SAO PAULO-BASED MEXTRA HAS DEVELOPED INNOVATIVE AND PATENTED TECHNOLOGY TO TURN SCRAP METALS INTO HIGH-GRADE RAW MATERIALS AND CREATE A THRIVING BUSINESS THAT CATERS TO AN INSATIABLE DEMAND WHILE REMAINING ENVIRONMENTALLY FRIENDLY.
Mextra was founded in 1978 as a family business dedicated to the production of iron alloys and non-ferrous metals. Due to the emergence and increasing importance of recycling as a source of raw materials, the firm’s main focus is now the production of metal powders from recycled aluminum and steel, which supply the aluminum, welding, casting and ironworks industries in more than 20 countries.
The firm’s business strategy, developed by owner and ECLA graduate Ivan Barchese, takes full advantage of the growth opportunity offered by the specialized treatment of waste materials, as well as increased demand by aluminum producers for cheaper and better quality raw materials.
As countries’ economies grow amid industrialization and population growth, recycling has become an essential factor in development, providing for a cleaner environment and representing a win-win business, providing profits to recycling firms and reducing costs to end users of raw materials. At the forefront of the trend, Mextra has developed and patented a technology and applies it to the recycling business.
From both the environmental conservation and production points of view, metal recycling has now become the firm’s core business. Much of the raw material for the company’s products comes from aluminum and steel scrap, which is collected for processing at the firm’s two plants in Brazil, Diadema and Taubaté, both located close to Sao Paulo.
“We have three factories in Brazil and one in China. We recycle aluminum and alloy, and the final product is powder, either iron or aluminum, which we use to produce a 100% recycled steel product. The iron comes from scrapped cars, and we have a factory in Sao Paulo near the Ford and General Motors plants. We melt scrap iron and steel, from which we produce the powder through a process of atomization. The powder is used to produce steel, which is once again used in the car industry. Our recycling process with powder as the end product is used to make increased-strength steel, and while we produce other products, our most important business is aluminum and iron powder production,” Barchese explains.
The scrap aluminum and steel is melted down and cleaned of impurities, before being supplied in powder as a raw material. The firm’s most important clients are Brazilian metals extraction and processing firm Companhia Brasileira de Metalurgia e Mineração (cbmm), Anglo American and Novelis, the world’s largest rolled aluminum and drinks can manufacturer, which supplies firms such as The Coca-Cola Company.
The firm also produces alloys with customized characteristics for different uses and customers, which include the Mextra line, composing alloy elements in manganese, chrome, iron and titanium pads and briquettes that, when added to liquid aluminum, increase its rigidity and mechanical resistance.
Since joining the Endeavor network, Mextra has quintupled revenues and tripled its workforce to 150.
Barchese took control of the business after the retirement of his father, who founded the firm. But it wasn’t all smooth rolling, he says.
“There were many difficulties, both in making the necessary technological breakthroughs and in financing, and now we are a leader in aluminum recycling, which is big business here. Many people now use our products, as a result of the huge demand for aluminum cans, for example.”
“We have become a sustainable company that consumes up to 95% less energy compared with our previous levels of consumption, and which contributes to Brazil’s environmental conservation. We have found a way to become profitable and recycle at the same time. There is now a big encouragement in Brazil to recycle, but previously there was no incentive for companies because recycling was not a profitable business.”
Mextra was the first company in Brazil to apply its patented technology to recycling. “We are the first company to recycle metals into a high-grade powder using our patented, cutting-edge technology,” he says.
The company opened a factory in China in 2008, another growth market in metals recycling. But Brazil and China are two markets that differ significantly, and success at home is not necessarily a guarantee of profitability in the vast and complex Chinese market, as Mextra has discovered.
“We are breaking even in China but it is not yet profitable. It’s a learning curve and we are becoming accustomed to a different market. But it’s also a difficult market, there is a different culture of business, and we have had trouble trying to find low-cost raw materials. The future there, in my opinion, is not as profitable, because of the competition, but we are trying to find a good business model,” Barchese says.
Rather than looking to expand internationally, Mextra’s most important growth market is actually on home soil. “We do have an operation in the U.S., but the main profits we receive are from Brazil, which is a growing market, and which is where we are focused,” he says.
Mextra plans to open another plant in Brazil in 2013.
As a result of the ECLA program’s focus on implementing strategies best suited to developing the firm’s potential, Barchese says the knowledge gleaned and the benefits the program has brought to his approach to the management and expansion of his company have been wholly positive.
“The program is one of the best things I have ever done. I studied with a lot of interesting people and professionals and the professors, who were excellent, helped us enormously. It is much more than a theoretical course and enabled me to put procedures and techniques into practice in my company here in Brazil. I have an MBA from Chapel Hill. But on the ECLA program we worked much more as a team, and it was very beneficial,” Barchese says.
“I have a manager in my company who studied with me and now we are able to work together and put the ideas and concepts into practice. The company was already functioning and already successful, but the experience at Columbia was very enriching in the sense that it gave me greater perspective and enabled me to move forward with our business plan.”