LOS ANGELES Precision Castparts Corp. will use its existing specialty alloys operations to extend the downstream product role of Titanium Metals Corp. under Timets future ownership by PCC.
PCC chairman and chief executive officer Mark Donegan said last week that PCC plans to utilize the assets of Huntington, W.Va.-based nickel and cobalt alloys producer Special Metals Corp. to stretch Timets product range within its new parent company.
"Where SMC was a fully integrated mill (when it was acquired by PCC in 2006)," Timet is a "fully integrated meltertheyre not a mill," Donegan told financial analysts at a meeting in New York. However, PCC can "match" SMCs downstream assets with Timets melt capabilities and "create a fully integrated mill" out of the titanium producer.
While Dallas-based Timet makes different products than SMC, its role within PCC will be similar to SMCs "in terms of being able to supply our internal needs," Donegan said.
Timet can use SMCs assets in such locations as Elkhart, Ind., as well as Huntington to convert its material "into shapes they cant do todaytheyre outsourcing that today," Donegan said.
While Donegan didnt mention any specific outsourcing agreements, Timet has at least two with Kokomo, Ind.-based Haynes International Inc. and Wyomissing, Pa.-based Carpenter Technology Corp.
In a 20-year deal signed with Haynes in late 2006, Timet agreed to pay an up-front fee of $50 million to the high-performance alloys producer in exchange for Haynes commitment to provide capacity to process up to 10 million pounds of flat products per year on its four-high Steckel rolling mill in Kokomo.
That contract includes an option to boost annual volume to 20 million pounds, subject to Timet providing financing for the expansion required to meet the higher volume. Moreover, Timet also would pay Haynes for processing services during the term of the agreement and sell "certain quantities of titanium metal" to Haynes.
Additionally, in 2007 Timet signed a minimum 12-year agreement with Carpenter under which the specialty metals producer would provide forging services to Timet while Timet would provide Carpenter with toll melting. The deal could run to a maximum of 20 years.
Spokesmen for both Haynes and Carpenter said this week that their agreements with Timet remain in effect.
Industry sources said one of SMCs assets that could prove particularly valuable to Timet is its 110-inch mill in Huntington, which could be used to convert Timet melted product into aerospace alloy titanium plate.
Asked during his appearance last week if Timet sells into markets where PCC isnt especially active, Donegan cited the chemical process industry, where titanium is in demand for its corrosion-resistant properties.
Portland, Ore.-based PCC expects to close its $2.9-billion acquisition of Timet by the end of the year.