Arcelormittalbook

COMPANY PROFILE

2014

Arcelor Mittal SA

016 889 9111 | www.arcelormittalsa.com

company profile

Steel: One of renewable energy’s key ingredients Editorial: Christian Jordan Production: Chris Bolderstone

The renewable energy industry is well and truly cast in steel. Imagine the wind towers on a wind farm; imagine the mounting systems for solar panels; imagine the turbines, water gates and penstocks in a hydro plant – all made from specialised steel products. In the renewable energy sector, ArcelorMittal is at the forefront with steel innovations that maximise capacity for power generation.

In recent times, wind energy has become one of the buzz phrases of the South African energy industry. There are currently only a handful of commercial wind farms in the country, located mainly in the Eastern Cape, and there are many more being planned and built right now, set for the Eastern, Northern and Western Capes.

The largest wind farms in South Africa are the Cookhouse (70 turbines) and Jeffreys Bay (60 turbines) projects which produce 138.6 and 138 MW respectively.

Wind energy has a growing reputation, not just in South Africa, but all over the world. Wind power is currently the fastest-growing source of electricity production in the world and a single wind turbine can power 500 homes and is one

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of the lowest-priced renewable energy sources.

In 1997 wind power generated only 0.1% of the world’s electricity, this increased to 1.5% in 2008 and 2.5% in 2010.

Large parts of South Africa’s coastal land, as well as various areas inland, have an economically viable source of wind energy. Furthermore, the scale and maturity of the global wind industry have made it a cost-competitive energy option, compared not just to other renewable technologies but also many fuel-based technologies. Also with significant local content, these technologies can also increase employment opportunities in the electricity generation sector.

Obviously, the raw materials involved in the construction of even a small wind farm are vast.

After all the planning, design and legislation comes

ArcelorMittal SA

the purchasing of turbines, cables and perhaps most importantly, steel.

Generally, a tubular construction of steel is used for the wind tower which not only carries the weight of the nacelle and the rotor blades, but must also absorb the huge static loads caused by the varying power of the wind. An alternative to this is the lattice tower form.

In order to guarantee the stability of a wind turbine a pile or flat foundation is used, containing steel concrete-reinforcing bars, depending on the consistency of the underlying ground.

STEEL GIANT This demand for steel has presented huge opportunities for the country’s steel producers and as everyone knows, when it comes to steel in South

Africa, ArcelorMittal is the preferred supplier.

ArcelorMittal South Africa Limited is the largest steel producer on the African continent, with a production capacity of 6.5 million tonnes of liquid steel per annum. The company is part of the world’s largest steel producer, the ArcelorMittal Group which is the world’s number one steel company, with 232,000 employees worldwide.

In the South African wind energy sector, ArcelorMittal South Africa strives to ensure that it has the correct base in place to meet demand for steel that is set to grow across the whole renewable energy sector, not just wind.

“This demand for wind towers is expected to continue until at least 2030 in line with the integrated program from the government,” says Jan Kotzé, Product Manager, Plate and Renewable

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company profile

© ArcelorMittal South Africa

Energy Projects.

“For the past two years ArcelorMittal South Africa have been supplying substantial tonnages into many of the country’s solar projects.

“The total renewable energy industry is very important to us that’s why we’ve introduced a renewable energy rebate for any steel going into these projects. This demonstrates our commitment to these projects and its importance to us. It also to makes industry more competitive against imports.”

Nic de Jager, Marketing Manager, Product and Market development (Flat steel) says: “In general, the company is very committed to green energy principles. We would like to supply steel into the green energy market and we are also exploring alternative energy supply for our plants to counter the rising costs of electricity.”

SOLAR, CSP, WIND Kotzé says that in the renewable energy industry there have been three areas of focus for ArcelorMittal South Africa to date.

“One is solar PV where we’re providing the bulk of the raw materials. Recently we had an enquiry

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from an international company who is dealing with ArcelorMittal Europe regarding a solar plant in Malawi; this is the benefit of us being part of an international group,” he says. “Second is CSP (Concentrated solar power) projects; at this stage a lot of components have been imported from Spain that could have been produced by the local industry and that will be a focus for us this year and next year. Lastly, the wind tower industry where we are planning the plate mill upgrade to supply the heavier plates. Obviously we will have to be very price competitive against imports, especially from China which is a big threat at this point.”

The plate mill at Vanderbijlpark supplies heavy plates required by wind towers and the company is currently finalising plans for the upgrade in order to produce plates of up to eleven tons of steel.

“The upgrade to the plant will be a one-off but we expect demand for towers to continue to grow,” says Kotzé. “The estimated cost will be in the region of $3.5 million.”

“The upgrade is planned to take place during quarter four of 2014. This will enable us to supply heavy plates in quarter one of 2015. Everything is

ArcelorMittal SA still on track and running as planned.”

These upgrades have all been done following close communication with the country’s tower manufacturers including DCD Wind who recently commissioned their facility in Coega and has the capacity to produce 110 towers per year and Gestamp Renewable Industries (GRI) who is in the process of constructing a wind tower manufacturing facility in Atlantis in the Western Cape with the capacity to produce 150 wind towers per annum.

The general development of the industry in South Africa is clearly welcomed by ArcelorMittal South Africa and increase our level of participation in the local industry is a key priority for the company.

“We have been supplying, for the past two years, into many of the country’s solar projects and we’ve supplied substantial tonnages already” “Obviously, as part of the upgrade it’s very important for us to work closely with all potential customers who will be manufacturing the towers. Another focus will be the total local steel manufacturing industry,” says de Jager.

The company also supplied 3000 tons of steel for 20 Vestas towers deployed at the Grassridge wind energy facility in Eastern Cape, 2200 tons of which was sourced from its Vanderbijlpark facility with the balance coming from ArcelorMittal Spain.

The need for local contributions arises from the Department of Energy’s (DOE) implementation of the Renewable Energy Independent Procurement Programme (REIPPPP). This is a tender process consisting of ‘Rounds’ where the most costeffective competitive Economic Development score is awarded a 20 year Power Purchase Agreement (PPA) with Eskom as the off-taker. The National Treasury has fully underwritten the PPAs. Following the first bid window ArcelorMittal South Africa supplied 40,000 tons to 12 solar projects in the Northern Cape, Free State, Limpopo and Western Cape provinces.

The aim is also to supply 30,000 tons of hotrolled and galvanised coil products to eight of the nine solar PV projects being developed following the second bid window.

HYDRO POWER Alongside wind, solar and CSP projects, Kotzé also expects increase growth in hydro power projects.

Popular in Africa with many countries already having installed between one and five GW, the power of falling water has been used to produce electricity for many years.

A lot of the attention surrounding African hydro has been fuelled by the looming Grand Inga Hydroelectric Project. The Grand Inga is the world’s largest proposed hydropower scheme and will be located in the DRC. It is the centrepiece of a grand vision to develop a continent-wide power system. Grand Inga will generate 40,000 MW and will be constructed in six phases of which the Inga III Dam is the first phase. The power generated would be double the capacity of the largest dam in the world, the Three Gorges Dam in China.

Construction is planned to commence in 2016.

“The biggest renewable drive in Africa will be

Growing to Serve, Serving to Grow.

At KGB we believe in Excellence in Execution. Since our establishment in 1983 as the first fully black-owned organisation we have shown consistent performance and growth.

Our Services include:

New Energy Petroleum:

Logistics:

Road transportation of bulkfuel products

Short-haul and long-haul transportation services

Property:

Fleet Maintenance & Engeineering:

Custom property solutionsfor industrial letting & investment

Fully integrated vehicle repairs& trailer building

30 years of specialist experience and reliability in supply chain management and logistics.

Durban: 031 459 2210 | Gauteng: 016 889 7407 | Email: info@kgb.co.za

www.kgb.co.za

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company profile

Š Clotan Steel and Mardo

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ArcelorMittal SA for hydro-power,” agrees Kotzé. “There are plans for many hydro-power plants; some are currently under construction and some are still being planned.

“As far as wind and solar are concerned, I think we are only at the tip of the iceberg, you’ll see substantial growth in the years to come in renewables in Africa.”

South Africa and the DRC signed a Memorandum of Understanding (MOU) in November 2011 for the development of Grand Inga. In May 2013, the two governments signed a co-operation Treaty to jointly develop the Inga III Dam. South Africa will purchase 2500 MW of the total 4300 MW generate, making it the principal buyer for Inga III electricity. All of this means that it is likely that South African companies will be heavily involved in development of the project and de Jager says that ArcelorMittal South Africa will support other African countries where it can.

“Our priorities regarding steel supply will always be firstly to the local market and secondly Africa with special focus on the Sub-Sahara countries,” he says.

“There is also a lot of opportunity for growth in the mining sector as well as the infrastructure sector, with enquiries for renewable projects up in sub-Saharan Africa. On a project basis, we will consider how we can assist with those projects.”

ON-GOING FOCUS The company’s focus on renewable energy projects is not something that has changed, even with the organisational changes that have taken place recently. Back in May, ArcelorMittal South Africa appointed Paul O’Flaherty as its new chief executive. The former financial director of both Group Five and Eskom brings an on-going focus to

the renewable side of the company’s operations.

De Jager says that his appointment has brought positivity to the workforce and it is expected that the focus on renewable projects will form part of his efforts to gain back the company’s domestic market share.

“Right from the very beginning of his tenure, Mr O’Flaherty has emphasised the importance of driving volumes. He told Alec Hogg of BizNews: “What we can do is make sure we get a very consistent, clear message down to the lowest level.

That’s what I’m imploring everybody to do. The message is simple: fill the mills, produce at low cost, and then to the sales department, let’s go and sell this product. Those are the simple, key messages for the entire ArcelorMittal South Africa business.”

But selling product has become more and more challenging recently due to low priced and sometimes low quality imports. Both de Jager and Kotzé are of the opinion that it is important to educate customers about what they’re buying with a dedicated ‘know what you buy’ campaign.

“What many customers do not realise is that transport costs from Gauteng to the coastal regions in the Eastern Cape and Western Cape, can be higher than shipping costs from China.

Our intension therefore will be to have a coastal delivered price for wind towers so that we can be more competitive.”

And as for the renewable projects that the company has been so successful with, Kotzé is in no doubt that South African steel has a big part to play. “Steel is used to create more than 80% of the components required to build wind turbines.

Valued for its strength, flexibility and durability in the field, steel is also 100% recyclable, making wind energy truly renewable.”

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Vanderbijlpark Steel Mill

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ArcelorMittal SA

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