While my research on Metalshub´s website provided valuable insights, I sought to gain a deeper understanding of the company´s essence, its origins, and its role in the metals industry. Therefore, Dr. Kreft and I jumped straight to how Metalshub came to be.
“My colleague and Co-founder, Dr. Frank Jackel, and I previously worked together at Anglo American, a major mining company in London. Frank handled sales of ferroalloys, while I was responsible for nickel sales, including ferronickel and nickel cathodes. Our extensive experience in the industry made us keenly aware of its shortcomings and the lack of innovation,” Dr. Kreft started our conversation.
Along with his colleague, Dr. Jackel, he attempted to drive change within a large corporation but encountered limitations. This led them to recognize the need for a different approach. Motivated by their desire to address industry challenges head-on, they decided to start Metalshub in 2016.
“Beginning with nothing but a shared vision, we started from scratch. We had no funds, products, or customers, only a clear understanding of the problems we aimed to solve. Despite the challenges, our determination remained steadfast as we embarked on this entrepreneurial journey,” Dr. Kreft explained.
Three pillars of change
In delineating Metalshub’s foundational principles, the founders identified three pivotal areas necessitating change within the industry. The first imperative was digitalization, emphasizing the implementation of digital processes across the entire supply chain. This encompassed not only individual companies but also extended to all stakeholders involved in the mining, processing, trading, and consumption of metals. The focus lay particularly on digitizing commercial processes to enhance efficiency and transparency throughout the supply chain.
The second pillar centered on sustainability, acknowledging the significant environmental impact of metal production. “Metals contribute substantially to global carbon emissions, with steel alone accounting for approximately 10%. Moreover, activities like mining often result in extensive environmental damage, as exemplified by nickel mining in regions like Indonesia. Despite these challenges, we recognized metals’ pivotal role in transitioning away from fossil fuels towards renewable energy and electromobility, heralding what we can call the “metal age.” Whether in solar panels, wind turbines, or electric vehicle batteries, metals like nickel, cobalt, and lithium are indispensable components. Hence, pillar #2 underscored the imperative of sustainable metal production to align with environmental imperatives” Dr. Kreft stated.
The third challenge they identified revolved around price discovery, particularly for lesser-known metals. While prominent metals like nickel, chrome, and aluminum are traded on exchanges and have established price benchmarks, many others lack such transparent price discovery. “This often results in opaque price reporting practices, relying on phone surveys to establish index prices. Such methodologies are susceptible to manipulation, as evidenced by past scandals in financial and commodity markets. In response, we advocate for a transaction-based price discovery approach grounded in real contracts and supply-demand dynamics. This ensures a more robust and reliable pricing mechanism, free from potential biases or manipulations,” he emphasized.
Tailored software solutions
Metalshub’s core operations encapsulate its role as an industry-specific software provider dedicated solely to the metals and mining sector. They offer three distinct solutions tailored to the industry’s unique needs.
“Firstly, our procurement solution caters to steel mills and other entities involved in purchasing raw materials. For instance, companies like Outokumpu utilize our procurement solution to streamline supplier management, purchasing and contract management processes,” Dr. Kreft explained and continued, “Conversely, our sales solution serves as the complementary counterpart, targeting mining and recycling companies seeking to sell their raw materials. This software facilitates comprehensive management of customer relationships, acquisition of new clients, development of pricing strategies, creation of offers and managing inventory. Essentially, it empowers companies to navigate the sales process in an efficient and compliant way, from initial outreach to deal closure.”
“Lastly, we offer Metis or Metalshub Intelligence Service, a market intelligence solution revolutionizing the metals industry. Through our platform, we provide transaction-based pricing indices derived from normalized and anonymized data. This data encompasses legally binding contracts concluded between buyers and sellers, amounting to multi-billion-dollar per year. By shifting away from traditional journalistic methodologies, our innovative approach ensures transparent and reliable price indices based on real transactions and market dynamics,” Dr. Kreft remarked.
In essence, the pillars outlined and the functionality of Metalshub´s solutions all converge towards a singular goal: transparency. Their solutions play a pivotal role in fostering internal transparency within companies, addressing gaps prevalent in traditional approaches reliant on disparate email communications and spreadsheets.
“While we safeguard sensitive commercial information, our initiatives exemplify our dedication to enhancing transparency in critical areas like carbon footprint and ESG credentials. As the demand for transparency continues to surge among buyers, encompassing factors beyond price and product quality, initiatives like ResponsibleSteel underscore the industry’s evolving landscape. Metalshub remains at the forefront of this trend, striving to empower buyers with comprehensive information through our software solutions,” he underscored.
Indeed, buyers in the steel industry increasingly prioritize transparency and responsibility in their procurement processes. Reflecting on feedback received from key industry stakeholders, including prominent names like Outokumpu and Aperam, Dr. Kreft stated that it is evident that Metalshub´s solutions have garnered positive reception. In addition to these partnerships, they collaborate with a diverse array of steel mills, including industry giants like Dillinger Hüte, Saarstahl, and GMH Group.
“Our clients recognize the tangible value our solutions bring to their operations. Firstly, our software streamlines and digitalizes crucial work processes, enhancing efficiency and process quality. Secondly, it ensures compliance with regulatory standards, which is particularly crucial when managing multi-billion-dollar procurement volumes across global supply chains. Moreover, our solutions empower companies to make data-driven decisions, providing structured data that encompasses not only pricing information but also factors like product quality and ESG credentials,” he highlighted.
companies, addressing gaps prevalent in traditional approaches reliant on disparate email
communications and spreadsheets.
Call for industry acceleration
Reflecting on Metalshub´s journey thus far, the significant progress made in digitalizing the market is evident. However, Dr. Kreft raised concerns about the slow pace of adoption by some industry leaders who remain reluctant to change and turn to traditional methods.
Similarly, Dr. Kreft expresses his concerns over the lack of immediate action on sustainability, particularly regarding suppliers who are slow to assess their carbon footprint and get it verified by a reputable auditor. He emphasizes the need for the industry to embrace a more agile and decisive approach to drive meaningful change.
“There is a prevailing reluctance among decision-makers to pioneer initiatives, reminiscent of the metaphorical scenario where everyone acknowledges the merits of jumping into the pool on a hot summer day but hesitates to take the plunge,” said Dr. Kreft. “Nevertheless, I commend those who are leading the way and are committed to achieving transformative goals.”
On the sustainability front, Dr. Kreft highlights the resistance from suppliers who are hesitant to provide data, often citing unclear methods for measurement. He encourages them to take action regardless of perfect methodologies and engage with customers to meet their expectations. While there is a plethora of ESG certifications available, action is key. Understandably, mining companies would like to see premiums to offset certification costs, but independent audits are necessary to establish credibility.
Metalshub is staying focused on metals and mining, starting with steel as the primary vertical, while expanding its reach to other relevant sectors. Namely, in January 2024, they tapped into the minerals sector by partnering with RHI Magnesita, one of the leading global suppliers of high-grade refractory products. This demonstrates Metalshub´s commitment to digitalization and sustainability across a broader range of industries.
