On the Road: 5N Plus

 

The unique economic, geopolitical and commercial developments that disrupted businesses and capital markets in the opening months of 2025 reignited debates about the structure and direction of the Canadian economy. With the future degree of economic integration with the United States in question, Canadians have become reflective about many aspects of the trading relationship between the two countries.

A common complaint among Canadians is the extent to which Canada exports its natural resources for processing, only to import the value-added products back at a higher cost. This phenomenon is evident in the energy, minerals, and forestry industries, for example.

Therefore, it is refreshing to have the opportunity to highlight a Pembroke investment that bucks this trend. 5N Plus (VNP) is a Montreal-based producer of specialty semiconductors and performance materials. These ultra-pure products are critical components in the offerings of VNP’s customers, and quality specifications are stringently adhered to. In fact, the name “5N Plus” refers to purity levels greater than 99.999%.

The company is a key supplier to several strategically important industries, including solar, space, security, pharmaceuticals and medical imaging.

EXTENSIVE TECHNICAL EXPERTISE

5N Plus’s technical expertise has been developed over several decades and provides a strong barrier to entry. The company was founded in 2000 by a group of employees who engineered a management buyout of materials processing operations from Noranda—a major Canadian mining society with a history spanning back to 1922.

Since then, VNP has developed a combination of physical and chemical purification techniques to transform waste from mining and smelting operations into ultra-high-purity metals. The intellectual property and trade secrets resulting from this specialized work cannot easily or quickly be replicated.

In addition, a board member took over as full-time CEO in 2022. He then proceeded to successfully transformed the company’s focus from low-margin commodity trading, capturing more of the downstream manufacturing and engineering value chain, and strengthening relationships with end customers.

OPERATIONAL PROFICIENCY

We had the opportunity to visit the 5N Plus facility in Saint-Laurent, Quebec, in both mid-2023 and early-2025. These visits further strengthened our belief that the combination of talent, institutional knowledge and specialized equipment involved in the company’s operations is irreplaceable. This, in turn, bolstered our confidence in the company’s market share, pricing power and overall business quality.

It became abundantly clear that, although this is material science, the company’s expertise is also an art, given the variability of the raw materials and the number of steps involved. 5N Plus’s domestic operations demonstrate that Canadian companies can be successful value-added processors, sourcing feedstock worldwide and transforming it into high-value intermediate goods.

CURRENT CONTEXT AND OUTLOOK

Early in 2025, tariff uncertainty swirled around all international businesses, causing volatility in VNP’s shares. Although the policy headlines were disconcerting at times, we believe that 5N Plus will navigate this environment successfully, for several reasons.

First, the long-term demand for terrestrial and space-based solar products remains very strong. Second, 5N Plus’s products account for only a small percentage of its end customers’ overall project costs, meaning demand is largely inelastic. Third, high tariffs imposed on the Chinese solar industry benefit 5N Plus by restricting supply from potential overseas competitors.

We are encouraged by the fact that domestic companies with unique talent, facilities and intellectual property can thrive on the global stage, despite ever-changing narratives on trade policies.

 

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