Paranapanema is a company in the steel sector in Brazil. However, on B3, the company is classified in the Basic Materials sector, in the niche of Steel and Metallurgy with a focus on Copper Artifacts.

The company's operations are based on the refining and manufacturing of copper alloys, being responsible for an incredible 94% of national copper production. In summary, Paranapanema transforms the mineral into metal and, subsequently, into copper products.

In the copper sector, PMAM3 operates in:

• Extraction

• Smelting

• Distribution

• Refining

In the production chain, the company transforms the raw mineral into final products for consumers in various market segments, especially through its structure. The company stands out for its end-to-end operation, from refining to its distribution and direct commercialization.

The origin of the company is basically simple. After buying a farm in the city of Paranapanema, 260 km from São Paulo, Aloysio Ramalho Foz met with two other entrepreneurs, José Carlos de Araújo – his father – and Octávio Cavalcante Lacombe, to found the company in May 1961.

Initially, the initiative was focused on the civil construction sector of factories and larger ventures, but the mining scenario caught the entrepreneurs' attention over the years.

Thus, in 1965, the partnership acquired Minebra (Minérios Brasileiros, Mineração e Industrialização Ltda) and effectively began mining operations.

In the mining sector, the main focus was the extraction and refining of tin ore, which gained strength both in the company and in the national scenario in 1969, with the discovery of the chemical element in the Amazon region.

To diversify investments, still in 1969, the company founded by the three São Paulo entrepreneurs bought a farm in Igarapé Preto and another in São Francisco, in the Amazon river basin.

The first acquisition created the mining arm of the business conglomerate, focusing on tin extraction, which later became a highlight in the group's activities until the mid-1980s.

Increasing the scale

With the arrival of the 1970s, two years after the start of operations, the group participated in the construction of the Transamazon Highway in 1971.

Due to significant growth, the company went public in the same year and, through the investment round, acquired two new companies: Taboca and Mamoré – both in the tin mining sector.

In 1974, BNDES acquired the mining branch for technical development purposes in the mining area. With the arrival of the 1980s, the company became a case of success on Bovespa and presented excellent operational results, despite the Brazilian economic scenario at the time not being the best.

The IPO was conducted in 1971, but the registration with CVM only occurred in 1977. From that point on, the company began to present interesting returns that caught the attention of the investor landscape in Brazil.

In early 1981, the business group grew rapidly on the Stock Exchange, and in 1982, the company began mining and extraction projects in Pitinga (AM). This increased the recurring cash generation of the Taboca miner and built a self-sustaining income system through mining.

Sharp growth

Despite establishing itself in the mining sector through Mineradora Taboca and Mamoré Metalurgia, the company did not abandon the civil construction sector.

Proof of this was, in 1983, the construction of two factories of companies controlled by Vale: the aluminum factory of Albrás and the mine of the Carajás Iron Project, both in Pará, northern Brazil – which began to gain great notoriety.

In the same year, Taboca started a partnership with the still-nascent Eike Batista, in his first gold extraction mine, increasing exposure and diversification through an extractive partnership.

Subsequently, in 1995, part of the group came under the control of the Caixa de Previdência dos Funcionários do Banco do Brasil (PREVI). This move led the company to enter the copper segment.

In addition to copper, PREVI brought various businesses to the portfolio, such as the insurance sector, waste collection, and oil production through ATP Petróleo S.A.

The following year, the group's growth began to intensify. Much of the growth was mirrored in two acquisitions: Caraíbas Metais and Eluma, in 1996.

In this sense, the company embraced the mining sector through two brands that constitute the group to this day. In this aspect, the role of Caíbas and Eluma was fundamental, as, in addition to production, the group is also part of the commercialization of the final product, enabling the business model we know today.

Beginning of what we know as Paranapanema

Although Paranapanema already existed at that time, the company – as we know it today – only consolidated in 1996. To do this, the conglomerate abandoned civil construction, collection, insurance, and oil and focused solely on mining, extraction, and refining of copper, zinc, and tin minerals.

With the exit from parallel sectors, the company caught the attention of a group of pensioners who acquired the controlling stake in the company and began to control Mineração Taboca and Mamoré Mineração e Metalurgia.

This move gave rise to Paranapanema S.A, intended solely and exclusively for the production of non-ferrous metals through shareholding control in the form of a holding company.

Thus, the Paranapanema brand became a holding, with no operational activity, concentrating investments in the non-ferrous metals niche. At the time, the group of holdings consisted of 5 companies that held the controlling stake, namely:

• Mineração Taboca S.A (Tin);

• Mamoré Mineração e Metalurgia Ltda (Tin);

• Companhia Paraibuna de Metais (Zinc);

• Caraíbas Metais S.A (Copper);

• Eluma S.A Indústria e Comércio (Copper Products);

Although the large conglomerate known as Paranapanema was profitable, the decision to abandon other areas came a few years later.

At the turn of the decade, the holding saw greater potential in the copper sector and thus sold its stakes in other businesses.

In 2002, Companhia Paraibuna de Metais ceased to be part of the holding's share portfolio, and in 2008, it was the turn of Mineração Taboca S.A and Mamoré Mineração e Metalurgia Ltda to leave the company's portfolio.

Final stretch

After the dismemberment of share positions in previous years, in 2009, Paranapanema began to take shape. The following year, in 2010, the company ceased to be a holding through an intense process of corporate restructuring, moving its headquarters to Dias D’Ávila (BA) and leaving São Paulo.

Two years after the restructuring, Paranapanema acquired Cibrafértil in September 2012. With the acquisition, the company began refining operations, offering products derived from copper, brass, and bronze, increasing production capacity and, consequently, expenses.

Due to management complications, the company began to experience budgetary problems, incurring losses throughout the year 2000. Thus, to fund basic operations, the operational cash was depleted and credit began to be acquired in an uncontrolled manner to cover fixed costs.

The tipping point came five years after the shareholding restructuring, in 2017. This was because the company recorded negative operating profit and debts began to dominate daily life. Despite the mining sector's growth in Brazil being evident, Paranapanema was going against the trend of the rest of the market.

The turning point

Undeniably, the year 2017 was marked for Paranapanema as the beginning of the recovery. Through the extension of deadlines, with 84% of the company's creditors, PMAM3 negotiated maturities and rates, in addition to establishing a plan to convert debt into equity in the company.

The debt was reduced by 28% and the extension of deadlines was successful, with 94% of the total gross debt. Through public and restricted offerings of shares and debentures (mandatory convertible into shares), the company was able to increase its budgetary breathing room and initiated the recovery process.

Thus, in 2018, the restructuring moved to the operational side. There was, therefore, a scheduled shutdown in May, along with investments in CAPEX and modernization of the outdated factories.

The investments totaling more than R$ 200 million reflected the reorganization of the company's operations due to a turbulent period. The third and final phase of the reorganization was carried out in management, reducing fixed costs and 'filling factories'.