Fiven Annual Report 2020

Fiven Annual Report 2020 The Group’s high consumption of petroleum coke in the production of silicon carbide has led to exposure against different types of emission such as dust, PAH, B(a)P and SO2 and related costs to satisfy local laws and regulation. Fiven is also exposed to other risk of liability under e.g. environmental laws and regulations due to the silicon carbide production. The Group has invested significantly into measures to control and reduce emission and is working closely with regulatory agencies to reduce the environmental footprint even further. The pilot installation of the Acheson furnace technology’s next generation, installed in the course of 2019 in the Lillesand plant, was fully operational in 2020. The impact on the emissions of dust, PAH and B(a)P is at the expected level with a reduction respectively of 22 per cent, 45 per cent and 62 per cent compared to 2019 level of production. The gas cleaning facility has shown an efficiency rate at 95 per cent to clean the SO2. In 2021, this technology will be deployed to additional furnace groups, meaning that at the end of 2021, 50 per cent of the furnaces’ groups of the Lillesand plant will ben- efit from this new technology. This is in line with the emission reduction roadmap for the plant, the goal is to reduce PAH and SO2 with 80 per cent and PAH with 50 per cent within 2025. Measures taken have been sufficient to meet requirements in the temporary licenses given for years 2020 and 2021 of the general operating license and the temporary license address- ing PAH and B(a)P limits. In June 2020, the Barbacena plant received its operating license valid for the next 10 years. In December 2020, the Lillesand plant received a new permit valid as from January 1st 2021 for 10 years. The Belgian plant in Hody has a license for operation until December 2029. The continued investment into emission controls and reductions is included in the business plan of the Group. It is expected that these investments will be sufficient to meet emission require- ments and not limit production in any material way. Safety is a key priority to Fiven, and the manufacturing loca- tions have established routines and procedures designed to minimize overall operational risk. KPI’s are recorded, analyzed and actioned systematically. Health, environment and safety performance is reviewed monthly on management level and with owners. Political risk Since the Group is present in several geographic markets, Fiven is also subject to external risks, such as political risks in e.g. Venezuela and Brazil. During 2020, approximately 80 per cent. of the Group's crude capacity was produced in South America and any changes in the general economic conditions and business environment in the region could have an adverse effect on the Group's business and results of operations. In Venezuela the need for authorities to issue permits for the new petroleum coke has been resolved in 2020. However, the US sanctions against Venezuela makes the climate for local crude production and for consumption and refinement in Belgium difficult. As a consequence of the COVID 19 and a general decline of market demand for silicon carbide, Fiven decided to temporarily suspend Venezuelan production and serve Fiven Belgium customers from stock or from internal supplies from Fiven entities in Norway and Brazil. Financial risk Fiven is exposed to different risks in the various market it operates. The objective is to minimize the impact from such risks to the financial statement. Fiven operates in an international industry which exposes the business to a variety of financial risks. Through its global opera- tions, Fiven is impacted by fluctuations in exchange rates of other currencies. Major trading currencies are USD, EUR and BRL. Fiven Group’s reporting currency is EUR, and the Group both hedges and actively uses natural hedge to reduce the risk for currency exposure. Similarly, denomination of currency for loans and bonds seeks to reduce the impact of fluctuations in exchange rates. Customer credit risk is considered low, and credit management ensures that a big portion of the receivables is insured against credit risk. Fiven Norge and Fiven Belgium (Matériaux Céramiques S.A) have a factoring arrangement where there is no recourse. Liquidity risk is related to difficulty in meeting financial obliga- tions. The main building blocks for liquidity are the shareholder loan and the initial bond listed on the Frankfurt Stock Exchange Open Market Segment. In March 2020 the bond was also listed on NASDAQ Stockholm stock exchange to increase the level of trading and to meet requirements as per the bond agreement. In parallel, the factoring agreement for Fiven Norge and Fiven Belgium constitutes another source for funding. In 2020 Fiven also started to use an export credit facility in Brazil. Other than that, liquidity needs are covered through cash generated from operation. Corporate Social Responsibility Business Ethics and anti-corruption Fiven is aware that company decisions and actions may have a repercussion on society. The general rule of Fiven is that all 20   Board of Directors’ Report