<PAGE>


                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 September 30, 2003

                                       OR

[ ]      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 offices)             including area code)


      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 is an accelerated filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes [ ] No [X]

      The number of shares of common stock, $0.01 par value, issued and
outstanding as of November 10, 2003 was 5,000,000.




<PAGE>



                  METALLURG, INC. AND CONSOLIDATED SUBSIDIARIES

                                      INDEX


<TABLE>
<CAPTION>
                                                                                                                 Page No.
                                                                                                                 --------

Part I.    FINANCIAL INFORMATION:

           Item 1 - Financial Statements (Unaudited)
<S>                                                                                                              <C>
                    Condensed Statements of Consolidated Operations for the Quarters and the Three
                    Quarters Ended September 30, 2003 and 2002......................................................2

                    Condensed Consolidated Balance Sheets at September 30, 2003 and
                    December 31, 2002...............................................................................3

                    Condensed Statements of Consolidated Cash Flows for the Three Quarters Ended
                    September 30, 2003 and 2002.....................................................................4

                    Notes to Condensed Unaudited Consolidated Financial Statements...............................5-13

           Item 2 - Management's Discussion and Analysis of Financial Condition and Results
                    of Operations...............................................................................14-22

           Item 3 - Quantitative and Qualitative Disclosure of Market Risk.........................................23

           Item 4 - Controls and Procedures........................................................................23


Part II.   OTHER INFORMATION:

           Item 6 - Exhibits and Reports on Form 8-K...............................................................23

           Signature Page..........................................................................................24
</TABLE>

                                       1




<PAGE>



                         PART I - FINANCIAL INFORMATION

                          ITEM 1 - FINANCIAL STATEMENTS

                  METALLURG, INC. AND CONSOLIDATED SUBSIDIARIES

           CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED)
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                   Quarters Ended                Three Quarters Ended
                                                                    September 30,                    September 30,
                                                             --------------------------       ---------------------------
                                                               2003              2002           2003              2002
                                                             --------          --------       --------         ---------
<S>                                                           <C>               <C>           <C>               <C>
Sales ...................................................     $83,647           $84,389       $250,296          $236,578
Commission income .......................................         131               177            423               538
                                                             --------          --------       --------         ---------
   Total revenue ........................................      83,778            84,566        250,719           237,116
                                                             --------          --------       --------         ---------
Operating costs and expenses:
   Cost of sales ........................................      78,040            75,839        227,438           215,304
   Selling, general and administrative expenses .........       8,370             7,660         25,696            25,755
   Environmental expense recovery .......................           -                 -              -            (3,000)
   Restructuring charges and asset impairment ...........       2,659               990          2,659             2,488
                                                             --------          --------       --------         ---------
   Total operating costs and expenses ...................      89,069            84,489        255,793           240,547
                                                             --------          --------       --------         ---------
   Operating (loss) income ..............................      (5,291)               77         (5,074)           (3,431)
Other income (expense):
   Other (expense) income, net ..........................         (87)               63             (7)              181
   Interest expense, net ................................      (3,328)           (3,491)       (10,050)          (10,146)
                                                             --------          --------       --------         ---------
   Loss before income tax (benefit) provision and
     minority interest ..................................      (8,706)           (3,351)       (15,131)          (13,396)
Income tax (benefit) provision ..........................        (902)              736           (322)              767
                                                             --------          --------       --------         ---------
   Loss before minority interest ........................      (7,804)           (4,087)       (14,809)          (14,163)
Minority interest .......................................          (9)              (60)           (57)              (81)
                                                             --------          --------       --------         ---------
   Net loss .............................................      (7,813)           (4,147)       (14,866)          (14,244)
Other comprehensive income (loss):
   Foreign currency translation adjustment ..............         487               759          1,773             3,259
   Deferred loss on derivatives, net ....................        (436)             (215)          (397)             (291)
                                                             --------          --------       --------         ---------
   Comprehensive loss ...................................    $ (7,762)         $ (3,603)      $(13,490)        $ (11,276)
                                                             ========          ========       ========         =========
</TABLE>

       See notes to condensed unaudited consolidated financial statements.

                                       2




<PAGE>



                  METALLURG, INC. AND CONSOLIDATED SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                 September 30,        December 31,
                                                                      2003                2002
                                                                    --------            --------
                                                                  (Unaudited)
<S>                                                                 <C>                 <C>
ASSETS
Current Assets:
   Cash and cash equivalents ..................................     $ 25,633            $ 24,251
   Accounts receivable, net ...................................       47,079              46,200
   Inventories ................................................       56,155              56,556
   Prepaid expenses and other current assets ..................        9,800               8,728
                                                                    --------            --------
     Total current assets .....................................      138,667             135,735
Property, plant and equipment, net ............................       58,744              63,217
Other assets ..................................................       25,193              23,097
                                                                    --------            --------
     Total ....................................................     $222,604            $222,049
                                                                    ========            ========

LIABILITIES AND SHAREHOLDER'S DEFICIT
Current Liabilities:
   Short-term debt and current portion of long-term debt ......     $  9,770            $  5,673
   Accounts payable ...........................................       34,923              38,937
   Accrued expenses ...........................................       15,945              16,316
   Other current liabilities ..................................        2,022               1,599
                                                                    --------            --------
     Total current liabilities ................................       62,660              62,525
                                                                    --------            --------

Long-term Liabilities:
   Long-term debt .............................................      121,290             120,573
   Accrued pension liabilities ................................       39,371              36,641
   Environmental liabilities, net .............................       24,165              23,938
   Other liabilities ..........................................          983                 947
                                                                    --------            --------
     Total long-term liabilities ..............................      185,809             182,099
                                                                    --------            --------

     Total liabilities ........................................      248,469             244,624
                                                                    --------            --------

Minority Interest .............................................          517                 462
                                                                    --------            --------

Shareholder's Deficit:
   Common stock ...............................................           50                  50
   Due from parent company ....................................      (21,715)            (21,715)
   Additional paid-in capital .................................       67,469              57,324
   Accumulated other comprehensive loss .......................      (36,306)            (37,682)
   Retained deficit ...........................................      (35,880)            (21,014)
                                                                    --------            --------
     Total shareholder's deficit ..............................      (26,382)            (23,037)
                                                                    --------            --------

     Total ....................................................     $222,604            $222,049
                                                                    ========            ========
</TABLE>

       See notes to condensed unaudited consolidated financial statements.

                                       3




<PAGE>



                  METALLURG, INC. AND CONSOLIDATED SUBSIDIARIES

           CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                                  Three Quarters Ended
                                                                                                      September 30,
                                                                                                -------------------------
                                                                                                  2003             2002
                                                                                                --------         --------
<S>                                                                                             <C>              <C>
Cash Flows from Operating Activities:
Net loss ....................................................................................   $(14,866)        $(14,244)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
   Depreciation and amortization ............................................................      6,089            5,670
   Deferred income taxes ....................................................................     (1,399)             (58)
   Restructuring charges and asset impairment ...............................................      2,659            2,488
   Change in operating assets and liabilities:
    Decrease in accounts receivable .........................................................        999            2,784
    Decrease in inventories .................................................................      2,092            8,825
    (Increase) decrease in other current assets .............................................     (1,342)             205
    (Decrease) increase in accounts payable and accrued expenses ............................     (4,200)           1,144
    Environmental payments ..................................................................     (1,686)          (1,823)
    Restructuring payments ..................................................................     (1,060)          (1,406)
    Other assets and liabilities, net .......................................................      1,325              511
                                                                                                --------         --------
      Net cash (used in) provided by operating activities ...................................    (11,389)           4,096
                                                                                                --------         --------

Cash Flows from Investing Activities:
Additions to property, plant and equipment ..................................................     (2,515)          (9,684)
Repayments of loans by former subsidiary ....................................................      1,000            4,000
Other, net ..................................................................................        198             (217)
                                                                                                --------         --------
      Net cash used in investing activities .................................................     (1,317)          (5,901)
                                                                                                --------         --------

Cash Flows from Financing Activities:
Long-term borrowings (repayments), net ......................................................          3              (37)
Short-term borrowings (repayments), net .....................................................      3,744             (702)
Capital contributions .......................................................................     10,000            2,976
                                                                                                --------         --------
      Net cash provided by financing activities .............................................     13,747            2,237
                                                                                                --------         --------

Effects of exchange rate changes on cash and cash equivalents ...............................        341              476
                                                                                                --------         --------

Net increase in cash and cash equivalents ...................................................      1,382              908
Cash and cash equivalents - beginning of period .............................................     24,251           22,648
                                                                                                --------         --------
Cash and cash equivalents - end of period ...................................................   $ 25,633         $ 23,556
                                                                                                ========         ========
</TABLE>

       See notes to condensed unaudited consolidated financial statements.

                                       4



<PAGE>


                  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,
these financial statements 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, 2002 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. These financial statements should be read in conjunction with
the audited consolidated financial statements included in Metallurg's annual
report on Form 10-K for the year ended December 31, 2002.

      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.

      Effective September 30, 2003, Metallurg, Inc. and its wholly owned
subsidiary, Metallurg Holdings Corporation, sold all of its ownership interests
in its Weisweiler, Germany manufacturing facility and its Turkish chrome ore
mines. (See "Note 3. Change in Reporting Entity"). As the above transactions
were between members of a common controlled group, as defined for accounting
purposes, they are accounted for on an historical basis with no gain or loss
being recorded, and the results presented herein have been restated to exclude
the financial results of the companies sold and to reflect the new reporting
entity. The financial statements for all prior periods have also been restated
to exclude certain subsidiaries sold at December 31, 2002. See "Note 2. Change
in Reporting Entity" to Metallurg's annual report on Form 10-K for the year
ended December 31, 2002.

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.K., the U.S. and Brazil, which are supported by an established worldwide sales
network. In addition to its own products, Metallurg distributes complementary
products manufactured by third parties.

Reportable Segments

      London & Scandinavian Metallurgical Co Limited and its subsidiaries
(collectively, "LSM") - This unit is comprised mainly of three production
facilities in the U.K. and another in Norway which manufactures and sells
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.

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

      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 ores
containing tantalum and niobium that are processed, along with other raw
materials, into metal oxides at the Sao Joao del Rei plant.



                                       5




<PAGE>

                  METALLURG, INC. AND CONSOLIDATED SUBSIDIARIES

                    NOTES TO CONDENSED UNAUDITED CONSOLIDATED
                       FINANCIAL STATEMENTS - (Continued)

2. Segments and Related Information - (Continued)

      In addition to their manufacturing operations, LSM and SMC 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 for
determining reportable segments. Metallurg does not allocate general corporate
overhead expenses to operating segments. The accounting policies of the segments
are the same as those for the consolidated group. Transactions among segments
are established based on negotiation among the parties.

<TABLE>
<CAPTION>

                                                                                     Intersegment  Consolidated
                                        LSM         SMC         CIF        Other     Eliminations    Totals
                                     ----------- ----------- ----------- ----------- ------------- ------------

<S>                                     <C>        <C>           <C>        <C>          <C>           <C>
Quarter Ended
   September 30, 2003
Revenue from external customers....     $32,456     $23,630      $5,860     $21,832                    $83,778
Intergroup revenue.................       6,875         827       3,838       1,290      $(12,830)           -
Income tax (benefit) provision ....        (860)       (290)          -         248             -         (902)
Net loss...........................      (2,248)     (1,279)        (67)    (12,197)        7,978       (7,813)

Quarter Ended
   September 30, 2002
Revenue from external customers....     $37,976     $20,805      $4,781     $21,004                    $84,566
Intergroup revenue.................       6,707       1,518       3,635         431      $(12,291)           -
Income tax provision (benefit).....         110      (1,369)          -       1,995             -          736
Net income (loss) .................         175        (369)        497        (453)       (3,997)      (4,147)


Three Quarters Ended
   September 30, 2003
Revenue from external customers....    $106,252     $69,531     $13,487     $61,449                   $250,719
Intergroup revenue.................      20,484       2,451      11,054       2,317      $(36,306)           -
Income tax (benefit) provision.....        (709)     (1,050)          -       1,437             -         (322)
Net loss...........................      (2,060)     (1,628)       (109)    (15,892)        4,823      (14,866)

Three Quarters Ended
   September 30, 2002
Revenue from external customers....     $97,662     $65,600     $13,570     $60,284                   $237,116
Intergroup revenue.................      20,921       4,018      11,536       1,933      $(38,408)           -
Income tax (benefit) provision.....        (481)     (3,066)         47       4,267             -          767
Net (loss) income..................      (1,427)     (2,104)      1,046      (8,281)       (3,478)     (14,244)
</TABLE>



                                       6





<PAGE>


                  METALLURG, INC. AND CONSOLIDATED SUBSIDIARIES

                    NOTES TO CONDENSED UNAUDITED CONSOLIDATED
                       FINANCIAL STATEMENTS - (Continued)

3. Change in Reporting Entity

         Effective September 30, 2003, Metallurg completed the sale of certain
subsidiaries as described below. As these transactions were between members of a
common controlled group, as defined for accounting purposes, Metallurg has
restated its financial statements for all periods to reflect a new reporting
entity that excludes these subsidiaries. As a result, there is no gain or loss
recorded and any proceeds received have been recorded as capital contributions
from members of the common controlled group.

         Metallurg, Inc. and its wholly owned subsidiary, Metallurg Holdings
Corporation, sold all of its interests in (a) Elektrowerk Weisweiler GmbH
("EWW"), a German corporation engaged in the manufacture of low carbon
ferrochrome; and (b) Turk Maadin Sirketi A.S. ("TMS"), a Turkish corporation
engaged in the mining of chrome ore.

         The shares and assets of EWW and TMS were sold to, and certain
liabilities assumed by, LAGO Vierundzwanzigste GmbH ("LAGO"), a German company,
for an aggregate purchase price of $10,000,000 in cash. The net book value of
the entities sold was $12,612,000 at September 30, 2003. Revenue and net income
(loss) for the three quarters ended September 30, 2003 were $27,887,000 and
$106,000, respectively, for EWW and $2,942,000 and $(324,000), respectively, for
TMS.

LAGO is a wholly owned subsidiary of Sudamin Recycling GmbH & Co. KG
("Sudamin"), a German company. At September 30, 2003, Sudamin was an affiliate
of Safeguard International Fund, L.P., the majority owner of Metallurg's parent,
Metallurg Holdings, Inc. Dr. Heinz C. Schimmelbusch and Mr. Arthur Spector, both
of whom are directors and officers of Metallurg, were also directors of Sudamin
through the transaction date of September 30, 2003.

4. Restructuring Charges and Asset Impairment

      As a result of continuing weakness in operating performance, LSM announced
on September 1, 2003 its intention to implement a restructuring plan designed to
streamline production, improve productivity and reduce costs. Due to a
significant deterioration in its metal catalyst business, LSM determined that
certain of its plant assets were impaired because recovery of the net book
values from projected future undiscounted cash flows could no longer be
expected. In the third quarter of 2003, LSM recognized a $2,256,000 ($1,579,000
after-tax) non-cash impairment loss, which reduced the carrying value of these
assets to nil. Plant operations will cease in the fourth quarter of 2003 and the
plant assets will be abandoned. LSM expects to incur additional restructuring
charges in the fourth quarter of 2003, relating to workforce reductions upon
finalization of an overall restructuring plan.

      In the third quarter of 2003, a plan was implemented to consolidate sales
and administrative functions performed by Metallurg's Canadian operations into
the New Jersey operations of SMC. As a result of this plan, Metallurg recognized
a pre-tax restructuring charge of $403,000, consisting of employee separation
costs. Metallurg will incur additional costs of approximately $75,000 (primarily
lease termination costs and professional fees) until activities cease completely
in the first quarter of 2004.


                                       7






<PAGE>


                  METALLURG, INC. AND CONSOLIDATED SUBSIDIARIES

                    NOTES TO CONDENSED UNAUDITED CONSOLIDATED
                       FINANCIAL STATEMENTS - (Continued)

5. Stock-Based Compensation

      Metallurg accounts for its stock-based compensation plan using the
intrinsic value method in accordance with Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" and related interpretations.
Accordingly, no compensation cost is reflected in net income, as all options
granted under this plan had an exercise price at least equal to the estimated
market value of the underlying common stock on the date of grant. The following
table illustrates the effect on net income if Metallurg had applied the fair
value measurement and recognition methods prescribed by Statement of Financial
Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation"
to record expense for stock option compensation (in thousands):

<TABLE>
<CAPTION>

                                                             Three Quarters Ended
                                                                 September 30,
                                                          ---------------------------
                                                            2003              2002
                                                          --------          --------
<S>                                                      <C>               <C>
 Net loss, as reported..........................          $(14,866)         $(14,244)
 Less: compensation expense for option awards
   determined by the fair value based method,
   net of related tax effects ..................                29               197
                                                          --------          --------
      Pro forma net loss.........................         $(14,895)         $(14,441)
                                                          ========          ========
</TABLE>

6. Inventories

      Inventories consist of the following (in thousands):

<TABLE>
<CAPTION>

                                                        September 30,         December 31,
                                                            2003                  2002
                                                        -------------         ------------
<S>                                                        <C>                   <C>
Raw materials...................................           $10,189               $9,994
Work in process.................................               651                  901
Finished goods..................................            43,888               44,157
Other...........................................             1,427                1,504
                                                           -------              -------
     Total......................................           $56,155              $56,556
                                                           =======              =======
</TABLE>

7. Borrowings

      On September 30, 2003, Metallurg received $10.0 million cash upon the sale
of EWW and TMS. Metallurg believes it will have sufficient resources to fund the
current and anticipated future requirements of debt service, working capital,
capital expenditures, pension benefits and environmental expenditures for the
next twelve months.

      In September 2003, LSM received a waiver from Barclays Bank plc regarding
the minimum interest coverage ratio covenant on its revolving term loans for the
period ended September 30, 2003. As LSM anticipates that it would not be in
compliance with the existing covenant at December 31, 2003, it is currently in
discussions with its lenders to restructure its facilities prior to that date,
thereby extending the terms of the loans due in 2004 and adjusting the financial
covenants. Metallurg believes that it will complete the restructuring of these
facilities prior to December 31, 2003.

      See "Note 8. Borrowings" to Metallurg's annual report on Form 10-K for the
year ended December 31, 2002.

      Metallurg Holdings, Metallurg, Inc.'s parent, does not have sufficient
cash on hand to make its interest payment due in January 2004 on its Senior
Discount Notes. While Metallurg, Inc. is permitted under the terms of its Senior
Notes indenture to distribute cash to Metallurg Holdings for the purpose of
making the January 2004 interest payment, Metallurg, Inc. could be prohibited
from making cash distributions at such time under the restrictive covenants of
its revolving credit facility. All of Metallurg, Inc.'s outstanding common stock
has been pledged as collateral for Metallurg Holdings' obligations under the
Senior Discount Notes. If Metallurg Holdings were unable to make its interest
payment when due, it could lead to a foreclosure on its assets, principally the
equity of Metallurg, Inc., and create a default under the terms of Metallurg,
Inc.'s Senior Notes indenture.

                                       8





<PAGE>


                  METALLURG, INC. AND CONSOLIDATED SUBSIDIARIES

                    NOTES TO CONDENSED UNAUDITED CONSOLIDATED
                       FINANCIAL STATEMENTS - (Continued)

8. Contingent Liabilities

      Metallurg defends, from time to time, 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 matters 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 future litigation or proceedings will
not result in an adverse judgment against Metallurg that could have a material
adverse effect on Metallurg's future results of operations or cash flows.

9. Environmental Expense Recovery

      SMC realized an environmental expense recovery of $3,000,000 in 2002 upon
receipt of a settlement with an insurance company relating to coverage for
certain environmental claims.

10. Earnings Per Share

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

11. Recent Accounting Pronouncements

      Effective January 1, 2003, Metallurg adopted SFAS No. 143, "Accounting for
Asset Retirement Obligations". This statement covers all legally enforceable
obligations associated with the retirement of tangible long-lived assets and
provides the accounting and reporting requirements for such obligations. The
adoption of SFAS No. 143 did not have a material impact on Metallurg's
consolidated financial statements.

      Effective January 1, 2003, Metallurg adopted SFAS No. 146, "Accounting for
Costs Associated with Exit or Disposal Activities". This statement nullifies
Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity", under which
a liability for an exit cost was recognized at the date of an entity's
commitment to an exit plan. SFAS No. 146 requires that a liability for a cost
associated with an exit or disposal activity be recognized at fair value only
once the liability is incurred. The adoption of SFAS No. 146 did not have a
material impact on Metallurg's consolidated financial statements.

      In April 2003, SFAS No. 149, "Amendment of Statement 133 on Derivative
Instruments and Hedging Activities" was issued. The standard amends and
clarifies financial reporting for derivative instruments and for hedging
activities accounted for under SFAS No. 133 and is effective for contracts
entered into or modified, and for hedges designated, after June 30, 2003.
Adoption of SFAS No. 149 did not have a material impact on Metallurg's
consolidated financial statements.

      In November 2002, the Financial Accounting Standards Board ("FASB") issued
Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others" ("FIN 45").
FIN 45 requires the initial recognition and initial measurement, on a
prospective basis only, of guarantees issued or modified after December 31,
2002. Additionally, certain disclosure requirements are effective for financial
statements ending after December 15, 2002. The adoption of FIN 45 did not have a
material impact on Metallurg's consolidated financial statements.

      In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities" ("FIN 46"), which changes the criteria for including
certain non-controlled affiliates, defined as variable interest entities
("VIE"), in a company's consolidated financial statements. FIN 46 requires
consolidation of a VIE if the company is subject to a majority of the risk of
loss or entitled to receive a majority of the residual returns of the VIE.
Metallurg does not expect its non-controlled affiliates to require consolidation
under FIN 46.



                                       9







<PAGE>


                  METALLURG, INC. AND CONSOLIDATED SUBSIDIARIES

                    NOTES TO CONDENSED UNAUDITED CONSOLIDATED
                       FINANCIAL STATEMENTS - (Continued)

12.  Supplemental Guarantor Information

      In November 1997, Metallurg, Inc. issued $100 million principal amount of
its Senior Notes. Under the terms of the Senior Notes, SMC, 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 September 30, 2003
                                 (In thousands)


<TABLE>
<CAPTION>
                                                            Combined      Combined
                                              Metallurg,   Guarantor    Non-Guarantor
                                                Inc.      Subsidiaries  Subsidiaries   Eliminations  Consolidated
                                              ----------  ------------  -------------  ------------  ------------
<S>                                          <C>         <C>           <C>             <C>          <C>
Total revenue..............................                    $27,134        $67,242      $(10,598)      $83,778
                                                               -------        -------      --------       -------
Operating costs and expenses:
   Cost of sales...........................                     26,771         61,641       (10,372)       78,040
   Selling, general and administrative
     expenses .............................      $ 1,133         1,950          5,287             -         8,370
   Restructuring charges and asset
      impairment...........................            -             -          2,659             -         2,659
                                                 -------       -------        -------      --------       -------
   Total operating costs and expenses......        1,133        28,721         69,587       (10,372)        89,069
                                                 -------       -------        -------      --------       -------

   Operating loss .........................       (1,133)       (1,587)        (2,345)         (226)       (5,291)

Other income (expense):
   Other expense, net......................            -             -            (87)            -           (87)
   Interest (expense) income, net..........       (2,580)          242           (990)            -        (3,328)
   Equity in earnings of subsidiaries......       (3,441)       (2,563)        (2,200)        8,204             -
                                                 -------       -------        -------      --------       -------
   Loss before income tax provision
     (benefit) and minority interest.......       (7,154)       (3,908)        (5,622)        7,978        (8,706)
Income tax provision (benefit).............          659          (633)          (928)            -          (902)
                                                 -------       -------        -------      --------       -------
   Loss before minority interest...........       (7,813)       (3,275)        (4,694)        7,978        (7,804)
Minority interest..........................            -             -             (9)            -            (9)
                                                 -------       -------        -------      --------       -------
   Net loss................................       (7,813)       (3,275)        (4,703)        7,978        (7,813)

Other comprehensive income (loss):
   Foreign currency translation adjustment.          487           487          1,010        (1,497)          487
   Deferred loss on derivatives, net.......         (436)         (436)          (872)        1,308          (436)
                                                 -------       -------        -------      --------       -------
   Comprehensive loss......................      $(7,762)      $(3,224)       $(4,565)      $ 7,789       $(7,762)
                                                 =======       =======        =======      ========       =======
</TABLE>


                                       10




<PAGE>


                  METALLURG, INC. AND CONSOLIDATED SUBSIDIARIES

                    NOTES TO CONDENSED UNAUDITED CONSOLIDATED
                       FINANCIAL STATEMENTS - (Continued)

12. Supplemental Guarantor Information - (Continued)

           Condensed Consolidating Statement of Operations (Unaudited)
                     Three Quarters Ended September 30, 2003
                                 (In thousands)



<TABLE>
<CAPTION>
                                                            Combined      Combined
                                              Metallurg,   Guarantor    Non-Guarantor
                                                Inc.      Subsidiaries  Subsidiaries   Eliminations  Consolidated
                                              ----------  ------------  -------------  ------------  ------------
<S>                                          <C>         <C>           <C>             <C>          <C>
Total revenue..............................                    $79,104       $201,052      $(29,437)     $250,719
                                                               -------       --------      --------      --------
Operating costs and expenses:
   Cost of sales...........................                     75,842        180,611       (29,015)      227,438
   Selling, general and administrative
     expenses .............................     $  3,435         5,762         16,499             -        25,696
   Restructuring charges and asset
      impairment...........................            -             -          2,659             -         2,659
                                                --------       -------       --------      --------      --------
   Total operating costs and expenses              3,435        81,604        199,769       (29,015)      255,793
                                                --------       -------       --------      --------      --------

   Operating (loss) income.................       (3,435)       (2,500)         1,283          (422)       (5,074)

Other income (expense):
   Other expense, net......................            -             -             (7)            -            (7)
   Interest (expense) income, net..........       (7,788)          858         (3,120)            -       (10,050)
   Equity in earnings of subsidiaries......       (2,410)       (1,841)          (994)        5,245             -
                                                --------       -------       --------      --------      --------
   Loss before income tax provision
     (benefit) and minority interest.......      (13,633)       (3,483)        (2,838)        4,823       (15,131)
Income tax provision (benefit).............        1,233        (1,169)          (386)            -          (322)
                                                --------       -------       --------      --------      --------
   Loss before minority interest...........      (14,866)       (2,314)        (2,452)        4,823       (14,809)
Minority interest..........................            -             -            (57)            -           (57)
                                                --------       -------       --------      --------      --------
   Net loss................................      (14,866)       (2,314)        (2,509)        4,823       (14,866)

Other comprehensive income (loss):
   Foreign currency translation adjustment.        1,773         1,773          3,611        (5,384)        1,773
   Deferred loss on derivatives, net.......         (397)         (397)          (794)        1,191          (397)
                                                --------       -------       --------      --------      --------
   Comprehensive (loss) income.............     $(13,490)      $  (938)      $    308      $    630      $(13,490)
                                                ========       =======       ========      ========      ========
</TABLE>


                                       11




<PAGE>


                  METALLURG, INC. AND CONSOLIDATED SUBSIDIARIES

                    NOTES TO CONDENSED UNAUDITED CONSOLIDATED
                       FINANCIAL STATEMENTS - (Continued)

12.  Supplemental Guarantor Information - (Continued)

                Condensed Consolidating Balance Sheet (Unaudited)
                               September 30, 2003
                                 (In thousands)


<TABLE>
<CAPTION>
                                                            Combined      Combined
                                              Metallurg,   Guarantor    Non-Guarantor
                                                Inc.      Subsidiaries  Subsidiaries   Eliminations  Consolidated
                                              ----------  ------------  -------------  ------------  ------------
<S>                                          <C>         <C>           <C>             <C>          <C>
ASSETS
Current Assets:
   Cash and cash equivalents...............     $ 12,840      $  1,386       $ 11,407                    $ 25,633
   Accounts receivable, net................       31,244        17,095         43,684     $ (44,944)       47,079
   Inventories.............................            -        23,114         33,521          (480)       56,155
   Prepaid expenses and other current
     assets................................          976         9,148          8,073        (8,397)        9,800
                                                --------      --------       --------     ---------      --------
       Total current assets................       45,060        50,743         96,685       (53,821)      138,667
Investments - intergroup...................       54,013          (167)        37,335       (91,181)            -
Property, plant and equipment, net.........          473        21,682         36,589             -        58,744
Other assets...............................       10,915        57,774         14,609       (58,105)       25,193
                                                --------      --------       --------     ---------      --------
       Total...............................     $110,461      $130,032       $185,218     $(203,107)     $222,604
                                                ========      ========       ========     =========      ========

LIABILITIES AND SHAREHOLDER'S
   (DEFICIT) EQUITY
Current Liabilities:
   Short-term debt and current portion of
     long-term debt........................                                  $  9,770                    $  9,770
   Accounts payable........................     $  2,922      $ 45,482         31,459     $ (44,940)       34,923
   Accrued expenses........................        5,069         4,945          5,931             -        15,945
   Other current liabilities...............        4,893         3,504          2,022        (8,397)        2,022
                                                --------      --------       --------     ---------      --------
       Total current liabilities...........       12,884        53,931         49,182       (53,337)       62,660
                                                --------      --------       --------     ---------      --------
Long-term Liabilities:
   Long-term debt..........................      100,000             -         21,290             -       121,290
   Accrued pension liabilities.............        6,083           549         32,739             -        39,371
   Environmental liabilities, net..........            -        24,059            106             -        24,165
   Other liabilities.......................       17,876             -         41,216       (58,109)          983
                                                --------      --------       --------     ---------      --------
       Total long-term liabilities.........      123,959        24,608         95,351       (58,109)      185,809
                                                --------      --------       --------     ---------      --------
       Total liabilities...................      136,843        78,539        144,533      (111,446)      248,469
                                                --------      --------       --------     ---------      --------

Minority Interest..........................            -             -            517             -           517
                                                --------      --------       --------     ---------      --------

Shareholder's (Deficit) Equity:
   Common stock............................           50         1,217        109,139      (110,356)           50
   Due from parent company.................      (21,715)            -              -             -       (21,715)
   Additional paid-in capital..............       67,469       127,457          7,076      (134,533)       67,469
   Accumulated other comprehensive loss....      (36,306)      (31,836)       (60,506)       92,342       (36,306)
   Retained deficit........................      (35,880)      (45,345)       (15,541)       60,886       (35,880)
                                                --------      --------       --------     ---------      --------
       Total shareholder's (deficit) equity      (26,382)       51,493         40,168       (91,661)      (26,382)
                                                --------      --------       --------     ---------      --------
       Total...............................     $110,461      $130,032       $185,218     $(203,107)     $222,604
                                                ========      ========       ========     =========      ========
</TABLE>


                                       12




<PAGE>


                  METALLURG, INC. AND CONSOLIDATED SUBSIDIARIES

                    NOTES TO CONDENSED UNAUDITED CONSOLIDATED
                       FINANCIAL STATEMENTS - (Continued)

12.  Supplemental Guarantor Information - (Continued)

           Condensed Consolidating Statement of Cash Flows (Unaudited)
                     Three Quarters Ended September 30, 2003
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                    Combined      Combined
                                                      Metallurg,   Guarantor    Non-Guarantor
                                                        Inc.      Subsidiaries  Subsidiaries   Eliminations
                                                      ----------  ------------  -------------  ------------
<S>                                                 <C>           <C>           <C>            <C>
Cash Flows from Operating Activities..............       $(9,175)     $ (3,909)       $ 1,695      $(11,389)
                                                         -------      --------        -------      --------

Cash Flows from Investing Activities:
   Additions to property, plant and equipment.....           (42)         (471)        (2,002)       (2,515)
   Repayment of loan by former subsidiary.........         1,000             -              -         1,000
   Other, net.....................................           149             -             49           198
                                                         -------      --------        -------      --------
      Net cash provided by (used in) investing
       activities.................................         1,107          (471)        (1,953)       (1,317)
                                                         -------      --------        -------      --------

Cash Flows from Financing Activities:
   Intergroup (repayments) borrowings.............        (6,444)        8,510         (2,066)            -
   Long-term borrowings, net......................             -             -              3             3
   Short-term borrowings, net.....................             -             -          3,744         3,744
   Capital contribution ..........................           450         9,550              -        10,000
   Dividends received (paid)......................        13,600       (13,348)          (252)            -
                                                         -------      --------        -------      --------
        Net cash provided by financing activities.         7,606         4,712          1,429        13,747
                                                         -------      --------        -------      --------

Effects of exchange rate changes on cash and
   cash equivalents...............................             -             -            341           341
                                                         -------      --------        -------      --------

Net (decrease) increase in cash and cash
   equivalents....................................          (462)          332          1,512         1,382

Cash and cash equivalents -
   beginning of period............................        13,302         1,054          9,895        24,251
                                                         -------      --------        -------      --------
Cash and cash equivalents -
   end of period..................................       $12,840      $  1,386        $11,407      $ 25,633
                                                         =======      ========        =======      ========
</TABLE>


13.  Related Party Transactions

      During the quarter ended June 30, 2003, a group of equity investors of
Metallurg Holdings, the parent company, purchased approximately $9 million face
amount of the Senior Notes on the open market.

      In the three quarters ended September 30, 2003 and 2002, Metallurg
received repayments of loans to a former subsidiary that was sold on December
31, 2002, in the amounts of $1,000,000 and $4,000,000, respectively.

      See "Note 1. Basis of Presentation" and "Note 3. Change in Reporting
Entity" regarding the disposition of EWW and TMS to an affiliate.



                                       13




<PAGE>


    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 within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements may be identified by
the use of words such as "plans", "expect", "believe", "should", "could",
"anticipate", "intend" and other expressions that indicate future events or
trends. All statements that address expectations or projections about the
future, including statements about Metallurg's strategy for growth, product
development, market position, expenditures and financial results are
forward-looking statements 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 that may cause Metallurg's results to be materially different
include:

          o    The cyclical nature of Metallurg's business.
          o    Metallurg's dependence on foreign customers. Metallurg operates
               throughout the world and derives a significant amount of its
               revenues from outside of the U.S.
          o    The impact of changes in foreign exchange rates and foreign trade
               regulations on Metallurg's competitive standing. Revenues and
               earnings from outside the U.S. could be materially affected by
               exchange rate fluctuations.
          o    The availability of raw materials, particularly
               vanadium-containing materials.
          o    Labor relations.
          o    The impact of worldwide competition.
          o    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.
          o    The accuracy of Metallurg's estimates of the costs of
               environmental remediation.
          o    The extension or expiration of existing anti-dumping duties.
          o    The performance of world financial markets and the resulting
               effect on pension expense of Metallurg's defined benefit plans.
          o    The ability to meet debt service and financial covenant
               requirements.
          o    The adequacy of capital resources to fund operations and growth.
          o    The possible disruption of business or increases in the cost of
               doing business resulting from terrorist activities or global
               conflicts.
          o    Changes in tax laws, including changes related to taxation of
               foreign earnings.
          o    Changes in accounting standards.

Critical Accounting Estimates

      For a discussion of the critical accounting estimates affecting Metallurg,
see "Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Critical Accounting Estimates" beginning on page 21 of
Metallurg's annual report on Form 10-K for the year ended December 31, 2002. The
critical accounting estimates affecting Metallurg have not changed since
December 31, 2002.

Overview

      Metallurg is a leading international producer and seller of high-quality
specialty metals and metal alloys which are essential to the production of
high-performance aluminum and titanium alloys, superalloys, specialty steels and
certain non-metallic materials for various applications in the aerospace, power
supply, automotive, petrochemical processing, capital equipment and construction
industries. Metallurg operates production facilities in the U.K., the U.S. and
Brazil. Metallurg's products are primarily sold to one of three major market
sectors: the aluminum industry, the superalloy industry and the steel industry.
Conditions in each of these sectors have remained quite challenging for several
quarters and these challenging conditions are expected to continue for the
foreseeable future. Below is a general overview of each of the major market
sectors:



                                       14





<PAGE>


      Overall, the aluminum market is seeing relatively low demand from
customers due to subdued worldwide economic growth, especially in the U.S. On
the supply side, there exists a significant amount of excess, as well as idle,
capacity in the industry waiting to be restarted when demand increases. This has
resulted in a weak pricing environment for aluminum producers and processors in
general and contributed to a decline in the selling price of products supplied
by Metallurg to the aluminum industry. Metallurg has implemented significant
cost reduction initiatives to partially offset the price declines that have been
experienced. Metallurg believes it is well positioned to benefit from such
initiatives when markets recover.

      The superalloy industry has been hit hard by the downturn in the
commercial aerospace industry, as well as a reduction in power generation
projects and services (i.e., land-based turbines). Commercial production build
rates for aerospace are significantly below forecasts, especially in the U.S.
Due to the long lead times in this market, excess inventory has been a factor
leading to lower prices and volumes for products supplied to this industry.
Metallurg does not expect the superalloy sector to show signs of recovery this
year.

      The domestic steel industry is operating at moderate levels of production.
However, prices have weakened from the peak levels experienced in the third
quarter of 2002. Industry fundamentals for the steel sector have improved from
the difficult conditions seen over the past few years, particularly as a result
of lower imports following the introduction of protective tariffs and the
consolidation of a number of producers within the industry. In the first nine
months of 2003, following a reduction in worldwide supply, ferrovanadium prices
rebounded from the very low levels that have been experienced over the last few
years. However, due to a shortage of raw materials, Metallurg was unable to take
full advantage of increased selling prices. Efforts are being made to secure
additional economic sources of raw materials to further reduce production costs
and enhance profitability.

Results of Operations - The Quarter Ended September 30, 2003 Compared to the
Quarter Ended September 30, 2002

      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.K., the U.S. and Brazil. In addition to its own products, Metallurg
distributes products manufactured by third parties.

      Summarized financial information concerning Metallurg's reportable
segments is shown in the following tables (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 for
determining reportable segments. Metallurg does not allocate general corporate
overhead expenses to operating segments. The accounting policies of the segments
are the same as those of the consolidated group. Transactions among segments are
established based on negotiation among the parties. There have been no material
changes in segment assets from the amounts disclosed in Metallurg, Inc.'s annual
report for the year ended December 31, 2002, other than the sale of EWW and TMS
(See "Note 3. Change in Reporting Entity").

<TABLE>
<CAPTION>

                                                                                    Intersegment
                                       LSM         SMC         CIF        Other     Eliminations  Consolidated
                                    ----------- ----------- ----------- ----------- ------------- ------------

<S>                                    <C>         <C>          <C>        <C>          <C>           <C>
Quarter Ended
   September 30, 2003
Total revenue......................    $39,331     $24,457      $9,698     $23,122      $(12,830)     $83,778
Gross profit.......................      2,799         326         628       2,211          (226)       5,738
SG&A...............................      3,338       1,769         499       2,764             -        8,370
Restructuring charges and asset
   impairment......................      2,256           -           -         403             -        2,659
Operating (loss) income............     (2,795)     (1,443)        129        (956)         (226)      (5,291)
Interest expense, net..............       (328)       (126)       (196)     (2,678)            -       (3,328)
Income tax (benefit) provision ....       (860)       (290)          -         248             -         (902)
Net loss...........................     (2,248)     (1,279)        (67)    (12,197)        7,978       (7,813)

</TABLE>




                                       15






<PAGE>


<TABLE>
<CAPTION>

                                                                                    Intersegment
                                       LSM         SMC         CIF        Other     Eliminations  Consolidated
                                    ----------- ----------- ----------- ----------- ------------- ------------

<S>                                    <C>         <C>          <C>        <C>          <C>           <C>
Quarter Ended
   September 30, 2002
Total revenue......................    $44,683     $22,323      $8,416     $21,435      $(12,291)     $84,566
Gross profit.......................      4,014         616       1,102       2,616           379        8,727
SG&A...............................      2,605       2,141         368       2,546             -        7,660
Restructuring charges..............        678          98           -         214             -          990
Operating income (loss)............        731      (1,623)        734        (144)          379           77
Interest expense, net..............       (425)       (115)       (237)     (2,714)            -       (3,491)
Income tax provision (benefit).....        110      (1,369)          -       1,995             -          736
Net income (loss)..................        175        (369)        497        (453)       (3,997)      (4,147)

</TABLE>

Total Revenue

      Consolidated total revenue decreased by $0.8 million (1%) in the quarter
ended September 30, 2003.

      LSM revenue was $5.4 million (12%) lower than the quarter ended September
30, 2002. Sales of aluminum master alloys and compacted products decreased by
$1.5 million, primarily as a result of decreased sales volume and selling
prices. Sales of aluminum powder decreased by $1.7 million, reflecting a 39%
decrease in volume, offset somewhat by an increase of 19% in selling prices.
Sales of chrome products, primarily chrome metal, decreased by $1.3 million due
to a drop in shipments. Sales of ferrotitanium were $0.9 million lower, due
primarily to a 27% decrease in volume.

      SMC revenue was $2.1 million (10%) higher than the quarter ended September
30, 2002. Sales of chrome products increased by $1.3 million, due to an increase
in sales volume and selling prices. Sales of aluminum products increased by $0.8
million, reflecting a 33% increase in sales volume, primarily compacted
products, which was partially offset by a 17% decrease in selling prices. Sales
of vanadium products increased by $0.3 million due to an increase of 27% in
average selling prices, offset somewhat by a 17% drop in volume due to limited
availability of raw materials. Sales of niobium products fell by $0.2 million,
primarily as a result of a drop in shipments of ferroniobium to the steel
industry.

      CIF revenue was $1.3 million (15%) higher than the quarter ended September
30, 2002, due primarily to an increase in shipments of aluminum products.

Gross Profit

      Consolidated gross profit decreased to $5.7 million (6.8% of total
revenue) for the quarter ended September 30, 2003 from $8.7 million (10.3% of
total revenue) for the quarter ended September 30, 2002.

      LSM gross profit was $1.2 million (30%) lower than the quarter ended
September 30, 2002. A decrease of $2.4 million in gross profit from aluminum
products was offset somewhat by an increase in gross profit from chrome
products.

      SMC gross profit was $0.3 million (47%) lower than the quarter ended
September 30, 2002. Gross profit from aluminum products decreased by $0.3
million, due to lower selling prices. Gross profit from vanadium products
decreased by $0.2 million, reflecting decreased sales volume and higher-cost raw
materials.

      CIF gross profit was $0.5 million (43%) lower than the quarter ended
September 30, 2002, due primarily to lower selling prices of aluminum products.



                                       16





<PAGE>


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

      SG&A increased to $8.4 million for the quarter ended September 30, 2003
from $7.7 million for the quarter ended September 30, 2002. An increase in
pension expense, primarily $1.2 million at LSM, due to decreases in plan asset
values resulting from declines in equity markets and interest rates, was offset
somewhat by reductions in compensation and other expenses resulting from
restructuring programs. For the quarter ended September 30, 2003, SG&A
represented 10.0% of total revenue compared to 9.1% for the quarter ended
September 30, 2002.

Restructuring Charges and Asset Impairment

      Due to a significant deterioration in its metal catalyst business, LSM
determined that certain of its plant assets were impaired because recovery of
the net book values from projected future undiscounted cash flows could no
longer be expected. In the third quarter of 2003, LSM recognized a $2.3 million
asset impairment loss, which reduced the carrying value of these assets to nil.
Plant operations will cease in the fourth quarter of 2003 and the plant assets
will be abandoned.

      In the third quarter of 2003, a plan was implemented to consolidate sales
and administrative functions performed by Metallurg's Canadian operations into
the New Jersey operations of SMC. As a result of this plan, Metallurg recognized
a restructuring charge of $0.4 million, consisting of employee separation costs.

      During the third quarter of 2002, Metallurg continued its restructuring
program to reduce the cost structure at corporate headquarters, SMC and LSM. A
charge of $1.0 million was incurred in the third quarter, all of which was for
severance costs of terminated employees.

Operating (Loss) Income

      Metallurg's consolidated operating loss was $5.3 million for the quarter
ended September 30, 2003 compared to operating income of $0.1 million for the
quarter ended September 30, 2002, primarily due to the restructuring charges,
asset impairment and decrease in gross profit, discussed above.

Interest Expense, Net

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

<TABLE>
<CAPTION>

                                                                Quarters Ended
                                                                 September 30,
                                                       --------------------------------
                                                            2003              2002
                                                       ----------------  --------------

<S>                                                       <C>              <C>
Interest income...................................         $   214          $   150
Interest expense..................................          (3,542)          (3,641)
                                                           -------          -------
     Interest expense, net........................         $(3,328)         $(3,491)
                                                           =======          =======
</TABLE>

Income Tax (Benefit) Provision, Net

      Income tax (benefit) provision, net, was as follows (in thousands):

<TABLE>
<CAPTION>

                                                               Quarters Ended
                                                                September 30,
                                                      --------------------------------
                                                            2003              2002
                                                      ---------------     --------------

<S>                                                        <C>               <C>
Total current.....................................          $ (90)             $469
Total deferred....................................           (812)              267
                                                            -----              ----
     Income tax (benefit) provision, net..........          $(902)             $736
                                                            =====              ====
</TABLE>

      The difference between the statutory federal income tax rate and
Metallurg's effective rate for the quarter ended September 30, 2003 is
principally due to: (i) certain deductible temporary differences, principally
domestic net operating losses, which in other circumstances would have generated
a deferred tax benefit, have been fully provided for in a valuation allowance;
(ii) taxes paid on foreign dividends; and (iii) the excess of foreign tax rates
over the statutory federal income tax rate.




                                       17






<PAGE>


Net Loss

      Metallurg had a net loss of $7.8 million for the quarter ended September
30, 2003 compared to a net loss of $4.1 million for the quarter ended September
30, 2002, due primarily to the decrease in gross profit and the restructuring
and asset impairment charges, discussed above.

Results of Operations - The Three Quarters Ended September 30, 2003 Compared to
the Three Quarters Ended September 30, 2002

<TABLE>
<CAPTION>

                                                                                    Intersegment
                                       LSM         SMC         CIF        Other     Eliminations  Consolidated
                                    ----------- ----------- ----------- ----------- ------------- ------------

<S>                                   <C>          <C>         <C>         <C>          <C>          <C>
Three Quarters Ended
   September 30, 2003
Total revenue......................   $126,736     $71,982     $24,541     $63,766      $(36,306)    $250,719
Gross profit.......................     11,425       2,869       1,872       7,537          (422)      23,281
SG&A...............................     10,827       5,222       1,383       8,264             -       25,696
Restructuring charges and asset
   impairment......................      2,256           -           -         403             -        2,659
Operating (loss) income............     (1,658)     (2,353)        489      (1,130)         (422)      (5,074)
Interest expense, net..............     (1,135)       (325)       (598)     (7,992)            -      (10,050)
Income tax (benefit) provision.....       (709)     (1,050)          -       1,437             -         (322)
Net loss...........................     (2,060)     (1,628)       (109)    (15,892)        4,823      (14,866)

Three Quarters Ended
   September 30, 2002
Total revenue......................   $118,583     $69,618     $25,106     $62,217      $(38,408)    $237,116
Gross profit.......................      9,335         (18)      2,875       8,462         1,158       21,812
SG&A...............................      9,102       7,503       1,257       7,893             -       25,755
Environmental expense recovery.....          -      (3,000)          -           -             -       (3,000)
Restructuring charges..............      1,028         371           -       1,089             -        2,488
Operating (loss) income............       (795)     (4,892)      1,618        (520)        1,158       (3,431)
Interest expense, net..............     (1,132)       (278)       (525)     (8,211)            -      (10,146)
Income tax (benefit) provision ....       (481)     (3,066)         47       4,267             -          767
Net (loss) income..................     (1,427)     (2,104)      1,046      (8,281)       (3,478)     (14,244)
</TABLE>

Total Revenue

      Consolidated total revenue increased by $13.6 million (6%) in the three
quarters ended September 30, 2003.

      LSM revenue was $8.2 million (7%) higher than the three quarters ended
September 30, 2002. Sales of aluminum master alloys and compacted products
increased by $4.6 million, primarily as a result of a 9% increase in sales
volume. Sales of aluminum powder rose by $0.9 million, due to an improved
product mix, which resulted in higher average selling price. Sales of
ferrotitanium were $1.9 million higher, due to a 21% increase in average unit
selling prices and a 3% decrease in sales volumes. Sales of metal powders rose
by $2.2 million as a result of increases in both sales volume and average
selling prices.

      SMC revenue was $2.4 million (3%) higher than the three quarters ended
September 30, 2002. Sales of compacted aluminum products increased by $3.7
million, despite a drop in average selling prices, as a result of an increase of
51% in shipments. Sales of vanadium products, produced in SMC's Ohio plant,
increased by $1.3 million, despite a drop in sales volume, as a result of an
increase in average selling prices. Sales of niobium products fell by $3.5
million, primarily as a result of a drop in shipments of ferroniobium to the
steel industry.



                                       18





<PAGE>

      CIF revenue was $0.6 million (2%) lower than the three quarters ended
September 30, 2002. Sales of tantalum and niobium products decreased by $1.1
million, due to lower selling prices.

Gross Profit

      Consolidated gross profit increased to $23.3 million (9.3% of total
revenue) for the three quarters ended September 30, 2003 from $21.8 million
(9.2% of total revenue) for the three quarters ended September 30, 2002.

      LSM gross profit was $2.1 million (22%) higher than the three quarters
ended September 30, 2002. Gross profits from aluminum master alloys and
compacted aluminum products increased by $0.4 million, due to increased volumes
and lower plant costs following the restructuring of operations in 2002. Gross
profits from chrome products increased by $1.1 million as a result of the
improved product costs.

      SMC gross profit was $2.9 million in the three quarters ended September
30, 2003, compared to nil for the three quarters ended September 30, 2002. Gross
profit from aluminum products rose by $2.4 million, due to increased shipments
and lower costs resulting from the restructuring of operations during 2002.
Gross profit from chrome products rose by $0.6 million, due to improved volume
and selling prices, particularly from lower grade products sold to the steel
industry. Gross profit from vanadium products improved by $0.1 million, despite
a drop in volume, as a result of an increase in average selling prices.

      CIF gross profit was $1.0 million (35%) lower than the three quarters
ended September 30, 2002, due to lower selling prices of niobium products.

Selling, General and Administrative Expenses

      SG&A decreased to $25.7 million for the three quarters ended September 30,
2003 from $25.8 million for the three quarters ended September 30, 2002. An
increase in pension expense, primarily $2.3 million at LSM, due to decreases in
plan asset values resulting from declines in equity markets and interest rates,
was offset by reductions in compensation and other expenses resulting from
restructuring programs and lower bad debt expense. For the three quarters ended
September 30, 2003, SG&A represented 10.2% of total revenue compared to 10.9%
for the three quarters ended September 30, 2002.

Restructuring Charges and Asset Impairment

      Due to a significant deterioration in its metal catalyst business, LSM
determined that certain of its plant assets were impaired because recovery of
the net book values from projected future undiscounted cash flows could no
longer be expected. In the period ended September 30, 2003, LSM recognized a
$2.3 million asset impairment loss, which reduced the carrying value of these
assets to nil. Plant operations will cease in the fourth quarter of 2003 and the
plant assets will be abandoned.

      In the period ended September 30, 2003, a plan was implemented to
consolidate sales and administrative functions performed by Metallurg's Canadian
operations into the New Jersey operations of SMC. As a result of this plan,
Metallurg recognized a restructuring charge of $0.4 million, consisting of
employee separation costs.

      During the second and third quarters of 2002, Metallurg carried out a
restructuring program intended to reduce the cost structure at corporate
headquarters, SMC and LSM. Restructuring charges of $2.5 million, which covered
the costs to discontinue certain production activities, terminate employees and
write down redundant plant and equipment, were recognized during the period.

Operating Loss

      Metallurg's consolidated operating loss was $5.1 million for the three
quarters ended September 30, 2003 compared to $3.4 million for the three
quarters ended September 30, 2002. The three quarters ended September 30, 2003
included $2.7 million of restructuring and asset impairment charges, which more
than offset the increase in gross profit, discussed above. The three quarters
ended September 30, 2002 included an environmental expense recovery of $3.0
million, recognized by SMC, and restructuring charges of $2.5 million.




                                       19






<PAGE>


Interest Expense, Net

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

<TABLE>
<CAPTION>

                                                           Three Quarters Ended
                                                                September 30,
                                                      ---------------------------------
                                                           2003              2002
                                                      ----------------  ---------------

<S>                                                      <C>               <C>
Interest income...................................        $    750          $    450
Interest expense..................................         (10,800)          (10,596)
                                                          --------          --------
     Interest expense, net........................        $(10,050)         $(10,146)
                                                          ========          ========
</TABLE>

Income Tax Benefit, Net

      Income tax (benefit) provision, net, was as follows (in thousands):

<TABLE>
<CAPTION>

                                                            Three Quarters Ended
                                                                September 30,
                                                       ---------------------------------
                                                           2003                2002
                                                      --------------      --------------

<S>                                                        <C>                  <C>
Total current.....................................         $ 1,077              $825
Total deferred....................................          (1,399)              (58)
                                                           -------              ----
     Income tax (benefit) provision, net..........         $  (322)             $767
                                                           =======              ====
</TABLE>

      The difference between the statutory federal income tax rate and
Metallurg's effective rate for the three quarters ended September 30, 2003 is
principally due to: (i) certain deductible temporary differences, principally
domestic net operating losses, which in other circumstances would have generated
a deferred tax benefit, have been fully provided for in a valuation allowance;
(ii) taxes paid on foreign dividends; and (iii) the excess of foreign tax rates
over the statutory federal income tax rate.

Net Loss

      Metallurg had a net loss of $14.9 million for the three quarters ended
September 30, 2003 compared to a net loss of $14.2 million for the three
quarters ended September 30, 2002.

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 September 30,
2003, Metallurg had $25.6 million in cash and cash equivalents and working
capital of $76.0 million as compared to $24.3 million and $73.2 million,
respectively, at December 31, 2002.

      On September 30, 2003, Metallurg received $10.0 million cash upon the sale
of EWW and TMS. Together with the sources discussed below Metallurg believes it
will have sufficient resources to fund the current and anticipated future
requirements of Metallurg, Inc.'s debt obligations, working capital, capital
expenditures, pension benefits and environmental expenditures for the next
twelve months. Metallurg's long-term debt agreements contain numerous covenants
and prohibitions that limit the financial activities of Metallurg, including
requirements that Metallurg satisfy certain financial ratios and limitations on
additional indebtedness and maintain a minimum liquidity level. While Metallurg
is in compliance with all such covenants at September 30, 2003, the ability of
Metallurg to meet its debt service requirements and to comply with such
covenants will be dependent upon future operating performance and financial
results of Metallurg, which will be subject to financial, economic, political,
competitive and other factors affecting Metallurg, many of which are beyond its
control.



                                       20





<PAGE>


Cash Flow Information

      Cash Flows from Operating Activities - Cash used in operating activities
was $11.4 million for the three quarters ended September 30, 2003, compared to
cash provided by operating activities of $4.1 million for the three quarters
ended September 30, 2002. In 2003, the net loss and an increase in working
capital contributed to the cash used in operating activities. In 2002, SMC
realized an environmental expense recovery and receipt of $3.0 million upon a
settlement with an insurance company relating to coverage for certain
environmental claims.

      Cash Flows from Investing Activities - Cash used in investing activities
was $1.3 million for the three quarters ended September 30, 2003, compared to
$5.9 million for the three quarters ended September 30, 2002. Capital
expenditures were $7.2 million lower in 2003 and loan repayments made to
Metallurg by a former subsidiary were $1.0 million in 2003 compared to $4.0
million in 2002.

      Cash Flows from Financing Activities - Cash provided by financing
activities was $13.7 million for the three quarters ended September 30, 2003,
compared to $2.2 for the three quarters ended September 30, 2002. The sale of
EWW and TMS (See "Note 3. Change in Reporting Entity") contributed $10.0 million
to cash and Metallurg's foreign subsidiaries had net borrowings of $3.7 million
of short-term debt in 2003.

Credit Facilities and Other Financing Arrangements

      On October 29, 1999, Metallurg, Inc., SMC and certain of Metallurg, Inc.'s
other subsidiaries (the "Borrowers") renewed their existing credit facility with
certain financial institutions led by Fleet National Bank as agent (the
"Revolving Credit Facility") for a term of five years. Effective October 1,
2003, following the sale of EWW and TMS, this facility was amended, thereby
reducing the size of the facility from $30.0 million to $27.0 million. Interest
is charged at a rate per annum equal to (i) LIBOR, plus 2.0% - 2.5% or (ii)
Prime, plus up to 1.0%, based on the performance of Metallurg, Inc. and certain
of its subsidiaries (the "North American Group"), as defined in the Revolving
Credit Facility. Interest rates on amounts borrowed are adjusted quarterly,
based on the North American Group's fixed charge coverage ratio. The Borrowers
are required to pay a fee of 0.375% per annum on the unused portion of the
facility. The total amount the Borrowers may borrow at any time is limited to a
borrowing base calculation that is based on eligible accounts receivable,
inventory and certain fixed assets. At September 30, 2003, there were no
borrowings under this facility; however, outstanding letters of credit totaled
$21.2 million. The Borrowers had unused borrowing capacity of $3.7 million under
this facility. The Revolving Credit Facility continues to prohibit Metallurg,
Inc. from paying dividends prior to 2004 and requires the Borrowers and certain
subsidiaries to comply with various covenants, including the maintenance of
minimum liquidity, as defined in the agreement, at a $10.0 million level.
Liquidity, as defined, was $18.7 million at September 30, 2003.

      LSM has revolving credit facilities with Barclays Bank plc ("Barclays")
and HSBC Bank plc ("HSBC") that provide LSM with up to 'L'6.0 million ($10.0
million) of borrowings, 'L'43.3 million ($72.2 million) of foreign exchange
contracts and options and 'L'4.0 million ($6.7 million) for other ancillary
banking arrangements, including bank guarantees. Borrowings under these
facilities are unsecured and payable on demand. Outstanding loans under this
facility bear interest at a rate of 1.0% over the lender's base rate. At
September 30, 2003, there were no borrowings under these facilities.

      LSM also has four revolving term loan facilities with Barclays and HSBC
that provide for borrowings up to 'L'12.0 million ($20.0 million) at an
interest rate of LIBOR plus 1.75%, all of which were outstanding at September
30, 2003. Two of the facilities expire during the second quarter of 2004 but, as
LSM intends to renew these facilities and believes it has the ability to do so,
amounts outstanding continue to be included in the balance sheet in long-term
liabilities rather than current liabilities. The other two facilities expire
during the second quarter of 2006. These term loan facilities are unsecured and
require LSM to comply with various covenants, including the maintenance of
minimum net worth and interest coverage. In September 2003, LSM received a
waiver from Barclays regarding the minimum interest coverage ratio covenant on
its revolving term loans for the period ended September 30, 2003. As LSM
anticipates that it would not be in compliance with the existing covenant at
December 31, 2003, it is currently in discussions with its lenders to
restructure its facilities prior to that date, thereby extending the terms of
the loans due in 2004 and adjusting the financial covenants. Metallurg believes
that it will complete the restructuring of these facilities prior to
December 31, 2003.



                                       21





<PAGE>


      LSM's Norwegian subsidiary has an unsecured overdraft facility of NOK 15.0
million ($2.1 million). Borrowings under this facility bear interest at a rate
of NIBOR plus 1.25%. At September 30, 2003, there was NOK 8.0 million ($1.1
million) outstanding under this facility. The Norwegian facility also has an
unsecured term loan with a remaining balance of NOK 7.2 million ($1.0 million).
Repayments continue until 2010 in equal monthly installments plus interest at
NIBOR plus 1.25%.

      Metallurg, Inc.'s other foreign subsidiaries maintain short-term secured
and unsecured borrowing arrangements, generally in local currencies, with
various banks totaling $10.5 million. Borrowings under these arrangements
aggregated $8.5 million at September 30, 2003 at a weighted-average interest
rate of 11.1%.

Capital Expenditures

      Metallurg invested $2.5 million in capital projects during the three
quarters ended September 30, 2003. Metallurg's capital expenditures include
projects related to improving Metallurg's operations, productivity improvements,
replacement projects and ongoing environmental requirements (which are in
addition to expenditures discussed in "Environmental Remediation Costs" below).
Capital expenditures are projected to total approximately $4 million for the
year ended December 31, 2003, approximately half of which Metallurg believes
will result in decreased costs of production, improved efficiency and expanded
production capacities. The remaining planned capital expenditures are primarily
for replacement and repairs of existing facilities. Although Metallurg has
projected these items for the year ended December 31, 2003, Metallurg has not
committed purchases to vendors for all of these projects, as some projects
remain contingent on final approvals and other conditions and the actual timing
of expenditures may extend into 2004. Metallurg believes that these projects
will be funded through existing and future internally generated cash and credit
lines.

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
three quarters ended September 30, 2003, Metallurg spent $1.7 million for
environmental remediation.

      In 1997, SMC 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, SMC
has agreed to perform environmental remediation, which, as of September 30,
2003, had an estimated net cost of completion of $26.3 million. Of this amount,
SMC expects to spend $0.6 million in the fourth quarter of 2003, $3.9 million in
2004 and $1.7 million in 2005. These amounts have been accrued for in prior
years and are reflected in Metallurg's balance sheet liabilities.

Other

      Metallurg Holdings, Metallurg, Inc.'s parent, does not have sufficient
cash on hand to make its interest payment due in January 2004 on its Senior
Discount Notes. While Metallurg, Inc. is permitted under the terms of its Senior
Notes indenture to distribute cash to Metallurg Holdings for the purpose of
making the January 2004 interest payment, Metallurg, Inc. could be prohibited
from making cash distributions at such time under the restrictive covenants of
its revolving credit facility. All of Metallurg, Inc.'s outstanding common stock
has been pledged as collateral for Metallurg Holdings' obligations under the
Senior Discount Notes. If Metallurg Holdings were unable to make its interest
payment when due, it could lead to a foreclosure on its assets, principally the
equity of Metallurg, Inc., and create a default under the terms of Metallurg,
Inc.'s Senior Notes indenture.

      SMC's collective bargaining agreement with the United Steelworkers of
America (USW, Local 4836-02), which covered 69 employees at the Cambridge, Ohio
plant, expired on June 6, 2003. Following negotiations, SMC and the union
reached an impasse on June 15, 2003. The union employees are currently working
under the terms of SMC's last offer for a proposed new contract. Metallurg does
not believe that this dispute will have a material, adverse effect on its
financial statements.




                                       22





<PAGE>


         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, 2002, which is incorporated
by reference herein.

                        ITEM 4 - CONTROLS AND PROCEDURES

      As of the end of the period covered by this report, Metallurg carried out
an evaluation, under the supervision of its Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of its
disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based
upon that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that Metallurg's disclosure controls and procedures are effective in
timely alerting them to material information relating to Metallurg (including
its consolidated subsidiaries) required to be included in its Exchange Act
filings.

      There have been no significant changes in Metallurg's internal control
over financial reporting during the quarter covered by this report that have
materially affected, or are reasonable likely to materially affect, Metallurg's
internal control over financial reporting.

                           PART II - OTHER INFORMATION

                    ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

     (a) EXHIBITS

<TABLE>
        <S>       <C>
         10.1     Seventh Amendment to Amended and Restated Loan Agreement
                  (dated as of October 29, 1999), dated as of October 1, 2003,
                  by and among Metallurg, Inc., Shieldalloy Metallurgical
                  Corporation and Metallurg International Resources, LLC, as
                  Borrowers; Metallurg Services, Inc., MIR (China), Inc.,
                  Metallurg Holdings Corporation and Metallurg (Canada) Ltd., as
                  Guarantors; and Fleet National Bank (formerly known as
                  BankBoston, N.A.) as Agent for itself and the other financial
                  institutions parties thereto, and the banks named therein.

         31.1     Certification of Chief Executive Officer pursuant to Section
                  302 of the Sarbanes-Oxley Act of 2002.

         31.2     Certification of Chief Financial Officer pursuant to Section
                  302 of the Sarbanes-Oxley Act of 2002.

         32.1     Certification of Chief Executive Officer pursuant to Section
                  906 of the Sarbanes-Oxley Act of 2002.

         32.2     Certification of Chief Financial Officer pursuant to Section
                  906 of the Sarbanes-Oxley Act of 2002.

</TABLE>

     (b) REPORTS ON FORM 8-K

     Metallurg, Inc. filed a Report on Form 8-K with the Securities and
Exchange Commission on October 15, 2003, reporting the sale of certain
subsidiaries to related parties.







                                       23






<PAGE>


                                   SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on November 10, 2003 on its
behalf by the undersigned thereunto duly authorized.



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








                                       24


                          STATEMENT OF DIFFERENCES

The British pound sterling sign shall be expressed as..................'L'
The section symbol shall be expressed as...............................'SS'