ArcelorMittal SA

COMPANY PROFILE

2015

ARCELORMITTAL SA

+022 709 4000 | www.southafrica.arcelormittal.com

Sustainable steel?

Editorial: Rosie DeWinter

Total World Energy speaks with Richard Holcroft, Reinet van Zyl and Otto Scribante at Saldanha Works to find out, amid the cloud of controversy surrounding the introduction of the carbon tax next year, how this ArcelorMittal site is playing its part in combatting climate change and implementing duty to care to its workforce.

PAGE 2

ARCELORMITTAL SA In the 2015 report released by Sustainable Energy Africa on the use of energy across South Africa, it was revealed that it is currently ranked the 12th-largest greenhouse gas emitter in the world.

Examining the sustainable energy development of 18 South African cities which are home to almost half of the country’s population - occupying 4.5% of land area – the report details that it is these particularly dense areas which must play an essential role in the continued development and proactivity of reducing climate change and implementing sustainable initiatives.

Per capita emissions in South African cities are high, relative to their level of development, the report reveals.

In Johannesburg for example, the emissions per capita are 6.4tons, in Cape Town 7.8-tons and in eThekwini it reaches 7.7-tons.

When comparing this with 4.9-tons per capita in Tokyo or 1.4-tons in São Paulo, the emissions are undeniably high.

Looking at South Africa as a whole, the report states: “The average energy-related emissions is 6-tons of carbon dioxide equivalent per person, which is on a par with cities such as Paris, London or Berlin that have larger populations and higher levels of development.”

With urban populations forecast to reach 70% of the national total by 2030 and 80% by 2050, the demand for modern energy will inevitably surge in correlation with these figures – largely fuelled by economic growth, urbanisation and demographic change.

To address the growing and dominating force of climate change, energy efficiency is no doubt the cheapest, quickest and most direct method with high electricity costs and energy generation constraints

in the country showing few signs of reprieve.

The energy efficiency of streetlights, traffic lights, buildings and water pumps provide huge potential in energy savings, with more than R10 million a year for many municipalities. “Local government’s own operations may account for only about 2% of total municipal electricity consumption but are a potential gold mine for efficiency implementation,” says the report.

Cape Town has the potential to save an exponential R13.2 million a year on street lighting alone with Johannesburg able to save an estimated R21.3 million on bulk water supply and wastewater treatment.

With such key and tremendous savings long-term for the country, these energy initiatives and sustainable developments do not necessarily provide an immediate result but certainly emphasise a long-term vision, as the report outlines.

“The economic benefits, through greater efficiency and (in the medium to long term) cheaper energy sources, are not instantaneous. Therefore, the transition to sustainable energy requires a high degree of leadership, innovation and partnership. This vision must go beyond short-term municipal budget constraints, immediate consumer wants and short-sighted political agendas.”

ENERGY SAVING INITIATIVES In an attempt to curb carbon emissions and reduce environmental impact, energy saving initiatives are being implemented across different industries, successfully showcasing

PAGE 3

large cost savings and encouraging sustainable results.

One company in the midst of combatting climate change and successfully introducing energysaving initiatives is ArcelorMittal SA. An essential component in South Africa’s infrastructure developments, steelmaking requires natural resources, leaving an inevitable environmental footprint but even with steelmakers’ best efforts to curb these GHG emissions, the industry is severely restricted and emission reductions called for by climatologists cannot be achieved with the current available technologies.

Total World Energy speaks with the management team at its Saldanha Bay Works plant to

PAGE 4

find out how the implementation of energy-saving initiatives is having a positive impact and the importance of sustainable practices at this site.

Using cutting edge technology, Saldanha Works successfully produces high quality, ultra-thin hot rolled coil (UTHRC) at a current capacity of 1.2 million tons per annum, largely for the export market.

SUSTAINABLE SOLUTIONS Certainly no stranger to reducing its environmental impact, Saldanha Works stands as the only steel mill in the world which combines the Corex and Midrex process into a continuous chain. This pairing eliminates the requirement of blast furnaces and coke ovens, placing it in a position to be a world leader in environmental management and emission control.

“We differ from the other business

units in that we are located in an environmentally sensitive area, and therefore need to be very vigilant as regards our responsibilities,” explains Richard Holcroft, General Manager at Saldanha Works.

With two key focus areas to tackle, Holcroft explains fugitive emissions remain one of the sites main challenges in its fight to reduce environmental impact from its steel operations.

“In our environment we use a lot of raw materials and we move these from one point to the next so fugitive emissions remain a challenge. We are located in a bay and subjected to different wind patterns, the strength of which varies, we can have very strong north winds and south-east winds, so we have to be able to manage our raw materials accordingly. That’s the first challenge we face on a regular basis.

“The second big challenge is fugitive emissions from the processes,” Holcroft explains. “We have two focus areas there - the iron-making unit and the steel-making unit. We will be implementing an improvement to help correct a shortcoming we have already identified in our Corex iron-making unit to help prevent fugitive emissions.

“That one is a very limited capex spend but the bigger spend will be in the steel-making area for what’s called our Conarc Process – essentially an electric arc furnace type operation. The current fume extraction system design has its limitations and at times is really not the optimum solution for our operation.

“The new design will be implemented in a phased approach starting in 2016, subject to the capital being realised as requested. If that is all solved and implemented, then our two biggest challenges for the

ARCELORMITTAL SA Saldanha Works, in terms of fugitive emissions, will have been solved.”

In 2012, it was reported that Saldanha Works saved an estimated R127 million as a result of the R21 million spent on energy saving initiatives it introduced in 2011.

With the new initiatives having an evident and positive impact on the site’s operations, a study conducted by the United Nations Industrial Development Organisation showed that the total savings could reach R362 million by 2016, even if no further energy efficiency investments were made by the plant.

In a process which requires significant energy, engineering and technology inputs, the introduction of a world-class manufacturing program helped optimise the facility’s energy management program, placing Saldanha Works

Upington

Kimberley

Saldanha

at the forefront of the Group’s lowest-cost producers in 2014.

The water treatment facilities at Saldanha are uniquely configured to make the best use of the natural arid conditions to evaporate brine emanating from desalination processes that are utilised.

“In terms of water management - we consume significant quantities of water - we have our own water treatment plant,” explains Otto Scribante, Manager of Environment & Quality Management. “Almost all water, except that which is lost to evaporation, is cleaned and recycled, and includes a Reverse Osmosis (RO) treatment process.”

A world leader, Saldanha ranks amongst the world’s best regarding water abstraction for steelmaking purposes.

“The plant is zero effluent discharge and we adhere to that very strictly. We

Worcester

are in a low rainfall area, our typical rainfall is 170mm per annum, which is very low so we don’t have a huge problem with effluent caused by rain, so that is slightly easier to manage,” explains Scribante.

DUTY TO CARE With an array of sustainable and successful initiatives implemented, Holcroft explains that it is constant environmental awareness amongst its employees which is so vital to the plant’s continued efforts to reduce its long-term environmental impact.

“We have an environmental manager and a team whose objective is to keep us honest and to ensure that each and every one of us understands that we have a duty to care for the environment. We are located in an environmentally sensitive area and any sort of contravention will not be tolerated,” Holcroft explains.

Johannesburg

The Natural Choice in Transportation Services From the time your cargo arrives alongside till the time we deliver it where it’s needed,VDM offers you seamless transportation solutions.

We also guarantee overseeing the quality disembarkment of all goods and provide storage facilities to keep it safe and secure if needed.

We offer: Road Transport Specialised Project Logistics

Container Depot Services

Intermodal Solutions

Integrated Rail Solutions

Warehousing & Containerisation

Ships Agencies

Deon van der Merwe

082 658 9785 | 022 714 3231 Deon@vdmsa.com

www.vdmsa.com

PAGE 5

“We have an area air quality management officer who is also continuously monitoring business in the area. You rely heavily on the thinking and actions of your workforce and that’s really education and training and making sure they understand their responsibility as regards our duty to care for the environment.

“The environmental department keeps us honest and challenges us all the time. We have weekly shift sessions, where we will sit with the shift team for that day and go through safety, the environment and production issues. I think it’s about constant environmental awareness and ensuring the team understands that we have a duty to care for the environment, that’s what we really try to do.”

“We’ve shown a lot of improvement in terms of our energy consumption, but where we are now, we have saved and maintained but looking to the future, we need technology injection”

CARBON TAX 2016 With shifting rainfall patterns spreading across South Africa increasing the risk of flooding and droughts, global climate negotiations have warned this is a result of climate change with the world now two degrees warmer than it was 100 years ago.

Before the Industrial Revolution, carbon concentrations in the atmosphere were recorded at just 250 parts per million but today, this has almost doubled, reaching 400 parts per million and with more heat being trapped in the atmosphere, temperatures are continuing to rise at an alarming rate.

In an effort to mitigate climate change and lower emissions, The National Treasury (Department of Finance) has introduced the carbon tax. First announced in 2010, it proposes to

Benefits of Optimization of Nozzle Systems Pressure on the steel industry to continuously reduce their energy consumption and to reduce emissions for environmental reasons is leading to more intensified efforts to optimize systems in the various sections of the steelmaking process. With Hot Rolling, the descaling systems have always been a focus for surface quality and energy saving programs.

With this in mind, leading nozzle and spray system manufacturer Lechler GmbH developed the next generation in descaling technology - Scalemaster HP-Superior. With advancements in CFD design, the HP-Superior nozzle system delivers improved impact force (up to 20%) at the same operational pressure, flow rate and spray height.

Last year exclusive representative in Southern Africa Industrial Nozzles & Systems (INS) embarked on a roll out campaign, with the various plants at ArcelorMittal South Africa (AMSA) to identify and optimize their various descaling systems. With a specially developed software program (DESCALE 7.X) Lechler is able to simulate current installations. This benchmarking enables Lechler to determine the overall impact value, which the plant can elect to either improve or maintain. However, in most cases at AMSA, due to the improved impact force of the HP-Superior nozzles, Lechler supplied nozzles, which offered improved or similar impact force, but with reduced flow rates to that of the existing nozzle system. This reduction in flow rate is a direct saving on energy costs, with reduced pumping capacity and less strain on water recirculation plants. Feedback from AMSA on some upgraded installations indicates reductions of over 20% in flow rate, as such energy costs.

Further benefits of new Scalemaster HP-Superior nozzle system is the compatibility with existing Scalemaster nozzles. With no requirement for modifications to the header layout, there is no capital investment. Although with the potential energy savings, optimization of a header layout would be a worthy investment.

PAGE 6

ARCELORMITTAL SA place a price of R120 a ton on carbon With taxes on electricity already emissions. in place, an additional tax could Hoping to change the behaviour and potentially be destructive for many attitude of consumers and producers companies - currently ArcelorMittal and penalise those that emit too much SA already pays in access R100 carbon, this introduction has since been million in environmental levies which delayed, facing severe objections and are raised as part of its electricity strong lobbying in South Africa. consumption.

Reinet van Zyl, Energy Manager at “I’m very serious if I say you will Saldanha Works, explains why it poses probably lose the bulk of the remainder a potentially catastrophic result, not of the manufacturing industry,” van just for ArcelorMittal SA, but for the Zyl explains. “We’re an export plant industries operating across South Africa. and focus on exporting into Africa so “It’s not just us or even the steel where our competitors may not have industry, the manufacturing industry the burden of a domestic carbon tax, in South Africa has been battling, for us to compete in those markets decreasing over the years from 25% of GDP to around 13% currently. It will actually destroy the remainder of the manufacturing industry if it is introduced in the way that has been currently proposed.”

Posing an undeniably big risk to the South African economy and taking into account the issues of limited alternative technology available in the short to medium term, the current carbon tax design will, for all carbon and energy intensive industries, result in a highly disproportionate tax load to bear which may detrimentally affect the feasibility of such industries.

“It will destroy the sector in South Africa in five years - between your metallurgical processes electricity availability and priceOptimize and spray solutions from Lechler the carbon tax - and will closewith down those manufacturing facilities•inDescaling South • Continuous casting Africa if it goes ahead in the current • Roll cooling (hot & cold) format,” explains van Zyl. • Processing lines In the case of ArcelorMittal,• the System audits • Process optimization P proposed carbon tax would have

with carbon tax on top, is a serious challenge that we face and it will be really difficult.”

AN ENERGY EFFICIENT FUTURE? With the benefit of its more modern design, van Zyl explains that Saldanha Works has been lucky in that it hasn’t encountered many significant issues – “In general, I believe, if you focus on sustainability and being environmentally responsible, it makes good business sense.

“One of our biggest costs is energy so to be efficient and reduce

NOZZLES AND SYSTEMS

FOR THE STEEL INDUSTRY

NOZZLES AND SYSTEMS

FOR THE STEEL INDUSTRY

eroded in excess of 50% of EBITDA at times if it were payable based on past financial performance - this is not

SCALE MASTER

HP

®

S U P E R I O R

Exclusive representative in Southern Africa:

©CM 110714LS

a sustainable situation for steelmakers or other related industries. The carbon tax, in its current form, will have a financial impact of around million Cape+27 Town: 557 3822 | Johannesburg: +27 11 236 8618 CapeR600 Town: +27on21ArcelorMittal 557 3822 SA’s | Johannesburg: 11+27 23621 8618 www.industrialnozzles.co.za | www.lechler.de www.industrialnozzles.co.za | www.lechler.de operations, which is simply not sustainable.

PAGE 7

your carbon footprint makes good economic sense. We’ve shown a lot of improvement in terms of our energy consumption, but where we are now, we have saved and maintained but looking to the future, we need technology injection.”

An estimated R1 billion investment, van Zyl explains ideally what this injection will involve and how it will assist Saldanha Works in its bid to become even more energy efficient.

“The Aerial Gas Distributor (AGD) is the latest Corex technology offered

by S-VAI. The AGD will improve the operation and efficiency of the Reduction Shaft by improving gas distribution. Campaign lengths between shaft cleaning shut-downs

PAGE 8

“One of our biggest costs is energy so to be efficient and hence reduce your carbon footprint, it makes good economic sense”

are significantly increased and the average pellet consumption can also be reduced. Improved metallisation of the burden in the Reduction Shaft can then be expected which will result in improved fuel rate and tempo.”

In an effort to implement more energy initiatives and lower its energy consumption, ArcelorMittal SA is assuredly riding on a successful wave across the Group.

And despite the looming introduction of the carbon tax early next year, Saldanha Works remains dedicated and focused on its unerring compliance to maintaining strict environmental initiatives and perhaps most importantly, spreading its duty to care mantra to its team of steadfast employees

ARCELORMITTAL SA

Select PPE, 17 years experience in PPE management.

Select PPE, 16 years experience in PPE management.

• Onsite stores • Retail offerings in key areas • Onsite stores • Vending solutions • Retail offerings in key areas 2015 • Deliveries country wide • Vending solutions • Occupational services • Deliveries country hygiene wide • Occupational hygiene services

SOUTHERN AFRICAN PERSONAL PROTECTIVE EQUIPMENT VISIONARY INNOVATION LEADERSHIP AWARD

Over 18,000 PPE items available Over 000 PPE items You18have tried theavailable rest, now partner with the Best.

You have tried the rest, now partner with the Best.

Tel: +27 (0)11 296 3600 • +27 (0)82 888 9225 Tel: 0861 SELPPE • 011-296 3600 yolandih@selectppe.co.za www.selectppe.co.za Fax: info@selectppe.co.za•• www.selectppe.co.za Protea Street, Aureus, Randfontein, South Africa PO Box383669, South Hills, 2136, 3 Protea Street, Aureus,1760, Randfontein, South Africa 1760

PAGE 9

©CM 021015C

+44 (0) 1603 411569 info@totalworldenergy.com East Coast Promotions Ltd, 2 Ardney Rise Norwich, Norfolk NR3 3QH

www.totalworldenergy.com