UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(MARK ONE)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

FOR THE TRANSITION PERIOD FROM TO

METALLURG, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN
ITS CHARTER)

DELAWARE 13-1661467
(State of organization) (I.R.S. Employer Identification
No.)

6 EAST 43RD STREET (212) 835-0200
NEW YORK, NEW YORK 10017 (Registrant's telephone number,
(Address of principal executive including area code)
offices)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [X] No [ ]

The number of shares of common stock, $0.01 par value, issued and
outstanding as of May 14, 2001 was 5,000,000.
2
METALLURG, INC. AND CONSOLIDATED SUBSIDIARIES

INDEX

PAGE NO.
--------

Part I FINANCIAL INFORMATION:

Item 1 -- Financial Statements (Unaudited)

Condensed Statements of Consolidated Operations for the
Quarters Ended March 31, 2001 and April 30, 2000 ..... 2

Condensed Consolidated Balance Sheets at March 31, 2001
and December 31, 2000 ................................. 3

Condensed Statements of Consolidated Cash Flows for the
Quarters Ended March 31, 2001 and April 30, 2000 ...... 4

Notes to Condensed Unaudited Consolidated Financial
Statements ............................................ 5-10

Item 2 -- Management's Discussion and Analysis of
Financial Condition and Results of Operations ............... 11-15

Item 3 -- Quantitative and Qualitative Disclosure of
Market Risk ................................................. 16

Part II OTHER INFORMATION:

Item 6 (a) EXHIBITS ......................................... 17

Item 6 (b) REPORTS ON FORM 8-K .............................. 17

Signature Page .............................................. 18

1
3
PART I -- FINANCIAL INFORMATION

ITEM 1 -- FINANCIAL STATEMENTS

METALLURG, INC. AND CONSOLIDATED SUBSIDIARIES

CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED)
(IN THOUSANDS)

QUARTER ENDED
------------------------
MARCH 31, APRIL 30,
2001 2000
--------- ---------

Sales .................................................... $ 135,684 $ 124,882
Commission income ........................................ 406 193
--------- ---------
Total revenue .......................................... 136,090 125,075
--------- ---------
Operating costs and expenses:
Cost of sales .......................................... 114,034 108,324
Selling, general and administrative expenses ........... 14,122 13,712
Environmental expense recovery ......................... (318) (750)
--------- ---------
Total operating costs and expenses ..................... 127,838 121,286
--------- ---------
Operating income ....................................... 8,252 3,789

Other income (expense):
Other income, net ...................................... 57 15
Interest expense, net .................................. (3,094) (2,572)
--------- ---------

Income before income tax provision and minority interest 5,215 1,232
Income tax provision ..................................... 2,295 1,616
--------- ---------
Income (loss) before minority interest ................. 2,920 (384)
Minority interest ........................................ 68 29
--------- ---------
Net income (loss) ...................................... 2,988 (355)

Other comprehensive loss:
Foreign currency translation adjustment ................ (2,825) (698)
Deferred loss on derivatives ........................... (66) --
--------- ---------
Comprehensive income (loss) ............................ $ 97 $ (1,053)
========= =========

See notes to condensed unaudited consolidated financial statements.

2
4
METALLURG, INC. AND CONSOLIDATED SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

MARCH 31, DECEMBER 31,
2001 2000
--------- ---------
(Unaudited)

ASSETS
Current Assets:
Cash and cash equivalents ........................................... $ 25,089 $ 33,402
Accounts and notes receivable, net .................................. 76,539 69,212
Inventories ......................................................... 94,838 91,176
Other current assets ................................................ 12,317 14,820
--------- ---------
Total current assets ............................................... 208,783 208,610
Property, plant and equipment, net .................................... 59,233 61,428
Other assets .......................................................... 19,204 20,117
--------- ---------
Total .............................................................. $ 287,220 $ 290,155
========= =========

LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities:
Short-term debt and current portion of long-term debt ............... $ 16,126 $ 11,305
Trade payables ...................................................... 42,145 44,985
Accrued expenses .................................................... 28,482 27,335
Other current liabilities ........................................... 2,365 4,116
--------- ---------
Total current liabilities .......................................... 89,118 87,741
--------- ---------

Long-term Liabilities:
Long-term debt ...................................................... 114,323 115,420
Accrued pension liabilities ......................................... 31,048 33,442
Environmental liabilities, net ...................................... 29,464 30,219
Other liabilities ................................................... 6,398 7,029
--------- ---------
Total long-term liabilities ........................................ 181,233 186,110
--------- ---------
Total liabilities .................................................. 270,351 273,851
--------- ---------

Minority Interest ..................................................... 477 557
--------- ---------

Shareholder's Equity:
Common stock ........................................................ 50 50
Due from parent company ............................................. (19,714) (19,714)
Additional paid-in capital .......................................... 48,214 47,666
Accumulated other comprehensive loss ................................ (9,382) (6,491)
Retained deficit .................................................... (2,776) (5,764)
--------- ---------
Total shareholder's equity ......................................... 16,392 15,747
--------- ---------
Total .............................................................. $ 287,220 $ 290,155
========= =========

See notes to condensed unaudited consolidated financial statements.

3
5
METALLURG, INC. AND CONSOLIDATED SUBSIDIARIES

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
(IN THOUSANDS)

QUARTER ENDED
-------------------------
MARCH 31, APRIL 30,
2001 2000
-------- --------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) .................................................................. $ 2,988 $ (355)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization .................................................... 2,640 1,986
Gain on sale of assets ........................................................... (4) (1)
Deferred income taxes ............................................................ 987 572
-------- --------
Total ........................................................................... 6,611 2,202

Change in operating assets and liabilities:
Increase in trade receivables .................................................... (11,689) (10,705)
Increase in inventories .......................................................... (6,694) (3,408)
Decrease (increase) in other current assets ...................................... 1,508 (997)
Increase (decrease) in trade payables and accrued expenses ....................... 246 (427)
Restructuring payments ........................................................... (6) (411)
Environmental payments ........................................................... (528) (686)
Other assets and liabilities, net ................................................ (704) 2,471
-------- --------
Net cash used in operating activities ........................................... (11,256) (11,961)
-------- --------

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment ......................................... (2,546) (3,377)
Proceeds from asset sales .......................................................... 47 8,349
Acquisitions, net of cash .......................................................... -- (8,957)
Other, net ......................................................................... 28 (37)
-------- --------
Net cash used in investing activities ........................................... (2,471) (4,022)
-------- --------

CASH FLOWS FROM FINANCING ACTIVITIES:
(Repayment) proceeds of long-term debt ............................................. (349) 7,432
Net short-term borrowings .......................................................... 6,438 4,253
-------- --------
Net cash provided by financing activities ....................................... 6,089 11,685
-------- --------

Effects of exchange rate changes on cash and cash equivalents ...................... (675) (117)
-------- --------

Net decrease in cash and cash equivalents .......................................... (8,313) (4,415)
Cash and cash equivalents - beginning of period .................................... 33,402 58,611
-------- --------
Cash and cash equivalents - end of period .......................................... $ 25,089 $ 54,196
======== ========

See notes to condensed unaudited consolidated financial statements.

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METALLURG, INC. AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The accompanying condensed unaudited consolidated financial statements
include the accounts of Metallurg, Inc. and its majority-owned subsidiaries
(collectively, "Metallurg"). These financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information pursuant to Accounting Principles Board Opinion No. 28. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. The condensed
consolidated balance sheet as of December 31, 2000 was derived from audited
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring adjustments) considered necessary for a fair presentation
have been included. Operating results for the interim periods presented are not
necessarily indicative of the results to be expected for a full year.

Metallurg is a wholly owned subsidiary of Metallurg Holdings, Inc.
("Metallurg Holdings") since the acquisition date of July 13, 1998. The
financial statements do not reflect the pushdown of purchase accounting
adjustments recorded by Metallurg Holdings.

For further information, see the financial statements and footnotes thereto
included in Metallurg's audited consolidated financial statements for the year
ended December 31, 2000.

Effective December 31, 2000, Metallurg, Inc. changed from a fiscal year
ending January 31 to a calendar year. As a result, Metallurg, Inc. no longer
reports the results of its operating subsidiaries on a one-month lag. The
quarter ended April 30, 2000 includes operating results of Metallurg, Inc., the
parent holding company, for the three months ended April 30, 2000 and worldwide
operating results for the three months ended March 31, 2000.

Certain prior year amounts were reclassified to conform to current year
presentations.

2. SEGMENTS AND RELATED INFORMATION

Metallurg operates in one significant industry segment, the manufacture and
sale of performance-enhancing additives mainly for the metallurgical industry.
Metallurg is organized around its major production facilities in the U.S., the
U.K., Germany and Brazil, which are supported by an established worldwide sales
network. In addition to selling products manufactured by Metallurg, Metallurg
distributes complementary products manufactured by third parties.

Reportable Segments

Shieldalloy Metallurgical Corporation ("Shieldalloy") - This unit is
comprised of two production facilities in the U.S. The New Jersey plant
manufactures and sells aluminum alloy grain refiners and alloying tablets for
the aluminum industry, metal powders for the welding industry and specialty
ferroalloys for the superalloy and steel industries. The Ohio plant manufactures
and sells ferrovanadium and vanadium-based chemicals used mostly in the steel
and petrochemical industries.

London & Scandinavian Metallurgical Co Limited and its subsidiaries
(collectively, "LSM") - This unit is comprised mainly of three production
facilities in the U.K., one in Poland and another in Norway which manufacture
and sell aluminum alloy grain refiners and alloying tablets for the aluminum
industry, chromium metal and specialty ferroalloys for the steel and superalloy
industries and aluminum powder for various metal powder-consuming industries.
The Norwegian facility ("Hydelko") was acquired on March 31, 2000.

Gesellschaft fur Elektrometallurgie mbH and its subsidiaries (collectively,
"GfE") - This unit is comprised of two production facilities and a sales office
in Germany. The Nuremberg plant manufactures and sells a wide variety of
specialty products, including vanadium-based chemicals and sophisticated metals,
alloys and powders used in the titanium, superalloy, electronics,
telecommunications, biomedical and optics industries. The Morsdorf plant
produces medical prostheses, implants and surgical instruments for orthopedic
applications.

5
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METALLURG, INC. AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS - (CONTINUED)

2. SEGMENTS AND RELATED INFORMATION - (CONTINUED)

Elektrowerk Weisweiler GmbH ("EWW") -- This production unit, also
located in Germany, produces various grades of low carbon ferrochrome used in
the superalloy, welding and steel industries.

Companhia Industrial Fluminense ("CIF") -- This unit is comprised mainly
of two production facilities in Brazil. The Sao Joao del Rei plant manufactures
and sells aluminum alloy grain refiners and alloying tablets for the aluminum
industry and metal oxides used in the telecommunications, superalloy and
specialty metal industries. The Nazareno mine extracts and concentrates
tantalum- and niobium-containing ores that are processed, along with other raw
materials, into metal oxides at the Sao Joao del Rei plant.

In addition to their manufacturing operations, Shieldalloy, LSM and GfE
import and distribute complementary products manufactured by affiliates and
third parties.

Summarized financial information concerning Metallurg's reportable segments
is shown in the following table (in thousands). Each segment records direct
expenses related to its employees and operations. The "Other" column includes
corporate related items and results of subsidiaries not meeting the quantitative
thresholds as prescribed by applicable accounting rules. Metallurg does not
allocate general corporate overhead expenses to operating segments. There have
been no material changes in segment assets from the amounts disclosed in the
last annual report.

INTERSEGMENT CONSOLIDATED
SHIELDALLOY LSM GfE EWW CIF OTHER ELIMINATIONS TOTALS
----------- --- --- --- --- ----- ------------ ------

QUARTER ENDED
MARCH 31, 2001
Revenue from external
customers ........ $ 25,165 $35,193 $ 23,974 $3,432 $4,095 $44,231 $136,090
Intergroup revenue .... 1,310 8,917 3,757 6,756 6,085 5,807 $(32,632) --
Income tax (benefit)
provision ...... (425) 147 550 705 188 1,130 -- 2,295
Net (loss) income ..... (755) 389 815 1,501 1,270 6,200 (6,432) 2,988

QUARTER ENDED
APRIL 30, 2000
Revenue from external
customers ........ $ 27,262 $33,127 $ 21,093 $3,534 $3,437 $36,622 $125,075
Intergroup revenue .... 773 10,140 3,105 5,507 3,286 4,235 $(27,046) --
Income tax provision .. 492 641 123 196 4 160 -- 1,616
Net income (loss) ..... 708 1,349 (643) 247 457 143 (2,616) (355)

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METALLURG, INC. AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS - (CONTINUED)

3. INVENTORIES

Inventories, net of reserves, consist of the following (in thousands):

MARCH 31, DECEMBER 31,
2001 2000
------- -------

Raw materials .................... $22,666 $20,491
Work in process .................. 3,890 2,854
Finished goods ................... 65,499 64,781
Other ............................ 2,783 3,050
------- -------
Total ....................... $94,838 $91,176
======= =======

4. CONTINGENT LIABILITIES

Metallurg continues defending various claims and legal actions arising in
the normal course of business, including those relating to environmental
matters. Management believes, based on the advice of counsel, that the outcome
of such litigation will not have a material adverse effect on Metallurg's
consolidated financial position, results of operations or liquidity. There can
be no assurance, however, that existing or future litigation will not result in
an adverse judgment against Metallurg which could have a material adverse effect
on Metallurg's future results of operations or cash flows.

5. EARNINGS PER SHARE

Earnings per share is not presented since Metallurg, Inc. is a wholly
owned subsidiary of Metallurg Holdings.

6. RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

Effective January 1, 2001, Metallurg adopted Financial Accounting Standards
Board Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities", as amended ("SFAS 133"). As a result of adopting SFAS 133,
Metallurg recognizes all derivatives on the balance sheet at fair value.
Derivatives that are not designated hedges are adjusted to fair value through
income. Changes in the fair value of derivatives that are designated hedges are
either offset against the change in fair value of the hedged firm commitment
through earnings or recognized in other comprehensive income until the hedged
item is recognized in earnings, depending on the nature of the hedge. The
adoption of SFAS 133 did not have a material effect on Metallurg's financial
statements.

7
9
METALLURG, INC. AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS - (CONTINUED)

7. SUPPLEMENTAL GUARANTOR INFORMATION

In November 1997, Metallurg, Inc. issued $100 million principal amount of
its 11% Senior Notes due 2007 (the "Senior Notes"). Under the terms of the
Senior Notes, Shieldalloy, Metallurg Holdings Corporation, Metallurg Services,
Inc., Metallurg International Resources, LLC and MIR (China), Inc.
(collectively, the "Guarantors"), wholly owned subsidiaries of Metallurg, Inc.,
have fully and unconditionally guaranteed on a joint and several basis
Metallurg, Inc.'s obligations to pay principal, premium and interest relative to
the Senior Notes. Management has determined that separate, full financial
statements of the Guarantors would not be material to potential investors and,
accordingly, such financial statements are not provided. Supplemental financial
information of the Guarantors is presented below.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (UNAUDITED)
QUARTER ENDED MARCH 31, 2001
(IN THOUSANDS)

COMBINED COMBINED NON-
METALLURG, GUARANTOR GUARANTOR
INC. SUBSIDIARIES SUBSIDIARIES ELIMINATION CONSOLIDATED
---------- ------------ ------------ ----------- ------------

Total revenue ........................... $ 45,837 $ 110,849 $(20,596) $ 136,090
-------- --------- -------- ---------
Operating costs and expenses:
Cost of sales ......................... 40,275 93,618 (19,859) 114,034
Selling, general and administrative
expenses ............................ $ 1,395 2,857 9,870 -- 14,122
Environmental expense recovery ........ -- (318) -- -- (318)
------- -------- --------- -------- ---------
Total operating costs and expenses .... 1,395 42,814 103,488 (19,859) 127,838
------- -------- --------- -------- ---------
Operating (loss) income ............... (1,395) 3,023 7,361 (737) 8,252

Other income (expense):
Other income, net ..................... -- -- 57 -- 57
Interest expense, net ................. (2,372) (15) (707) -- (3,094)
Equity in earnings of subsidiaries .... 5,695 2,323 -- (8,018) --
------- -------- --------- -------- ---------
Income before income tax
provision and minority interest ..... 1,928 5,331 6,711 (8,755) 5,215
Income tax (benefit) provision .......... (1,060) 1,153 2,202 -- 2,295
------- -------- --------- -------- ---------
Income before minority interest ....... 2,988 4,178 4,509 (8,755) 2,920
Minority interest ....................... -- -- 68 -- 68
------- -------- --------- -------- ---------
Net income ............................ 2,988 4,178 4,577 (8,755) 2,988

Other comprehensive loss:
Foreign currency translation adjustment (2,825) (2,052) (2,825) 4,877 (2,825)
Deferred loss on derivatives .......... (66) -- (66) 66 (66)
------- -------- --------- -------- ---------
Comprehensive income .................. $ 97 $ 2,126 $ 1,686 $ (3,812) $ 97
======= ======== ========= ======== =========

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METALLURG, INC. AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS - (CONTINUED)

7. SUPPLEMENTAL GUARANTOR INFORMATION - (CONTINUED)

CONDENSED CONSOLIDATING BALANCE SHEET AT MARCH 31, 2001 (UNAUDITED)
(IN THOUSANDS)

COMBINED COMBINED
METALLURG, GUARANTOR NON-GUARANTOR
INC. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
--------- ------------ -------------- ------------ ------------

ASSETS
Current Assets:
Cash and cash equivalents ............ $ 19,458 $ 863 $ 14,289 $ (9,521) $ 25,089
Accounts, notes and loans
receivable, net .................... 22,029 26,767 66,908 (39,165) 76,539
Inventories .......................... -- 38,728 58,982 (2,872) 94,838
Other current assets ................. 6,520 3,640 9,499 (7,342) 12,317
--------- --------- --------- --------- --------
Total current assets ............. 48,007 69,998 149,678 (58,900) 208,783
Investments - intergroup ................ 86,324 50,804 -- (137,128) --
Property, plant and equipment, net ...... 826 12,874 45,533 -- 59,233
Other assets ............................ 6,731 17,420 15,538 (20,485) 19,204
--------- --------- --------- --------- --------
Total ............................ $ 141,888 $ 151,096 $ 210,749 $(216,513) $287,220
========= ========= ========= ========= ========

LIABILITIES AND
SHAREHOLDER'S EQUITY
Current Liabilities:
Short-term debt and current portion of
long-term debt ..................... $ 25,647 $ (9,521) $ 16,126
Trade payables ....................... $ 755 $ 32,915 47,641 (39,166) 42,145
Accrued expenses ..................... 5,351 10,527 12,604 -- 28,482
Other current liabilities ............ -- 7,342 2,365 (7,342) 2,365
--------- --------- --------- --------- --------
Total current liabilities ........ 6,106 50,784 88,257 (56,029) 89,118
--------- --------- --------- --------- --------
Long-term Liabilities:
Long-term debt ....................... 100,000 -- 14,323 -- 114,323
Accrued pension liabilities .......... 1,027 147 29,874 -- 31,048
Environmental liabilities, net ....... -- 27,085 2,379 -- 29,464
Other liabilities .................... 18,363 -- 8,520 (20,485) 6,398
--------- --------- --------- --------- --------
Total long-term liabilities ...... 119,390 27,232 55,096 (20,485) 181,233
--------- --------- --------- --------- --------
Total liabilities ................ 125,496 78,016 143,353 (76,514) 270,351
--------- --------- --------- --------- --------

Minority Interest ....................... -- -- 477 -- 477
--------- --------- --------- --------- --------

Shareholder's Equity:
Common stock ......................... 50 1,227 52,181 (53,408) 50
Due from parent company .............. (19,714) -- -- -- (19,714)
Additional paid-in capital ........... 48,214 94,460 11,927 (106,387) 48,214
Accumulated other comprehensive
(loss) income ...................... (9,382) (6,678) 12,353 (5,675) (9,382)
Retained deficit ..................... (2,776) (15,929) (9,542) 25,471 (2,776)
--------- --------- --------- --------- --------
Total shareholder's equity ....... 16,392 73,080 66,919 (139,999) 16,392
--------- --------- --------- --------- --------
Total ............................ $ 141,888 $ 151,096 $ 210,749 $(216,513) $287,220
========= ========= ========= ========= ========

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METALLURG, INC. AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS - (CONTINUED)

7. SUPPLEMENTAL GUARANTOR INFORMATION - (CONTINUED)

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (UNAUDITED)
QUARTER ENDED MARCH 31, 2001
(IN THOUSANDS)

COMBINED COMBINED
METALLURG, GUARANTOR NON-GUARANTOR
INC. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
---------- ------------ ------------ ------------ ------------

CASH FLOWS FROM OPERATING ACTIVITIES ... $ (1,068) $(6,809) $ (3,379) $(11,256)
-------- ------- -------- --------

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and
equipment ......................... (14) (488) (2,044) (2,546)
Proceeds from asset sales ........... -- -- 47 47
Other, net .......................... 28 -- -- 28
-------- ------- -------- --------
Net cash provided by (used in)
investing activities ......... 14 (488) (1,997) (2,471)
-------- ------- -------- --------

CASH FLOWS FROM FINANCING ACTIVITIES:
Intergroup (repayments) borrowings .. (7,667) 6,576 1,091 --
Repayment of long-term debt ......... -- -- (349) (349)
Net short-term borrowings ........... -- -- 5,474 $ 964 6,438
Dividends received (paid) ........... 3,003 -- (3,003) -- --
-------- ------- -------- -------- --------
Net cash (used in) provided by
financing activities........... (4,664) 6,576 3,213 964 6,089
-------- ------- -------- -------- --------

Effects of exchange rate changes on cash
and cash equivalents ................ -- -- (675) -- (675)
-------- ------- -------- -------- --------

Net decrease in cash and cash
equivalents ......................... (5,718) (721) (2,838) 964 (8,313)
Cash and cash equivalents -
beginning of period ................. 25,176 1,584 17,127 (10,485) 33,402
-------- ------- -------- -------- --------
Cash and cash equivalents -
end of period ....................... $ 19,458 $ 863 $ 14,289 $ (9,521) $ 25,089
======== ======= ======== ======== ========

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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

Certain matters discussed under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in this Form 10-Q may
constitute forward-looking statements for purposes of Section 21E of the
Securities Exchange Act of 1934, as amended, and as such may involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance and achievements of Metallurg to be materially different
from future results, performance or achievements expressed or implied by such
forward-looking statements. Factors which may cause Metallurg's results to be
materially different include the cyclical nature of Metallurg's business,
Metallurg's dependence on foreign customers (particularly customers in Europe),
the economic strength of Metallurg's markets generally and particularly the
strength of the demand for aluminum, superalloys, titanium alloys, iron and
steel in those markets, the accuracy of Metallurg's estimates of the costs of
environmental remediation and the extension or expiration of existing
anti-dumping duties.

OVERVIEW

Metallurg is a leading international producer and seller of high-quality
specialty metals, alloys and metallic chemicals which are essential to the
production of high-performance aluminum and titanium alloys, superalloys, steel
and certain non-metallic materials for engineered applications in aerospace,
power supply, automotive, petrochemical processing and telecommunications. The
industries that Metallurg supplies are cyclical.

Steady growth in the aluminum industry continued throughout most of the
world in 2000. In 2001, the industry has continued at high levels of production
except in the U.S., where increased energy costs and weaker economic conditions
have led to substantial production curtailments, particularly in the Pacific
Northwest. As a result, demand for Metallurg's products in the U.S. has been
subdued, but has continued firm and steady elsewhere. During the quarter,
Metallurg announced a rationalization of its aluminum master alloys and grain
refiner production activities in order to better utilize the capabilities of its
various plants and better serve customers in this competitive and increasingly
global marketplace. Melting operations will be discontinued at Shieldalloy's
Newfield facility and transferred to the company's operations in the U.K.,
Norway and Brazil.

Growth in the superalloy industry remained strong during the first quarter
of 2001, as Metallurg's customers continued to meet heavy U.S. demand for power
generation equipment. The positive trend in demand for aerospace material, which
began in 2000, has continued during the current period, resulting in healthy
demand for Metallurg's chromium and high-purity niobium products.

U.S. steel production picked up a little during the first quarter of 2001,
but only from the very low levels seen at the beginning of the year. In most
other parts of the world, steel production has remained at reasonable levels,
unchanged since the latter part of last year, with oil and gas pipeline plate
production even tending to increase. Ferrovanadium demand in the U.S. was
generally subdued; prices rose modestly over the quarter in response to
curtailed production by vanadium producers in both Europe and the U.S.

During 2000, demand for electronic components containing tantalum increased
sharply, which impacted the price of all tantalum materials as the year
progressed. Metallurg benefited, particularly in the last six months, in its
various tantalum operations from the consequent strengthening of its tantalum
product prices. Although prices have declined in 2001, Metallurg's products
continue to be priced at higher levels than prevailed prior to the price rise of
last year.

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RESULTS OF OPERATIONS - THE QUARTER ENDED MARCH 31, 2001 COMPARED TO THE QUARTER
ENDED APRIL 30, 2000

Metallurg operates in one significant industry segment, the manufacture and
sale of performance-enhancing additives mainly for the metallurgical industry.
Metallurg is organized around its major production facilities in the U.S., the
U.K., Germany and Brazil, which are supported by an established worldwide sales
network. In addition to its own products, Metallurg distributes products
manufactured by third parties. This is a natural complement to Metallurg's
manufacturing operations and leverages its global sales staff by providing a
broader product offering to existing customers without incurring significant
additional overhead.

INTERSEGMENT CONSOLIDATED
SHIELDALLOY LSM GfE EWW CIF OTHER ELIMINATIONS TOTALS
-------- -------- -------- ------- -------- -------- ------------ ------------

QUARTER ENDED
MARCH 31, 2001
Total revenue ......... $ 26,475 $ 44,110 $ 27,731 $10,188 $ 10,180 $ 50,038 $(32,632) $ 136,090
Gross profit .......... 1,017 3,756 5,454 2,700 2,090 7,776 (737) 22,056
SG&A .................. 2,345 2,764 3,834 556 466 4,143 14 14,122
Operating (loss) income (1,180) 817 1,620 2,144 1,624 3,964 (737) 8,252
Interest (expense)
income, net ....... -- (347) (297) 62 (166) (2,346) -- (3,094)
Income tax (benefit)
provision ......... (425) 147 550 705 188 1,130 -- 2,295
Net (loss) income ..... (755) 389 815 1,501 1,270 6,200 (6,432) 2,988

QUARTER ENDED
APRIL 30, 2000
Total revenue ......... $ 28,035 $ 43,267 $ 24,198 $ 9,041 $ 6,723 $ 40,857 $(27,046) $ 125,075
Gross profit .......... 2,468 4,999 3,357 1,059 861 3,767 240 16,751
SG&A .................. 2,140 2,755 3,603 621 372 4,262 (41) 13,712
Operating income (loss) 908 2,075 (246) 438 489 (115) 240 3,789
Interest income
(expense), net ... 292 (80) (303) 5 (28) (2,458) -- (2,572)
Income tax provision .. 492 641 123 196 4 160 -- 1,616
Net income (loss) ..... 708 1,349 (643) 247 457 143 (2,616) (355)

Total Revenue

Consolidated total revenue increased by $11.0 million (9%) in the first
quarter of 2001 as compared to the first quarter of 2000. Shieldalloy revenue
was $1.6 million (6%) below the first quarter of 2000. Increased sales volume of
chrome products was more than offset by lower sales volume and prices of
vanadium, aluminum and niobium products. LSM revenue was $0.8 million (2%) above
the first quarter of 2000. An increase in sales of aluminum products was due
primarily to the acquisition of Hydelko on March 31, 2000 and higher sales of
compacted products. GfE revenue was $3.5 million (15%) above the first quarter
of 2000 due primarily to increased sales volume and selling prices of specialty
coating materials and alloys for the titanium industry. CIF revenue was $3.5
million (51%) above the first quarter of 2000 due primarily to increased selling
prices of tantalum products. Increased revenue at EWW and from distribution
activities included in "Other" above was primarily the result of increased
volume and/or selling prices of tantalum-containing products.

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14
Gross Profit

Gross profit increased to $22.1 million (16.2% of total revenue) in the
quarter ended March 31, 2001 from $16.8 million (13.4% of total revenue) in the
quarter ended April 30, 2000, an increase of 32%. Improved profitability in
tantalum-containing products and specialty coating materials was offset somewhat
by reduced profitability of ferrovanadium, ferrotitanium and aluminum products.

Selling, General and Administrative Expenses ("SG&A")

SG&A increased slightly to $14.1 million in the quarter ended March 31, 2001
from $13.7 million in the quarter ended April 30, 2000. For the quarter ended
March 31, 2001, SG&A represented 10.4% of total revenue compared to 11.0% for
the quarter ended April 30, 2000.

Operating Income

Operating income increased to $8.3 million in the quarter ended March 31,
2001 from $3.8 million in the quarter ended April 30, 2000, due primarily to the
increase in gross profit, discussed above. In addition, Shieldalloy recognized
an environmental expense recovery of $0.3 million in the quarter ended March 31,
2001 compared to $0.8 million in the quarter ended April 30, 2000 upon
settlements with insurance companies relating to disputed coverage for old
environmental claims.

Interest Expense, Net

Interest expense, net, is as follows (in thousands):

QUARTER ENDED
-------------------
MARCH 31, APRIL 30,
2001 2000
------- -------

Interest income ........ $ 542 $ 780
Interest expense ....... (3,636) (3,352)
------- -------
Interest expense, net $(3,094) $(2,572)
======= =======

Income Tax Provision, Net

Income tax provision, net of tax benefits, is as follows (in thousands):

QUARTER ENDED
---------------------
MARCH 31, APRIL 30,
2001 2000
------ ------

Total current .......... $1,308 $1,044
Total deferred ......... 987 572
------ ------
Income tax provision,
net ............... $2,295 $1,616
====== ======

The difference between the statutory federal income tax rate and Metallurg's
effective rate for the quarter ended March 31, 2001 is principally due to: (i)
losses in certain foreign jurisdictions for which the related deferred tax was
offset by a valuation allowance; (ii) the deferred tax effects of certain tax
assets, primarily foreign net operating losses, for which the benefit had been
previously recognized of $0.5 million in the quarter ended March 31, 2001; and
(iii) the deferred tax effects of certain deferred tax assets for which a
corresponding credit has been recorded to "Additional paid-in capital", of $0.5
million in the quarter ended March 31, 2001. The deferred tax expenses referred
to in items (ii) and (iii) above will not result in cash payments in future
periods.

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Net Income

Net income was $3.0 million in the quarter ended March 31, 2001 compared to
a loss of $0.4 million for the quarter ended April 30, 2000. The improvement in
2001 resulted primarily from increased gross margins, discussed above.

LIQUIDITY AND FINANCIAL RESOURCES

General

Metallurg's sources of liquidity include cash and cash equivalents, cash
from operations and amounts available under credit facilities. At March 31,
2001, Metallurg had $25.1 million in cash and cash equivalents. Metallurg
believes that these sources are sufficient to fund current and anticipated
future requirements through the next twelve months.

At March 31, 2001, Metallurg had working capital of $119.7 million, as
compared to $120.9 million at December 31, 2000. For the first quarter of 2001,
Metallurg's use of $11.3 million in cash for operations resulted primarily from
the increase in trade receivables and inventory.

Credit Facilities and Other Financing Arrangements

Metallurg has a credit facility with certain financial institutions led by
Fleet National Bank as agent (the "Revolving Credit Facility") which provides
Metallurg, Inc., Shieldalloy and certain of their subsidiaries with up to $50.0
million of financing resources, including a German subfacility (as discussed
below). Interest is charged at a rate per annum equal to (i) LIBOR plus 2.0% -
2.5% or (ii) Prime plus up to 1%, based on the performance of Metallurg, Inc.
and certain of its subsidiaries. The Revolving Credit Facility permits
borrowings of up to $50.0 million for working capital requirements and general
corporate purposes, up to $35.0 million of which may be used for letters of
credit in the U.S. As part of the Revolving Credit Facility, Fleet National
Bank, through its London office, makes available up to DM 20.5 million ($9.2
million) of financing to GfE, which is guaranteed by Metallurg, Inc. and the
other U.S. borrowers under the Revolving Credit Facility. At March 31, 2001,
$0.9 million of loans were outstanding in Germany and $24.4 million of letters
of credit were outstanding in the U.S.

LSM has negotiated to extend and restructure its revolving credit facilities
and term loans with Barclays Bank plc ("Barclays") and HSBC Bank plc ("HSBC").
The agreements with Barclays, signed on April 30, 2001, provide LSM with several
borrowing facilities. Overdraft facilities provide LSM with up to L5.0 million
($7.1 million) of borrowings, up to L3.3 million ($4.7 million) of foreign
exchange exposure and up to L2.3 million ($3.3 million) for other ancillary
banking arrangements, including bank guarantees. Borrowings under this facility
are payable on demand. Outstanding loans under this facility bear interest at a
rate of 1.0% over the lender's base rate. A revolving term loan facility
provides for borrowings up to L3.0 million ($4.2 million) at an interest rate of
LIBOR plus 0.75%. LSM is required to pay a fee of 0.375% per annum on the unused
portion of the facility, which expires on April 30, 2004. A second revolving
term loan facility also provides for borrowings up to L3.0 million ($4.2
million) at an interest rate of LIBOR plus 0.90%. A fee of 0.45% per annum is
required on the unused portion of this facility, which expires on April 30,
2006. These term loan facilities require LSM to comply with various covenants,
including the maintenance of minimum net worth and interest coverage. LSM
expects to finalize similar facilities with HSBC during the second quarter.

In addition, certain foreign subsidiaries of Metallurg have credit facility
arrangements with local banking institutions to provide funds for working
capital and general corporate purposes. These local credit facilities contain
restrictions that vary from company to company. At March 31, 2001, there were
$13.9 million of outstanding loans under these local credit facilities.

CAPITAL EXPENDITURES

Metallurg invested $2.5 million in capital expenditures during the first
quarter of 2001. Capital expenditures are expected to total approximately $20
million in 2001. Although Metallurg has budgeted these items in 2001, Metallurg
has not committed to complete all of these projects during that period, as some
commitments remain contingent on senior management approval and other
conditions. Metallurg believes that these projects will be funded through
existing and future internally generated cash and local credit lines.

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ENVIRONMENTAL REMEDIATION COSTS

Losses associated with environmental remediation obligations are accrued
when such losses are deemed probable and reasonably estimable. Such accruals
generally are recognized no later than the completion of the remedial
feasibility study and are adjusted as further information develops or
circumstances change. Costs of future expenditures for environmental remediation
obligations are generally not discounted to their present value. During the
first quarter of 2001, Metallurg expended $0.5 million for environmental
remediation activities which had been previously accrued for.

In 1997, Shieldalloy entered into settlement agreements with various
environmental regulatory authorities with regard to all of the significant
environmental remediation liabilities of which it is aware. Pursuant to these
agreements, Shieldalloy has agreed to perform environmental remediation and, as
of March 31, 2001, had an accrual of $32.1 million for the remaining estimated
cost of completion. Of this amount, $4.5 million is expected to be expended in
the last three quarters of 2001, $5.4 million in 2002 and $2.3 million in 2003.
In addition, Metallurg has accruals of $3.0 million for estimated expenditures
with respect to environmental remediation at its foreign facilities. Of this
amount, $0.6 million is expected to be expended over the next three years.

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ITEM 3 -- QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK

Refer to the Market Risk section of Management's Discussion and Analysis of
Financial Condition and Results of Operations included in Metallurg's annual
report on Form 10-K for the year ended December 31, 2000, which is incorporated
by reference herein.

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PART II -- OTHER INFORMATION

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

(a) EXHIBITS

None

(b) REPORTS ON FORM 8-K

None

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on May 14, 2001 on its
behalf by the undersigned thereunto duly authorized.

METALLURG, INC.
By: /s/ Barry C. Nuss
--------------------
Barry C. Nuss
Vice President, Finance and Chief
Financial Officer