Why 3D Systems Corp. and Arcam AB Could Be Big Winners Because of This New U.K. Development

3-D printing in titanium could soar because of this development.

Feb 13, 2014 at 2:13PM

Companies that make 3-D printing machines that can print in titanium, which include 3D Systems Corp. (NYSE:DDD) and Arcam, could be big winners if a newly developed process that cuts the cost of titanium powder by up to 75% works as well as is being reported.

Cambridge University spin-off Metalysis developed the process and reportedly is in talks with commercial partners to build a $500 million plant to churn out low-cost titanium powder. Titanium is incredibly lightweight, yet also strong and highly corrosion resistant. These properties make it a top materials choice for aerospace applications, certain medical implants, and other specialty uses, yet its high price means it isn't employed much in mass manufacturing.

Of the five major 3-D printing companies that trade on U.S. exchanges, only industry leader 3D Systems Corp. and Sweden-based Arcam make systems with titanium and/or titanium alloy capabilities; ExOne has reportedly been working on developing this capability, while Stratasys and voxeljet don't offer any systems that can print in metals.

The 3-D printing titanium players
This development could turbocharge the already fast-growing 3-D printing sector because the lower-cost titanium will only be available in powder form: 3-D printing uses powder as a raw material, while conventional "subtractive" manufacturing uses solid materials.

It's very likely that some companies that now use other metals to produce certain components will consider using titanium if it's more competitively priced. Higher-end automakers and others will likely start using titanium for select parts that are now made from aluminum or steel.

The titanium powder produced by Metalysis' process is high-grade, but not quite aerospace-grade. So, at this point, manufacturers that currently produce titanium aerospace components using conventional manufacturing won't have the extra cost-savings incentive to switch to 3-D printing.

3D Systems Corp. only recently acquired metals printing capabilities when it bought Phenix Systems last summer. Its printers use laser sintering technology, which is the most commonly used metals 3-D printing technology. 3D Systems Corp.'s machines can print in stainless steel, tool steels, aluminum, titanium, precious metals, among other metals. There are a few privately held companies that also make 3-D printers that use laser sintering technology; most notable is Germany-based EOS.

3D Systems Corp. launched three rebranded Phenix Systems' printers at last year's EuroMold: ProX 100, ProX 200, and ProX 300, and is already competing for key new business with its new metal printer lineup. General Electric has reportedly been testing printers from 3D Systems Corp. to see if the company will be part of its capacity ramp-up necessary to produce thousands of fuel nozzles for its new Leap jet-engine.

Arcam has considerable experience making 3-D printers that have titanium capabilities, as it's been solely involved in the industrial metals end of the 3-D printing sector since it was founded in 1997 (though the company's roots and technology go back further). Arcam's 3-D printers use its proprietary electron beam melting, or EBM, technology, and can print in titanium, several titanium alloys, and a cobalt-chrome alloy. The company has been exclusively focused on two markets: aerospace and orthopedic implant.

Arcam's systems are relatively small, so they'd currently not be able to produce larger components in titanium. However, surely the company could develop and make larger systems using its EBM technology if demand warranted it.

Titanium economics, and titanium making 101 
Metalysis' development could turn the metals markets topsy-turvy, as demand for titanium should rise at the expense of the aluminum and steel markets.

Titanium powder sold for $200 to $400 per kilogram, as of December. Shaving up to 75% off its cost would make titanium much more competitively priced with aluminum powders, which were selling for about $30-$50 per kilogram, and almost as cheap as specialty steels. Given the cost factor, it's not surprising only about 140,000 tons of titanium was produced and consumed globally in 2012, compared with 1.5 billion tons of steel and 48 million tons of aluminum, according to the Financial Times. 

Titanium is now produced using the Knoll process, which is an 80-year-old technology that's very inefficient. The four-step process uses a lot of energy and only produces small quantities of titanium. By contrast, Metalysis' technology involves just one step. It uses electrolysis to convert rutile sand, a naturally occurring titanium ore present in beach sands, directly into powdered titanium.

This is here-and-now technology, not tech that's still in the R&D stage. Metalysis has long collaborated with SheffieldUniversity's MercuryCenter, which specializes in metal powder-based manufacturing. Engineers at the Center have successfully 3-D printed various components using titanium produced by Metalysis' process. This includes what they believe to be the world's first 3D-printed titanium car component, according to an article in TCT Magazine .

In what appears good news for Arcam, Prof. Iain Todd, director of the center, was quoted by TCT as saying: "We've been operating since 2007, which is when we got our first Arcam system. We're more focused around electron beams than lasers and we do a lot of work mainly with industrial partners, so our projects are supported by the European Regional Development Fund."

Foolish final thoughts 
There are several reasons why investors might want to keep their eyes on Metalysis' progress in building a titanium powders production plant based on its technology. First, companies that make 3-D printers that can print in titanium, which include Arcam and 3D Systems Corporation, would almost surely see demand for their systems increase. Second, there could be some significant investment opportunities in the metals market. Lastly, Metalysis could make for a potentially attractive IPO. 

Don't miss our top stock for 2014
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Beth McKenna has no position in any stocks mentioned. The Motley Fool recommends 3D Systems. The Motley Fool owns shares of 3D Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers