Pyrogenesis AM powder business and A&D partnershipLots of big numbers have been thrown about when discussing the Additive manufacturing (AM) business (also known as 3D printing). It’s amazing when you consider it’s only one exciting business line among many at Pyrogenesis. In order to get a better idea of the actual market potential from both the A&D contract and the AM powder industry in general, as well as some of the competition (Ti powder), I’ve put together the following information. Please feel free to add relevant information that I've overlooked, or to comment where there are mistakes.
Regarding the AM powders business and the partnership with Aubert & Duval: In a previous NR (
2019-01-17; the signing of the RISE contract) Peter stated the following:
https://www.pyrogenesis.com/wp-content/uploads/2019/03/PyroGenesis-Signs-Mutually-Exclusive-Partnership-Agreement-with-Aubert-and-Duval-to-Supply-Plasma-Atomized-Titanium-Powder.pdf "Our other billion-dollar partner, Aubert & Duval,
announced that they are targeting capturing 15% of the titanium powders market in Europe by 2022, and we are starting to take steps together in that direction." The
AM powders market is expected to be over $3.1 billion USD in 2027. Titanium AM market is expected to be around 30-35% of that market. That’s ~$1 billion USD.
https://www.aerospacemanufacturinganddesign.com/article/additive-manufacturing-metal-powder/ From what I could find, the European market accounts for roughly 35% of the AM powders market, or $350 million in 2027. If A&D manage to capture 15%, that is $52 million USD. Let us say that Pyrogenesis gets 80% of the revenue... that is a very respectable annual sum, considering it is from only one metal powder (Titanium) in one region (Europe) in one segment (AM). And the number will only grow as the market expands.
There are also applications in Metal injection molding (MIM) and Thermal coating in sectors like Aerospace, Biomedical, Automative, Electronics, etc. The total
Titanium powder market is expected to reach about 3.3 billion$ USD by 2024. Even a 5% market share of this sum is incredible. Looking forward, Pyrogenesis can either choose to sell its own powders, expand its agreement to other regions with A&D, or partner with different suppliers.
Inconel is another powder Pyrogenesis additive is currently manufacturing. The market for Inconel powder is estimated to grow to $520 million USD by 2026.. 10% of that would be $52 million USD.
Competitors: looking into Pyrogenesis’ competition, one of their major competitors in Ti seems to be GE, who have an additive division (AP&C) for Ti powders. Both companies use plasma atomized powders (and AP&C has quite the history with Pyrogenesis, more on that later). If anyone wants to check how their current powders compares to Pyrogenesis, feel free to go through the links below, they each have datasheets. To me they look relatively similar.
Pyrogenesis:
https://www.pyrogenesis.com/products-services/plasma-atomized-metal-powders/ CP&T:
https://www.advancedpowders.com/powders/titanium Regarding production rates, Pyrogenesis appears to be the leader between the two, judging by their comments in the following NR from 2019:
https://www.pyrogenesis.com/wp-content/uploads/2019/05/PyroGenesis-Unveils-its-New-NexGen%C2%AE-Plasma-Atomization-System-Significant-Production-Advancements-for-AM-Powders.pdf Our NexGen® System, which is now proven, to the best of our knowledge, has shattered all published plasma atomization system production rates.” […]“Today’s unveiling of the NexGen® System, with production rates in the neighborhood of 25 kg/h, represents a significant achievement not only for ourselves, but for the industry as a whole,” said Mr. P. Peter Pascali, President and CEO of PyroGenesis. “These production rates are easily transferable to our titanium offerings. Higher production rates allow PyroGenesis to provide plasma atomized powders at exceedingly competitive price points. This would allow high value materials to be accessible to many new markets, which have up until now found these high value materials, such as titanium, to be too costly. Anyway, let's take a walk back into the annals of Pyrogenesis history… This may look familiar to those who have been following the company for the past several years :)
October 23, 2017 NR (
Ramp-up phase of 1st Plasma Authomization System)
https://www.pyrogenesis.com/wp-content/uploads/2018/11/Completion-of-Ramp-Up-Phase-.pdf PyroGenesis’ strategy in the beginning of 2016, when we first announced that we were reentering
the business of producing the very same powders we once produced for ourselves and the biomedical industry, was simply to be a credible second supplier. It only made good business sense for companies to have a second supplier for a vital feedstock such as titanium powders, and we wanted to fill that role.
Approximately one year ago, GE announced its acquisition of Arcam and, by default, AP&C. Thisacquisition, in our opinion, effectively introduced a supply chain risk in Additive Manufacturing
(“AM”), despite AP&C’s willingness to still sell powders into the marketplace. We have found that
end-users, and metal 3D printer manufacturers alike, want to make their supply chain more robust.
We believe that as a result of GE’s acquisition of Arcam/AP&C, we are seeing a particular interest from GE’s competitors. We are in the process of negotiating at least three (3) NDAs with multinational aircraft engine manufacturers after having concluded at least another five (5) with metal 3D printer manufacturers. This activity, we believe, not only underscores, but validates our previously identified concerns regarding the supply chain.
So, with that as background, and to answer your question, we are positioning ourselves to be a
dominant metal powder supplier to anyone in the industry with a need for small, spherical, uniform
metal powders, of exceptional characteristics, whose particle size can be varied depending on the
need. [Below is an interesting read... had things gone differently, Pyrogenesis could have been a unique supplier of Plasma atomized Ti powder. Now they and AP&C are competitors :P]
From the same 2017 NR:
To make a long story short, we invented Plasma Atomization (and actually coined the term in our
original patent application) to make small spherical powders for ourselves, not realizing that these
powders had a use in the biomedical industry. The biomedical industry liked how our powders flowed like water and compacted tightly. The industry immediately found a use for them in the production of titanium implants (ex. titanium knee and hip replacements). Our first commercial biomedical sale was to a company called Stryker Corporation (the relationship of which was transferred to AP&C [in 2006, then to Arcam in 2013], who we believe, can still count them as one of their important customers today).
When the program to develop lightweight armor came to an end, the biomedical industry would not take up all of our powder production, which is the reason PyroGenesis decided to get out of the business of powder production and, to this end, reached an arrangement wherein AP&C could
continue the business subject to, amongst other things, a non-compete clause which ended in 2012. AP&C (a former division of Raymor Industries) sought creditor protection in 2009. When AP&C eventually came out of creditor protection, metal 3D printers started to have a need for the exact titanium powders that PyroGenesis’ Plasma Atomization system produced, and which AP&C was trying to commercialize. Arcam AB, a manufacturer of metal 3D printers, became a client of AP&C and eventually bought AP&C in 2013. Since that time, Arcam has done an amazing job of industrializing the process and AP&C, under Arcam, has become one of the dominant suppliers of titanium powders to metal 3D printers. Q. Will your newly developed ability to control particle size distributions allow you to significantly
differentiate yourself from your competition in terms of price? A. We believed that we could differentiate ourselves from our competition in terms of price, before
our newly developed ability to control particle size distribution was a consideration; our recent
developments only solidifies/amplifies this advantage.
[I don't know if this advantage still applies over AP&C in particular, but over the rest of the industry it looks promising.]
Lastly...
Q. Do you plan on selling spot orders, or entering into a partnership / joint venture, or an exclusive
sales agreement? A. As discussed above, our original strategy was to sell spot orders, but given the strategic
importance of GE’s acquisition of Arcam, and the concerns it has created with respect to powder
supply, we believe that the market is now more interested in long term arrangements such as
partnerships, joint ventures,
and exclusivity agreements as opposed to buying spot orders as
needed. Pyrogenesis made good on that strategy. The fact that A&D was willing to partner exclusively with Pyrogenesis to distribute their Ti powders, despite AP&C (now owned by a large corporation (GE) and spun-off into their own AM powder divison) having a similar product with a head start in the production race, and also knowing there are a number of other competitors out there.... this instills confidence that A&D has done their DD. They believe that there is sufficient market interest in Pyrogenesis' powders, and that they have the distribution network to make it work. As Peter mentioned, GE's competitors will not want to buy from their subsidiary. They'll go for the next best thing: Pyrogenesisadditive. Targeting a 15% market share in 2 years of signing the exclusive agreement was both ballsy, and adds to the projection of confidence by A&D.
It wouldn’t be a balanced review if the risks to Titanium demand are not addressed, so here are a few:
- Potential reduction in aerospace demand due to COVID for the next several years; airlines will not be ordering planes in the near future due to financial stress and lack of demand.
- A&D is not able to penetrate the EU market with their Titanium as well as expected
- Competition gets an advantage on pricing or powder quality
Regardless of any other powders Pyrogenesis plans to add to their AM offerings (Al maybe? Ni?), just the amounts mentioned for Ti and Inconel powders are quite impressive... if all goes well, the numbers easily scale up to hundreds of millions in annual revenue within the next 10 years. This is especially impressive when considering Pyrogenesis' highest annual revenue was around
$7 million.
Here's to hoping Aubert & Duval puts their Titanium powders up for sale soon, and to much success for the Pyrogenesis Additive division!
MazerRR