Industrial Giant Being Born in Czech Republic. Revolutionary Metals Extraction Method Is Ace Up Its Sleeve
10/21/2022 - seznamzpravy.cz
Draslovka, a manufacturer of industrial chemicals owned by a group of domestic billionaires, intends to revolutionise the mining of gold and metals for the auto industry. It claims that it is currently worth over a billion dollars.
It is only about 20 minutes from the centre of Memphis, Tennessee, to the Czech businessmen’s plant. There is a blue-and-white Draslovka sign on the lawn in front of the entry gate.
A group of businessmen in the bpd partners family office bought this huge site from the US Chemours Company for USD 520 m (over CZK 11 bn). The purchase by the former coal barons Vasil Bobela, Petr Pudil, Jan Dobrovský and the Brůžek family proved to be far-sighted and saved the owners of the Kolín-based Draslovka a number of problems during the energy crisis.
At the porter’s lodge, after a while I was collected by the chemical plant employee responsible for environmental safety and in the car she told me that her ancestors came from the Czech lands. The offices reminded me of the Unex Uničov mechanical engineering plant, which I went to in the ‘90s to visit my father. The Memphis plant has seen quite a bit: it has been in operation since 1952 and is celebrating its seventieth birthday this year.
Transformative Technology
The chemical plant’s size is breath-taking. Highly toxic substances are produced on the site, primarily hydrogen cyanide—120,000 tons a year, which makes the company the largest manufacturer of these chemicals in the world. Draslovka then uses hydrogen cyanide to make, for example, sodium cyanide, which is still irreplaceable during the extraction of gold and other minerals. Sodium cyanide was previously produced in Kolín, but because of the energy crisis in the European Union production was significantly limited. In the Czech Republic, Draslovka focuses mainly on research and development of new chemical products and technologies, and the group is also managed from Prague.
The Memphis plant occupies an area of 160 hectares and is ten times larger than the one in Kolín. It is in the area of Woodstock, close to the Mississippi, up which water craft transport primarily ammonia to the site. There is a prohibition against taking photos throughout the site due to the protection of trade secrets, but aerial photos provide a good idea of how it looks.
In the meeting room I met almost the entire management of the US Draslovka, which was, by the way, one of the reasons the Czech businessmen bought the plant. They have known some of the managers since 2009, when they started to produce in Europe for the original owner, the chemical conglomerate Dupont. “We have tenants on the site that have stayed with us since the Dupont times and then Chemours. They are obviously big names in the chemical industry such as Mitsubishi Chemical, Arkema and Linde,” says the plant’s chief operating officer Jason Painter.
The Dupont group built the site as a connected whole, but progressively broke it up and the production of cyanides came to be at the edge of the company’s interest. The plant therefore served the parent company as a cash machine, but there was not much investment in it.
This is now to change, according to Pavel Brůžek, who actively manages the Draslovka group. The company plans to start seriously developing its own new technology based on glycine, which is to cause a revolution in the mining industry—not only for gold, but also for other “metals of the future”, such as nickel, cobalt and copper. These are minerals that are part of the new industries for electromobility, energy storage and information technology.
“We are currently the number one in cyanide deliveries for gold miners. What is new, however, is that we have a new, sustainable technology for the mining of gold, as well as nickel, cobalt and copper. It is the most transformative technology that we have experienced in our lives. It’s something that will change the mining industry,” said the forty-one year-old Brůžek as we were walking between the ammonia storage tanks.
Revolutionary Technology
How does mining using glycine work?
Extraction using sodium cyanide can be compared to a shotgun, but glycine is more of a precision sniper. Cyanide is non-selective, so it dissolves all metals from the ore mined. Draslovka’s glycine technology is for selective leaching, where only some metals are extracted from rock. This is a big benefit of the technology. For example, gold mines are currently being closed because the ore mined contains a lot more copper than gold. A ton of ore therefore produces a very small quantity of gold, which is not profitable. In addition, the copper cannot be picked out and “runs away down the drain.”
Compared to sulphuric acid, the advantage of glycine is that it rapidly decomposes, is recyclable and non-toxic. It can be used to selectively obtain precious metals such as cobalt, nickel, zinc and copper. Cyanide itself is then used only for binding gold, where it is still the most effective substance. Its consumption is therefore markedly reduced.
Economic Impacts of Glycine Extraction
Lower use of sodium cyanide, which reduces the economic cost of mines by 10 to 25 percent, depending on how complicated the ores mined are.
Higher yield of metals from the ore; in addition to gold, it is possible to select copper and other metals that are to be sold from the ore; this increases the value of a mine, because it can sell more metals.
Lower costs of recycling, which represent approximately 5 to 10 percent of a mining company’s operating costs; less chemicals are consumed for cleaning wastewater polluted by cyanide; glycine is recycled.
Draslovka has two technologies: Glycat (gold) and Glyleach (copper, cobalt and nickel); at the current time it is testing them with Australian miners; according to the first results, large companies could save over USD 100 m annually.
According to Brůžek, Draslovka is negotiating on the introduction of the technology with the largest names in the mining industry. Trial operation is taking place with some of them, but the new income should appear in Draslovka’s accounting ledgers in two or three years.
Brůžek expects that by 2030 the firm will grow tenfold. Last year, the Czech billionaires’ chemical plant generated revenues of USD 121 m (approximately three billion Czech crowns) and EBITDA was USD 89 m (CZK 2.2 bn). The company’s debt is around USD 350 m. “This year, we expect that we will have revenues over USD 500 m and around the same operating profit, because of investments. A large part of the better revenues is obviously due to the integration of the Memphis plant into the group, but we also have the first revenues from the Australian company Mining & Process Solutions, which we bought this year,” says Brůžek.
Global Company
The Australian company should power the Draslovka group forward in the next few years and make the billionaires multibillionaires. At the current time, gold is mined by pushing rock through a sulphuric acid solution, which helps filter the precious metal out. Draslovka has a solution that uses glycine, a biodegradable substance, for leaching metals; this is a complete revolution in rare metal extraction. It not only makes mining more efficient, but also helps it go to places where nobody would have permitted it before. Glycine is currently produced from hydrogen cyanide, which Draslovka manufactures in Memphis and Kolín.
“A huge market is opening up in front of us. Our outlook is such that within ten years we could increase operating EBITDA by USD 1.5 billion. If we did really badly, then in ten years we could have five or ten times the current EBITDA,” said Brůžek.
The group is already holding conversations with investors that should provide additional capital for development. “The current value of the Draslovka group is, based on conversations with investors, USD 1.2 to 1.5 bn (CZK 30 to 38 bn). Now we will ascertain how much our shares will be subscribed for and also how competitive investors that have been watching us for a long time will be. We want to choose one new one,” added Brůžek, saying that within two to four years the company could be publicly traded and Draslovka could become a “global company”. It has been a dramatic ride since Pavel Brůžek Sr put Draslovka together in Kolín in the ‘90s.
Draslovka needs capital. Partly to finance an investment in its US operation, but also to develop its technology. At the start of the year, it got USD 150 m from the US fund Oaktree Capital Management, which primarily went into financing its US acquisitions.
At the start of the story was a relatively simple business idea of the Brůžek, Pudil, Bobela and Dobrovský families where, however, not many people saw an opportunity.
In past years, the mining of minerals became the dirtiest business as a part of the global sustainability strategy. Everybody thought that mining was bad, and banks and institutional investors started to boast that they did not invest in the mining industry. It is therefore no wonder that new copper mines, new oil discoveries, etc. stopped being opened. Nevertheless, the “new transformed green economy” requires a large quantity of minerals that need to be extracted.
For example, a typical electromobile requires six times more minerals than an ordinary car. Lithium, nickel, cobalt, manganese and graphite are of fundamental importance for a battery’s performance. Rare ore elements are necessary for the permanent magnets in wind power plants. Electrical networks need a large quantity of copper and aluminium, and copper is the foundation stone of all technologies related to electricity.
Raw Material Races
Draslovka bet on the fact that minerals such as lithium, copper, cobalt and gold will continue to be necessary. “I woke up in the night thinking about how to convince investors to see the world through our eyes. I thought that it would cost lots of energy, public relations and education, not only for investors, but also regulators and professionals. There were lots of negatives about Russia’s invasion of Ukraine, but it was positive for us in the sense that they all very rapidly realised what we had known for a long time. That 30 percent of the world’s nickel is mined in Russia, and everybody said: what will we do? We’re building large factories for batteries to be put into electromobiles, but we don’t control the raw materials,” said Brůžek.
Europe and the United States are just now starting to think about how to obtain the metals for the production of electromobiles, energy storage facilities and chips. For example, 70 per cent of the world’s cobalt production is currently in the Congo, where it is mined by the Chinese. Lots of nickel is mined in Russia. These are partners that don’t work with the West much.
Draslovka’s global ambitions may not be entirely misplaced.