

Imetal’s history began in 1863 in the French colony of New Caledonia, when Jules Garnier, an engineer, discovered important nickel deposits. Some ten years later, together with Henri Marbeau, he founded La Société de Traitement des Minerais de Nickel, Cobalt et Autres. Four years later, in 1880, Garnier and Marbeau’s company merged with Higginson et Hanckar to form Imetal’s direct predecessor, Société Le Nickel (SLN). Although its headquarters were located in Paris, the SLN built small factories near Marseilles and a blast furnace at Noumea, New Caledonia. Its early progress was encouraging. However, the first nickel crisis in 1884 slowed down its activities, and after the closing of the main factory at Chaleix, Garnier and Marbeau were forced to relocate production to France, Britain, and Germany.

This was the era of tall sailing ships of 3,000 to 5,000 tons, that were able to cross in 100 days and to transport around 60,000 tons of minerals annually. These transported nickel from New Caledonia to Europe until World War I interrupted the company’s expansion. By the end of the war, only the Le Havre factory had escaped damage. The SLN took nearly 15 years to recover from the disaster. In 1931 it entered into partnership with the Société Calédonia and created Calédonickel, a company that managed the large factory of Doniambo, near Noumea. Six years later, having absorbed Calédonickel, the SLN was the only company exploiting nickel in New Caledonia and was already producing 10% of the world’s nickel consumption. Calédonickel and, more generally, the SLN were not only responsible for considerable improvements in the Caledonian economy but also played a leading role in the urbanization and social development of the island. They took on workers from abroad, but also trained and employed natives. During World War II, the Doniambo factory’s output reached the United States, since a great part of it was sent to help in the construction of U.S. weapons. Although these transactions increased SLN’s international status, the war left the company in a precarious state. The need was felt to concentrate and modernize its structure and equipment. This process took SLN about ten years, but in 1950 the company’s nickel production (6,900 tons) finally exceeded that of 1939 (6,700 tons). In spite of several other crises, the next 20 years saw the continuation of SLN’s development from the level of a cottage industry to that of an advanced technology company.

Peñarroya, which was to merge with SLN in 1967, had grown rapidly in parallel with SLN. Although both companies were partly owned by the Rothschild empire, which had been one of the founders of Peñarroya, they had separate identities, management, and operations. Created in 1881 by Charles Le-roux in order to exploit the coal and lead mines of the Andalusian village that gave its name to the company, Peñarroya, after a very difficult start, made great progress at the beginning of the 20th century. For his efforts, Charles Leroux received a medal at the Paris Universal Exhibition (Exposition Universelle) of 1900. In 1910, Peñarroya’s new chairman, Frederic Ledoux, decided to extend the company’s activities beyond Spain. World War I had little effect on Peñarroya, since Spain was not at war with Germany, and the company rapidly turned to the exploitation of nonferrous metals in the Mediterranean basin. It prospected for zinc in North Africa and its French colonies, in Greece, and in Italy. After the shock of World War II, Penarroya expanded as far as South America and Mauritania, under the influence of the new chairman Rene Fillon, who used to work for the Banque Rothschild and whose tenure would last until 1961. Peñarroya then became a world leader in zinc but also produced silver, cadmium, germanium, and later—in association with Mokta—uranium and aluminum. In 1961 the company’s structure was redefined and Peñarroya found itself in need of a new chairman to replace Rene Fillon. The Rothschild group proposed Georges Pompidou, who was, however, unable to accept the offer as he was shortly to become prime minister of France. It was therefore Guy de Rothschild himself who became chairman, this being the first time that a Rothschild had personally participated in the management of one of the family’s businesses. He also recruited Bernard de Villeméjane, the present chairman of Imetal.

On his arrival at Peñarroya, Guy de Rothschild found that there were numerous problems to solve. To modernize the company’s plant, he introduced a new zinc furnace. The commercial problems were more serious, as Peñarroya was not able to sell its own products. Rothschild established and bought small businesses to counterbalance Peñarroya ’s losses and entered into partnership with several other companies, which included Pechiney, the iron and steel leader. Throughout this period, Rothschild actively sought new sources of financing and revenue. After the metal crisis of 1967, when metal prices plunged, this search gave birth to Imetal.

The year 1967 was important for both SLN and Peñarroya. Through COFIRED, a company owned by the Compagnie du Nord, itself belonging to the Rothschilds, which bought 50% of Peñarroya’s capital and gave it back to SLN, SLN became the majority shareholder in Peñarroya and therefore controlled it. Yet until 1970, although the two companies were run along the same lines, they retained separate management and headquarters. In 1970, just before the takeover of Mokta, the companies eventually merged and become a single group, SLN-Peñarroya. The nomination of Bernard de Villeméjane as president of the group coincided in 1971 with Mokta’s entry into the group, through a public offer of exchange which was accepted by 92% of Mokta’s shareholders. Created in 1865 to exploit magnetic iron ore deposits in Mokta-el-Hadid, Algeria, Mokta had developed slowly under the control of the Suez Bank. It diversified primarily into manganese and uranium and later became a holding company. With iron interests in Spain, manganese in Gabon and Morocco, and—most importantly—uranium in France, Nigeria, Gabon, and Canada, Mokta was only fully absorbed by Imetal in 1980.

The three Rothschild companies were now faced with the merger of Pechiney and Ugine-Kuhlmann, their direct competitors, in 1971. Three years later, in 1974, the Rothschild group became an industrial holding company. A new name, Imetal, was chosen for its modern connotations although it had no actual meaning. It was a public limited company with headquarters in the 15th arrondissement of Paris and moved in 1977 into the 51st floor of the famous Tour Montparnasse. This concentration and merging was, of course, part of the logical continuation of SLN’s growth policy, but was also prompted by the international oil crisis of 1973 that affected the nickel industry more directly in 1975. Although Mokta and its uranium survived the energy crisis quite well, the 30% decrease in construction as well as the fall in prices and of the dollar deeply affected the group. Imetal did not recover fully from the crisis until the end of the 1980s.

However, one year after its formation Imetal was to receive international attention through the highly publicized Copperweld case. Imetal was trying to expand into the United States and made a takeover bid for Copperweld, a company created in 1915 that manufactured specialty tubing, bimetallic wire, and alloy steel. Copperweld’s employees and management opposed the bid and took the case to court. The court decision in favor of Imetal provoked protests by U.S. workers in the streets of Washington, D.C. and New York. The anti-French movement reached its climax and was fueled by antisemitic slogans directed against Baron Guy de Rothschild. The latter eventually came to Pittsburgh to defend his company and succeeded in turning opinion in his favor. He ended by acquiring 67% of Copperweld, and now owns the company entirely.

Rothschild did not stop there, and on his way toward internationalization he bought 25% of the Lead Industries Group, formed in 1930 as the result of the amalgamation of a number of U.K. lead manufacturers in the 1920s. Then through Mokta, Imetal managed to take over the largest private uranium-ore company in France, la Compagnie Fran#x00E7;aise des Minerais d’Uranium. The latter is now a major subsidiary of Mokta.

These events were followed in 1976 by the creation of Mine-met, which combined in a single entity all of the marketing companies of the Imetal group, together with Minemet Recherche, a subsidiary conducting the major part of its operations at the Trappes Research Center, near Paris, which was opened in 1972. In 1979, Guy de Rothschild, who had passed the retirement age laid down by the company, was obliged to resign, and, Bernard de Villeméjane became chairman of Imetal. In 1980, when SLN celebrated its 100th anniversary, Imetal’s consolidated profits totalled FFr200 million, to which Copperweld had made a major contribution. However, Bernard de Villeméjane had to face another crisis, mainly affecting nickel production and caused by recession in the minerals market. The industry was, if not depressed, certainly in stagnation. Change was urgently needed and the possibility of a change of product line gradually became apparent.

At the beginning of the 1980s, Bernard de Villeméjane took a series of measures to reduce the importance of uranium and minerals in Imetal’s activities. In his opinion, they were no longer profitable. First, in 1983, he conceded the majority of SLN’s shares to Eramet and the latter became Eramet-SLN, of which Imetal now controls only 15%. In 1986 the situation had deteriorated still further and Imetal’s losses amounted to FFr586 million. Mokta, which was partly responsible for this, was sold to Cogéma in 1986. In 1987 it was Peñarroya’s turn; Imetal’s share in the company was reduced from 59% to 34.1% and later to 15%. Peñarroya in the early 1990s was owned by Metaleurop. As Bernard de Villeméjane explained to Le Nouvel Economiste, on August 21, 1987, “Ten years ago, uranium and mining represented 80% of our activity. Today, it is less than one fifth.”

As it was moving away from its old activities, Imetal was buying new companies and specializing in construction materials. It obtained 100% control of Huguenot Fenal, a company constructing roof shingles and with many affiliates. Imetal then bought the Industrie Regionale du B#x00E2;timent (IRB), which included ten companies. Imetal’s move into the construction materials sector and its subsequent financial recovery were spectacular. From losses of FFr586 million in 1986, the group had moved to profits of FFr550 million in 1988. After this success, Bernard de Villeméjane decided to diversify into baked clay, tiling, ceramics, and brick. These seem incongruous activities for a mining group but as its chairman stated in Entreprises, December 12, 1988, “it appears to be different from what we used to do, but in reality it does correspond to our company culture.” Indeed, the manufacturing technique employed in construction materials is not far removed from that used in nonferrous metals; both rely on the use of kilns. The success of Imetal in this sector can also be explained by the company’s considerable experience in energy conservation and the way in which Imetal used this experience to adapt itself to an increasingly competitive sector such as construction.

After the purchase of la Société Gélis-Poudenx-Sans— shingles and bricks—and the Groupe de la Financiére d’Angers—slate—in 1989, Imetal became the world leader in shingles and the foremost brick producer in France. Yet Imetal’s outlook remained if not regional, at the most national. Naturally, the next step will be internationalization in its new sector. “We are on the threshold of a European development phase” said Imetal#x2019;s chairman, in La Cote Desfossée, April 4, 1989. Its first two partners were Italy and Germany, through Metaleurop, created in association with Preussag. Then came the United Kingdom, in the form of Steely, a company with which Imetal entered into partnership in September 1990, for the distribution of its products in the United Kingdom. Imetal also maintains good relations with the United States and, having bought all the remaining shares in Copperweld, Imetal acquired CE-Minerals, a subsidiary of Asea Brown Boveri and an important producer of clay.

“Imetal” is becoming more and more of a misnomer. The company has definitely passed from the nonferrous metal industry to that of construction materials, although its dramatic success in the sector has not kept it from maintaining its former and traditional activities. Although the company tried very hard to justify these changes and to make them seem consistent, there was a paradox in the fact that this company, which once had an enormous network of international branches, was—in 1989—”on the threshold of a European development phase.” In spite of its brilliant successes in its new field, Imetal has entered a sector far less prestigious and far more competitive, especially on a European scale, than its former field. As Bernard de Villeméjane stated in I’Usine Nouvelle, on November 11, 1989, “Making money in sectors that one may find less glamorous, is preferable to losing money in other, more prestigious sectors.” Imetal is, after more than a century’s existence, actually building itself a new future.