Elkem targets growth in medical silicones with new facility in S.C.

YORK, S.C.—Elkem Silicones USA Corp. believes its new, 18,000-sq.-ft. silicone manufacturing facility—a half-mile away from another Elkem silicone production plant—will open up a $300 million market in medical silicones.

The "low double-digit millions of dollars" facility, which employs 16 and began operations in York in September, will produce high-purity silicone materials that meet the strict thresholds of the medical market.

"This facility will produce medical, pharmaceutical, mostly implantable-grade silicones," Bertrand Mollet, president of Elkem Silicones USA, told Rubber News from his New Jersey office. "We are targeting a market worth roughly $300 million with long-term implantable devices—this is using the very highest grades of silicone."

Employment could top out at between 25 and 30 people, from manufacturing jobs to engineers and logistics specialists.

Since the raw materials required for high-purity silicones are expensive, the facility is expected to produce relatively smaller volumes, in the hundreds of tons per year, Mollet said.

Oslo-based parent Elkem Silicones is fortunate in this regard as it is vertically integrated at the highest upstream levels, from silicon refinement from its own quartzite mines to the production of its own siloxane monomer.

Elkem's monomer production takes place in France and China, with up to 100,000 tons per year coming from the French facility.

Located on Timberland Court, the production plant is Elkem's second operational facility in York. Elkem opened its main manufacturing campus for North America on Park Place Road in 2012, about a half-mile from the new facility.

"When it comes to the medical field and implantable grade silicones, we are the only player in the world that can go from quartz to high-quality formulation," Mollet said.

And that, in turn, can eliminate supply chain nightmares.

"They are a moot point for us," Mollet said. "We have access to the raw materials we need. Silicone has been tight for past couple years, and the industry has been tight.

"But from our standpoint, we have all the material we need to manufacture what we want."

The second York facility, purchased from Bolton, Ontario-based Silcotech North America Inc. in January and refurbished over the next nine months, is ISO 13485 certified in its Class 7 and 8 clean rooms.

"The industrial ecosystem is very complementary for us in South Carolina," Mollet said. "There is room around us to continue to expand, and everyone, including local governments and administrations, have been very supportive."

"This is our history," Mollet said. "Elkem Silicones was created through acquisitions. We expanded in Europe first, then made further acquisitions in the '80s."

Elkem entered the South Carolina manufacturing market in 2010, purchasing a smaller site in Rock Hill that had limited potential for expansion.

"So we moved into a site that we thought was huge," Mollet said of the initial York site. "At least, it looked huge at the time. When you look at it today there is not one inch of spare space in there. It is packed and we needed space for segregation in our processing.

"We now have a very clean environment in which to do that."

Serving as Elkem's "global center of excellence for medical-grade silicones," the York campus produces medical-grade LSR, HCR, high-purity gels, adhesives and dispersions marketed under the Silbione Biomedical brand.

"Now customers have a choice in their partner for quality medical grade silicones," said Bob Waitt, global strategic marketing director of Elkem's Life Sciences. "Whether addressing supply security risks or next-generation device development, we now have a world-class manufacturing infrastructure to combine with our comprehensive implant grade product range and support network.

"This is good news for our customers and, most importantly, patient care."

All known technological solutions for the green transition require advanced materials, Mollet said, and for that reason facilities that can conduct such operations are inherently greener.

"This is a difficult question to answer because the essence of Elkem Silicones in the U.S. with the York sites is to manufacture specialized silicone," Mollet said. "This translates into more energy-efficient buildings."

Silicones, silicon and carbon solutions are critical enablers and they continue to represent the most significant ways for Elkem to have an impact—by ensuring durable and sustainable supply toward a low-carbon future.

Elkem has received a platinum rating from Ecovadis and an A- rating on CDP Climate.

And renewable carbon sources and developing innovative production processes will be critical as the world moves toward sustainability.

"With a fully integrated value chain from upstream silicon to silicones and their downstream uses, it is vital to manage the environmental production footprint," Mollet said.

Elkem's own journey, as detailed in its 2021 sustainability report, includes the notion of "dual-play growth."

Dual-play growth has Elkem seeking balance in the company, both geographically and across the value chain, with an ambition to grow by more than 5 percent per year, and an EBITDA margin of at least 15 percent per year.

"Green leadership means that we aim to be in the forefront on reducing emissions in our industry, toward net zero by 2050, and that we focus our growth on markets essential to the green transition," Elkem CEO Helge Aasen said in the company's 2022 third-quarter financial report. "Based on this strategy, Elkem is well-positioned to provide advanced silicon-based materials shaping a better and more sustainable future."

And the York facility that cut the ribbon Sept. 28 is a big part of that master plan.

"Elkem's investment in this highly specialized facility demonstrates our commitment to growing with our customers around the world in medical implantable and pharmaceutical applications," Mollet said. "As the only fully integrated silicone supplier in this space, we are incredibly proud of this facility and all the opportunities it offers our customers."

Elkem was founded in 1904 and has grown to a company of about 7,000 employees across 30 locations and an annual operating income of about $3.4 billion.

Despite weakening market conditions in the third quarter 2022, Elkem delivered strong quarterly results.

Total operating income for the third quarter of 2022 was about $1.13 billion, up 28 percent year-over-year, while EBITDA for the quarter was approximately $330 million, compared to $213 million for the third quarter of 2021.

The Silicon Products and the Carbon Solutions divisions "continue to deliver excellent results due to superior cost and market positions," the company said in the report.