Belgian company Umicore is a case study in how an old fashioned firm that for two centuries made its living from resource extraction transformed into a future-fit enterprise with sustainability at its heart, producing products essential to the energy transition

Changing vision:
Umicore started out in the nineteenth century as a leader in the world of zinc refining. Today its focus is high-tech materials for sustainable mobility

Key to success:
Sticking to a long-term vision even when the going gets tough

Wise words:
You can be both a low-carbon economy leader and profitable at the same time

Egbert Lox loves chemistry. A chemical engineer, he has been senior vice president for government affairs at Belgian firm Umicore for the past six years and with the company for more than twice that time while it reinvented itself for the energy transition. A publicly traded enterprise with 10,000 staff, Umicore describes itself today as a global materials technology and recycling group. Thanks to a series of visionary CEOs, the company has gone from miner and smelter to high-tech materials supplier for sustainable mobility. It makes exhaust cleaning systems for cars, materials for lithium-ion batteries and fuel cells and recycles them all. Key to its success is a long-term vision and the courage to stick to it, says Lox. He plays down the company’s recent share price drop. China has so far been its core market for batteries and the government’s decision to reduce subsidies a little faster than expected caused the fall. But mobility is still undergoing a transformation and there is an emerging European market for electric cars.

Q: How did Umicore transform from nineteenth-century mining giant into one of the leading forces of the energy transition?

A: We started out as a company that had developed a new process for zinc refining. The zinc was mined at Vieille-Montagne in what is today Belgium, but was then France. At some point our CEO was a relation of Napoleon’s and it was our zinc on the roofs of Paris. Over the years other non-ferrous metals came on board. Umicore’s core business was mining and smelting. This was the case until the 1990s, but digging up huge quantities of material all over the world and shipping it to Belgium for processing no longer made sense.

Q: What changes did the company undergo?

A: We moved away from mining and generic products. We started to buy in the metals and make very specific products, such as cathode materials for lithium-ion batteries [used in electric cars]. These are high performance products defined in close interaction with the final customer. The same is true for the catalysts we make for car exhaust cleaning systems. In parallel, sustainability became a core value of the company. There was no economic rationale for it at the time. It came from a deep personal conviction of our then CEO, Thomas Leysen. And although others have followed, the European Commission still regularly invites us as to talk about how you can be both a low-carbon economy leader and profitable at the same time.

Q: What defines Umicore today? What exactly do you do?

A: The final step in our evolution was the sale of those activities that did not fit into a clear vision of what is sustainable, such as the zinc for roofs. As of two years ago, we have a very clear focus: we now make products and services for sustainable mobility. This means that we have four main activities. First, we produce materials for lithium-ion batteries for electric vehicles and e-bikes, for example. Second, we produce exhaust cleaning systems and not only for cars — last year we bought a company that makes them for ships. Third, we make products for fuel cells. Not all clean mobility will be battery-based. Even hybrid cars have different battery and exhaust cleaning requirements depending on how electric they are. Finally, we can recycle everything. This has several advantages: the metal content in a product is always much higher than from a primary extraction, it requires far less energy to extract and the product is often already here in Europe so we save on transport.

Q: Despite Umicore’s impressive results these past few years however, your share price recently took a nosedive. What happened?

A: Our products for the internal combustion engine, electric engine and recycling each account for roughly a third of our profits. What happened is that we had expected our profits around batteries to grow even faster. Our core market for this so far is China. Electro-mobility in China has been enormously supported with spectacular success. But now the Chinese government has reduced subsidies a little faster than expected. We think that mobility as we know it — where everyone owns 1000 kilograms of material that they drive around 5% of the time — cannot continue. We will see more public transport and more sharing. This is not a threat to us. A car that is used 5% of the time can easily last 15 years. If you use it 20-30% of the time, that is four to six times as much, it will reach its end of life much faster. We do not think we will sell fewer products; if they are used more, they will come back faster. That is why recycling is such an important part of our business.

Q: How important does China remain for you?

A: We have and are still investing in China. It remains a very important market. The growth of mobility is high there. But we are also building up our European industry. We are building our largest cathode factory in Poland and we have just bought a big cobalt refinery in Finland. We expect many more electric vehicle models on the market in Europe in the next two years. Everyone is moving in this direction, without exception. The current European policy framework supports this. In the past it only regulated toxic air pollutants [such as nitrogen oxide], but now we have vehicle carbon dioxide (CO2) standards too. The two are equally important to us. The new standards envisage big fines of €95 for every gram of excess CO2 emitted for every kilometre travelled. This could quickly add up to a penalty of €1000 a car. Going hybrid is a better option.

Q: How did Umicore manage its transformation from miner to high-tech materials supplier?

A: If you go into a transition you need a vision. That is the start. You have to believe that the world will move to a more sustainable model. And you have to act on that. You need the power and courage to keep going. You cannot be distracted by momentary changes. Take the oil price: it has gone down again. But you have to stay your course, knowing that in the long term it has to go up. The Chinese have a vision for society coupled to an industrial policy. We need the same. It is too easy to hide behind the “we are a democracy” mantra. It might take us a little longer to implement, but we can and must have it. Today that vision is starting to appear. European industry is working to the Paris climate goals and the European Commission has put out a net zero emissions by 2050 strategy.

Q: You have always worked in and around innovation. What’s next for Umicore?

A: Technologies are built up slowly until suddenly someone discovers the last building block and they take off. The most recent example is LEDs. The principle behind them has existed for a very long time. But we missed one component to be able to make white light. A trio of Japanese scientists won the Nobel Prize for physics in 2014 for plugging that gap. Less than two years later, the shelves were full of LEDs. Who knows what’s next? Umicore spends 6% of its turnover on R&D, which is right at the top end for our sector. The average is more like 1-2%. We work on making our processes more sustainable, for example using less energy as well as making sure that energy is renewable. We are also testing a closed loop circuit for battery recycling. Exhaust cleaning catalysts are a more mature technology, but there too we look at how to improve performance, notably through new chemistry. In our recycling business we are always working to reduce residual emissions and increase yields that little bit more. The advantage of recycling is that it is a lot less energy-intensive than mining, but the disadvantage is that your source material does not have a constant chemical composition — it is more like “catch-of-the-day” — so the process requires more attention to get it right. We are also thinking about the longer term future. Now we do sustainable mobility. What other mega-trends could we supply high-tech materials for?

Q: How will Umicore stay ahead of the competition?

A: The catalyst is one of the most expensive components a carmaker buys for its exhaust cleaning system. Some of them have looked into doing it themselves. But the technology has been in use since 1972 and the vast majority of carmakers have not gone down this road. Apparently the chemistry is quite special after all. I will extrapolate for batteries. The cathode material is one of a battery’s most valuable components. Here too, we have, and expect to continue to have, intensive cooperation with carmakers. It is almost as if they were doing it themselves. Umicore has a unique combination of chemistry expertise, production and recycling, a global presence and an uncompromising commitment to sustainability. If you insist on the energy transition, it becomes a differentiator.

Writer: Sonja van Renssen