SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
October 13, 2003
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(Date of Report, date of earliest event reported)
TITANIUM METALS CORPORATION
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(Exact name of Registrant as specified in its charter)
Delaware 0-28538 13-5630895
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
1999 Broadway, Suite 4300, Denver, CO 80202
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(Address of principal executive offices) (Zip Code)
(303) 296-5600
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or address, if changed since last report)
Item 9: Regulation FD Disclosure
The following information is furnished under Item 9, "Regulation FD
Disclosure." The information in this Form 8-K and the Exhibits attached hereto
shall not be deemed to be "filed" for purposes of Section 18 of the Securities
Exchange Act of 1934 (the "Exchange Act"), nor incorporated by reference into
any filing under the Exchange Act or the Securities Act of 1933, except as shall
be expressly identified in such filing.
On October 13, 2003 Registrant's Chairman, President and Chief Executive
Officer delivered a speech with an accompanying visual presentation to the 2003
Annual International Titanium Association ("ITA") meeting. A copy of this
presentation is attached hereto as Exhibit 99.1 and Exhibit 99.2 and is hereby
incorporated by reference.
Item No. 9 Exhibit List
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99.1 Speech of Registrant's Chairman, President and Chief Executive
Officer dated October 13, 2003
99.2 Presentation of Registrant's Chairman, President and Chief
Executive Officer dated October 13, 2003
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TITANIUM METALS CORPORATION
(Registrant)
By: /s/ Joan H. Prusse
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Joan H. Prusse
Vice President, General Counsel and Secretary
Date: October 13, 2003
EXHIBIT 99.1
LOW-COST TITANIUM PROCESS DEVELOPMENT
SLIDE 1: COVER PAGE
Good morning ladies and gentlemen. I'm pleased to be with you here today to
spend just a few minutes talking about several exciting advances in titanium
process development that we believe may have the potential to positively shape
the future of our industry by lowering, hopefully substantially lowering, the
cost to produce titanium products.
SLIDE 2: FORWARD-LOOKING INFORMATION
Let me just start by giving the normal SEC caution that some of the
statements made in this presentation may represent forward-looking statements
that carry associated risks and uncertainties.
SLIDE 3: LOWER COST MUST CONTINUE TO BE A PRIMARY INDUSTRY GOAL
As most of you in this room know, titanium's well established physical
properties have been highly attractive to design engineers in many industries
since the metal first became commercially available in the 1950's.
Unfortunately for all of us, the cost of the metal has limited its
application to a comparatively small marketplace to date. Consequently, the
quest for lower-cost production methods has been a primary goal of the titanium
industry since its inception.
The history of titanium is replete with efforts focused on reducing the
cost of producing titanium to make it a more attractive material alternative,
but with relatively limited exception to date, the cost of producing most forms
of titanium today has not changed fundamentally since its commercialization over
50 years ago.
Basic research into lowering the cost of producing refined titanium metal,
as well as lowering downstream processing costs, remains just as, or even more,
critical to the industry today as we continue to seek out new ways to expand the
marketplace for our products.
While there continue to be a variety of research efforts in this area
today, including work in the area of titanium extraction by Dr. Marco Ginatta
and International Titanium Powder, LLC and work by a number of other prominent
titanium industry experts in the area of titanium production processes,
including Dr. Sam Froes of the University of Idaho, I want to focus particular
attention today to two current initiatives in this pursuit of lower-cost
titanium: the ongoing study of the FFC Cambridge, or Fray, Process under the
auspices of the US Department of Defense and recent advancements in electron
beam, cold hearth melting.
SLIDE 4: DEFENSE VISION FOR TITANIUM
SLIDE 5: [NO TITLE]
The US Department of Defense is one of the key end-users driving the search
for lower-cost titanium today. As you know, titanium has long played a critical
role in the production of military aircraft, both from a structural and engine
standpoint. However, as other speakers in recent years have discussed, titanium
is playing an ever-increasing role in the development of ground-based weapons
systems as well.
Central to current notions of weapons design, both in terms of developing
new systems for the future, as well as retrofitting existing systems, are
reductions in weight, size and cost of fuel. This means that future vehicles are
being designed to retain at least the same degree of fire power and endurance as
today's vehicles, but with considerably less weight to make equipment
mobilization via cargo aircraft more efficient and less costly.
With its high strength-to-weight ratio and excellent damage-tolerance
properties, titanium plays a pivotal role in the design of these newer, more
mobile, ground-based weapons systems.
New weapons systems, such as the Stryker and the Lightweight Towed Howitzer
have made extensive use of titanium in their design.
In addition, retrofit armor has been procured in large quantities for
existing vehicles such as the Abrams tank and the Bradley Fighting Vehicle.
However, despite recent press about the price tag associated with the
ongoing military effort in Iraq, military budget constraints are a very real
consideration and stand to adversely impact titanium's potential in these
programs. While titanium may fit the bill in terms of weight reduction and
technical capabilities, at its current procurement costs titanium may not
achieve its full potential as a material alternative in armor and other
defense-related applications, either because alternate materials are selected
over titanium based on cost or because the higher cost of titanium simply means
that fewer vehicles are ultimately built.
SLIDE 6: DARPA TITANIUM INITIATIVE
Consequently, in support of these critical military needs in future
systems, the Defense Department through the Defense Advanced Research Projects
Agency, or DARPA, has initiated several research programs under the auspices of
the DARPA Titanium Initiative designed to lower the cost of producing titanium
and, therefore, its acquisition cost to the Government, both for these emerging
ground-based weapons systems, as well as more traditional military aerospace
applications.
These programs are designed to foster critical technologies in titanium
extraction and to link with various other initiatives targeting low-cost
conversion and processing technologies. The goal of these initiatives is to
lower acquisition costs in order to create more affordable weapons systems
designs.
SLIDE 7: FFC CAMBRIDGE PROCESS
In 2003, as part of the DARPA Titanium Initiative, TIMET was awarded a
significant grant to study the commercialization of the FFC Cambridge Process
for the low-cost extraction of titanium from titanium-bearing minerals.
The FFC Cambridge process, which is sometimes referred to in the literature
as the Fray Process, was invented by Derek Fray, Tom Farthing and George Chen at
Cambridge University. This is a unique, patented process in which titanium oxide
is reduced through an electrochemical de-oxidation process to produce elemental
titanium.
SLIDE 8: SCHEMATIC OF FFC CAMBRIDGE REDUCTION
Simplistically, a cathode made from an oxide of titanium, such as natural
or synthetic rutile or pigment-grade titanium dioxide, is placed in a bath of
molten calcium chloride together with a graphite anode. In an electrolytic
process, oxygen is removed from the titanium oxide in the form of oxygen, carbon
monoxide or carbon dioxide, leaving pure titanium at the cathode.
SLIDE 9: POTENTIAL ADVANTAGES OF FFC CAMBRIDGE REDUCTION
One obvious advantage that can be foreseen is that by simply modifying the
chemistry and form of the titanium oxide input, the chemistry and form of the
reaction product can be tailored to meet the precise requirements of the down
stream processes and ultimate end use.
Thus, utilizing this single extraction process, one might be able to
produce feedstock for melting conventionally in a VAR or electron beam furnace
or, alternatively, to produce feedstock such as powder for utilization in
various novel consolidation processes.
By taking the current multi-step approach of refining elemental titanium
and turning it into a single step, continuous process, we believe that the FFC
Cambridge Process currently represents one of the most meaningful cost-reduction
opportunities the industry has ever seen. While it is still a bit early to
judge, both in terms of the likelihood of ultimate success and probably cost
reduction potential, we hold out hope that those who have said that the FFC
Cambridge Process could reduce the cost of titanium extraction by as much as 50%
will ultimately prove to be right (or wrong because they underestimated the
savings potential).
SLIDE 10: TIMET/DARPA INITIATIVE
Currently, with the support of DARPA funding of approximately 12 million
dollars, TIMET is focused on evaluating and demonstrating the technical and
commercial viability of the FFC Cambridge process. This work is being carried
out at TIMET's Henderson, Nevada technical laboratory.
The program is set up in three phases, each with its own go/no-go
milestones. The first phase of the program is expected to take roughly 18
months. This initial phase is essentially designed to demonstrate feasibility on
a small pilot scale of approximately 50 lbs. per day and to satisfy certain
technical milestones relating to chemistry and uniformity of the product. The
principle goal during the second phase, also intended to last approximately 18
months, is to demonstrate the viability of the process at a scale of
approximately 500 lbs per day and provide evidence that the process has the
potential to meet certain cost targets. Finally, in Phase 3, intended to be a 12
month program, the objective is to demonstrate an operational pilot facility
producing product that meets the same technical and financial milestones. There
is an additional goal during Phase 3 to prove out the unique capabilities of the
process by demonstrating a novel alloy and/or a novel processing route to
produce a unique combination of product properties. Today, the program is still
in Phase 1 and the process has been successfully demonstrated only on a very
small laboratory scale.
Obviously, we anticipate several years and significant hurdles before the
process may prove itself to be commercially viable.
SLIDE 11: INTEGRATED PROCESS DEVELOPMENT TEAM
With financial and governmental backing through DARPA, TIMET has adopted an
integrated team approach to this significant project.
This includes participation by several major US defense contractors, in
order to provide a rapid route to market once this new extraction technology
has, hopefully, proven itself commercially viable. TIMET's industry partners in
this program include Boeing, GE, Pratt and Whitney, and United Defense who are
focused on the applications and implementation issues.
In addition, the team also includes Cambridge University and the University
of California at Berkeley, who are providing support on the fundamental
scientific research aspects of the process.
SLIDE 12: ELECTRON BEAM SINGLE MELT
Now, let me turn now to one specific development in the area of melting
technology and, in particular, in the area of electron beam, cold hearth
melting.
Cold hearth melting technology has brought significant benefits to the
titanium industry, from its capability to utilize high percentages of scrap as
raw material, to its ability to remove potential defects in the refining hearth.
In addition, the process allows for the manufacture of either round
electrodes for re-melting in traditional VAR furnaces or direct cast rectangular
slabs that replace traditional forged slab from multiple-melt, round VAR ingots.
The direct cast slab process has long been recognized as offering
significant potential for lowering the cost of commercially pure plate, sheet,
strip and tube because of the reduced process steps and resulting increased
yield.
SLIDE 13: NEXT STEP: ALLOY EBSM
More recently, the electron beam, single melt process has been further
refined and is now being used for producing direct cast slabs and ingots of
titanium alloy material, particularly the commonly used 6-4 alloy.
Applications include casting electrodes for aerospace, industrial, and
consumer parts, as well as small diameter cast billet for industrial alloy bar
manufacture.
In addition, over 500 MT of 6-4 alloy armor plate has been successfully
manufactured using this process at TIMET. In order to prove equivalency with the
traditional multiple VAR melt and forged slab process, all of the armor plate
produced has been tested to aerospace specifications and all of it has met the
physical requirements of those specifications.
On the basis of these results, electron beam cold hearth single melt 6-4
titanium alloy has now been approved for use in primary structure on a military
aircraft and will be undergoing full-scale component and flight-testing in 2004
and 2005. Applications for a wide range of aircraft applications are expected to
follow in the same time frame. Military aerospace programs are under intense
budget pressure, as are the ground force projects, and will certainly benefit
from the cost reductions associated with this less expensive manufacturing
process.
The data from these test results has also been submitted to industry
standard bodies such as AMS, and electron beam cold hearth material is currently
being evaluated as an acceptable and equivalent alternative to titanium produced
through more traditional multiple VAR melting. Based on current results, it is
expected that this approval will be received within the next year.
Other alloys are also being produced using the single melt electron beam
process for industrial applications as well. Particular success has been found
in manufacturing valve stock for motorcycle engines, where using the single melt
to cast a small diameter round product saves multiple melt steps plus eliminates
initial forging cost and the associated yield loss, thereby lowering the cost of
manufacturing the product.
The success of this project represents a significant step forward in
titanium melting technology, showing that innovation in process development
continues to thrive in the industry helping an effort to produce ever more
cost-competitive titanium products.
SLIDE 14: MARKET EXPANSION
It is generally accepted that many industries would either expand the use
of titanium or adopt it for initial use if the procurement costs could be
significantly lowered.
The basic premise is that while titanium outperforms many competing
materials in the design and procurement decision process, titanium's acquisition
cost often tips the balance in favor of other, cheaper material alternatives.
This is what makes these potential cost breakthroughs so exciting. The
opportunity to grow the market and our businesses is tremendous if we can
fundamentally alter the cost structure of the metal for the better.
Beyond the growth in military applications already noted, opportunities for
increased penetration exist in many markets.
These include general chemical applications in equipment used for the
manufacture of agricultural chemicals and pharmaceuticals, chimney linings for
fossil fuel flue gas de-sulfurization systems, as well as food processing
equipment and water heater liners are all examples of areas that hold good
potential for lower-cost titanium to displace manufacturing components and
systems currently designed in various grades of stainless steel or other
materials.
In emerging markets for titanium that have frequently been discussed in
this forum, where use is still small but the potential is great, lower cost
material can be a catalyst for significant growth in demand for titanium.
The automotive market, for example, where titanium applications such as
connecting rods, valve train components, suspension springs, and exhaust systems
all have high levels of interest in the engineering community, provides a great
potential for industry growth with lower cost titanium.
Another market in which the engineering community has shown a high level of
interest in titanium is in energy exploration, where applications in riser
systems, including pipe and stress joints, sub-sea transmission pipes, well
casing, and production tubing are all viable applications for lower cost
titanium.
Consumer applications such as cell phones, personal data assistants, and
computer cases may become commonplace with lower cost titanium. Architecture,
marine, and naval uses all represent further areas of potential expansion for
the titanium industry.
And beyond all of these identified opportunities, new markets that we have
not even considered could become consumers of titanium if we can reach the right
price point.
SLIDE 15: LOWER COSTS = MARKET GROWTH
In closing, let me just emphasize the continued importance of finding lower
cost means of producing titanium, both in extraction and in processing. The
potential for lower costs to expand the market and grow the overall industry is
clear.
Titanium possesses superior physical properties to many competing materials
that see far greater utilization than titanium in the world today.
The single greatest disadvantage for titanium is its high cost compared to
these competing materials, a disadvantage that frequently offsets titanium's
clear engineering advantages in many of these situations.
Just as other metals, such as aluminum, have had cost breakthroughs that
have dramatically expanded their use, lower production costs will increase the
scope of titanium's usage, possibly dramatically.
As the most likely pathway for our industry to achieve significant growth
and long-term prosperity, continued funding of basic research in both extraction
and processing technologies is vital to this very important effort.
Thank you very much for your attention this morning.
EXHIBIT 99.2
[TIMET Logo]
Low-Cost Titanium Process Development
J. Landis Martin
International Titanium Association
2003 Annual Meeting
Monterey, California
October 13, 2003
Forward-Looking Information
Certain of the statements made during this presentation that are not historical
facts may represent forward-looking statements that involve risks and
uncertainties, including but not limited to, the technical, financial and timing
risks associated with process development activities and the risks and
uncertainties associated future market conditions and potential market
opportunities, future global economic conditions, global productive capacity,
changes in product pricing, and other risks and uncertainties associated with
TIMET's business that are described more fully in TIMET's filings with the
Securities & Exchange Commission.
Lower Cost Must Continue to Be a Primary Industry Goal
Titanium's physical properties are highly attractive
However, cost limits applications to smaller markets
Basic research into lower cost refining and processing remains critical
Defense Vision for Titanium
Lighter weight, high damage-tolerant designs
Increased mobility
Reduce support requirements
[picture]
Stryker
[picture]
M1 A2 Tank
However, titanium's potential into existing and future programs may be limited
at current acquisition cost levels
DARPA
Titanium Initiative [DARPA Titanium Initiative Logo]
FOSTER CRITICAL TECHNOLOGIES IN TITANIUM EXTRACTION
+
LINK WITH OTHER INITIATIVES TARGETING LOW-COST CONVERSION AND PROCESSING
=
LOWER ACQUISITION COSTS TO CREATE MORE AFFORDABLE WEAPONS SYSTEMS DESIGNS
FFC Cambridge Process
[Diagram]
Schematic of FFC Cambridge Reduction
[Diagram]
Potential Advantages of FFC Cambridge Process
Potential to tailor chemistry of output to downstream requirements
Output could be used for conventional VAR or potentially powder applications
Potential for single step, continuous process
TIMET / DARPA Initiative
Evaluate and scale up FFC Cambridge Process to demonstrate technical and
commercial viability
Project timeline is four years, with specific technical and financial milestones
at 1.5, 3 and 4 years
Significant hurdles anticipated
Integrated Process Development Team
[TIMET Logo]
Industry leader
Broad expertise
Production facilities
[DARPA Logo]
Financial and governmental support
[University of Cambridge Logo]
[University of California, Berkeley Logo]
Academic and research excellence for basic understanding of the science
[Boeing Logo]
[General Electric Logo]
[Pratt and Whittney Logo]
[United Defense Logo]
End-user focus to provide rapid route to market
Electron Beam Single Melt
High scrap usage; low defect rate
Direct cast slabs replace forged VAR ingots
Benefits of reduced process steps and increased yields long recognized in CP
flat products
[picture]
As-Cast Jumbo Slab
[picture]
As-Rolled Intermediate Slab
Next Step: Alloy EBSM
Process now in place for EBSM alloy products
Casting electrodes approved for aerospace, industrial, and commercial
applications Single melt billet for industrial bar manufacture
Armor plate
Initial approval received for use in primary physical structure on a military
aircraft
Significant step forward in melting technology
Market Expansion
Lower acquisition costs likely to expand existing market applications and spur
first time adopters
Displace competing materials such as stainless steels in process applications
(general chemical, food processing, pharmaceutical, flue gas desulfurization)
Meet price targets in new markets where adoption has been slower (auto, energy,
consumer)
Lower Costs = Market Growth
Titanium outperforms many competing materials
Cost differential outweighs engineering advantages
Significant cost breakthroughs will change the scope of applications for
titanium
Basic research into new technologies is the only way to achieve dramatic growth