EXCLUSIVE INTERVIEW
MINIMILLS
COATINGS
INNOVATIONS
Philip K Bell, president of the Steel Manufacturers’ Association
Myra Pinkham talks to the electric steelmaking industry in the USA
Strip coating solutions for steel, by Fives Group
Three pages of the latest product news from around the world
www.steeltimesint.com November/December 2017 - Vol.41 No8
STEEL TIMES INTERNATIONAL – November/December 2017 – Vol.41 No.8
EXCLUSIVE INTERVIEW: DAVE STICKLER OF BIG RIVER STEEL cover ad 11.2017.indd 1 STISTI Cover nov.indd 1
11/20/1712:04:41 3:24 PM 22/11/2017
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CONTENTS - NOVEMBER/DECEMBER 2017
EXCLUSIVE INTERVIEW
MINIMILLS
COATINGS
INNOVATIONS
Philip K Bell, president of the Steel Manufacturers’ Association
Myra Pinkham talks to the electric steelmaking industry in the USA
Strip coating solutions for steel, by Fives Group
Three pages of the latest product news from around the world
1
www.steeltimesint.com November/December 2017 - Vol.41 No8
STEEL TIMES INTERNATIONAL – November/December 2017 – Vol.41 No.8
Picture courtesy of: Midrex
EXCLUSIVE INTERVIEW: DAVE STICKLER OF BIG RIVER STEEL cover ad 11.2017.indd 1 STISTI Cover nov.indd 1
11/20/1711:34:38 3:24 PM 21/11/2017
EDITORIAL Editor Matthew Moggridge Tel: +44 (0) 1737 855151 matthewmoggridge@quartzltd.com
16
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Consultant Editor Dr. Tim Smith PhD, CEng, MIM Production Editor Annie Baker Advertisement Production Martin Lawrence SALES International Sales Manager Paul Rossage paulrossage@quartzltd.com Tel: +44 (0) 1737 855116 Sales Director Ken Clark kenclark@quartzltd.com Tel: +44 (0) 1737 855117
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Managing Director Steve Diprose stevediprose@quartzltd.com Tel: +44 (0) 1737 855164 Chief Executive Officer Paul Michael SUBSCRIPTION Elizabeth Barford Tel +44 (0) 1737 855028 Fax +44 (0) 1737 855034 Email subscriptions@quartzltd.com Steel Times International is published eight times a year and is available on subscription. Annual subscription: UK £182.00 Other countries: £258.00 2 years subscription: UK £324.00 Other countries: £460.00 ) Single copy (inc postage): £41.00 Email: steel@quartzltd.com Published by: Quartz Business Media Ltd,
2 Leader By Matthew Moggridge, editor, Steel Times International. 4 News Astounding facts and figures, industry news and diary dates.
Quartz House, 20 Clarendon Road, Redhill, Surrey, RH1 1QX, England. Tel: +44 (0)1737 855000 Fax: +44 (0)1737 855034 www.steeltimesint.com Steel Times International (USPS No: 020-958) is published monthly except Feb,
6 Innovations The latest new products.
May, July, Dec by Quartz Business Media Ltd and distributed in the US by DSW, 75 Aberdeen Road, Emigsville, PA 17318-0437. Periodicals postage paid at Emigsville, PA. POSTMASTER send address changes to Steel Times International c/o PO Box 437, Emigsville, PA 17318-0437. Printed in England by: Pensord, Tram Road, Pontlanfraith, Blackwood, Gwent NP12 2YA, UK ©Quartz Business Media Ltd 2017
11 USA update Trump softens tone on China. 13 Latin America update Mexico’s new hot strip mills.
Profile: Dave Stickler, Big River Steel 16 Rolling on the river. 24 “We are a lifecycle partner” 26 Electric warriors Sustainable steelmaking. 32 Minimills Together in electric dreams. 37 Coatings Strip coating solutions for steel. 42 Perspectives A breakthrough in corrosion protection? 44 History Ireland’s blast furnaces.
ISSN0143-7798
www.steeltimesint.com
Contents.indd 1
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LEADER
Do steelmakers dream of electric arc furnaces?
Matthew Moggridge Editor matthewmoggridge@quartzltd.com
I drove all the way from Memphis, Tennessee, to Osceola, Arkansas, and I got a lot more than a lousy tee-shirt. I got an exclusive interview with Dave Stickler, CEO of Big River Steel (BRS), the most technologically advanced steel minimill on the planet, thanks to the combined efforts of the company and its technology supplier, SMS group of Germany. It was always going to be an interesting encounter as Big River Steel is the talk of the town (and the world) in a big country where electric steelmaking rules the roost (accounting for 69% of all US steel production). Stickler is the electric warrior, the metal guru, the ‘new kid on the block’ of EAF steelmaking, and the David to the integrated steel mills’ Goliath. When Betty Hutton and Howard Keel sang Anything You Can Do in Annie Get Your Gun, little did they know that the song title would prove relevant to the phoney war that exists between integrated steelmakers and their ‘friends electric’. In 1980 when Nucor Corporation announced it was going to make flatrolled steel, the integrated community gasped, like the Toecutter in Mad Max One, and countered that EAFs – ‘those
meddlin’ kids’ – were good for just one thing: making garbage cans. How wrong they were! These days in America, electric steelmaking is clearly the leader of the pack. BRS was designed with a clean sheet of paper to produce steels that, prior to the company’s arrival, had never been produced by a minimill. In short, BRS has adopted the motto of the Starship Enterprise, ‘to boldy go where no EAF steelmaker has gone before’, and soon it will be producing fully processed, grain oriented steels and more. The key to the current and future success of BRS is its Flex Mill, which enables the company to compete not only with other minimills, but also with integrated steelmakers. Stickler has his sights firmly set on a variety of new markets including that of electric vehicles and their charging stations too. Is this the beginning of the end of integrated mills? Some say yes, but others believe there will always be a place for ‘virgin steel’. That said, today less than 45% of flat-rolled steel is produced by integrated steel mills. In 10 years it will probably be less than 35%, says Stickler.
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4 NEWS IN BRIEF
INDUSTRY NEWS
“Remember, a Chinese mill doesn’t have
US Steel penalised for illegal discharging The State of Indiana is seeking penalties against US Steel for its illegal discharging of hexavalent chromium at the steelmaker’s plant in Portage, Indiana, and also its more recent illegal wastewater discharge late in October for which the company sought ‘confidential treatment’, according to a report by nwi.com.
SAIL targets ‘untapped geographies’ Steel Authority of India Ltd (SAIL) plans to export 10% of its saleable steel to new overseas markets and is streamlining its channel management to address the needs of customers in ‘untapped geographies’ such as Africa, Philippines, Indonesia, Thailand, Sri Lanka and Bangladesh. Chairman PK Singh said that ‘big challenges offer great opportunities’, according to a report on BusinessStandard.com
Making the most of emerging technologies Tata Steel will exploit emerging technologies – such as Industry 4.0 – to improve its performance, according to the Indian steel giant’s managing director, TV Narendran. Speaking while visiting the Kalinganagar plant to celebrate its second anniversary, Narendran said that technology is evolving and that there was always scope to leverage it better to enhance performance.
Sideways moving elevator a ‘game changer’, says TK An elevator (or lift) without ropes that can move up, down and sideways is one of 25 ‘best inventions’ of 2017, according to Time magazine. The elevator in question was developed by ThyssenKrupp Elevator.
Tenaris ‘state-of-the-art’ pipe mill up and running Global steel pipe giant Tenaris, a leading supplier of tubes and related services for the world’s energy industry, is fully operational at its new $1.8 billion mill near Houston, Texas, USA. The plant is producing pipes for the shale oil and gas wells in Texas, Oklahoma and beyond, according to a report in the Houston Chronicle. One of the plant’s chief objectives is to compete with Asian imports.
450 workers like we do, some of them have over 100,000. You can’t have those people
”
out on the streets, right?
Source: Dave Stickler, CEO, Big River Steel.
New reversing mill for Vietnamese steelmaker Vietnamese steelmaker Nam Kim Steel rolled the first coil on its new reversing cold mill ahead of schedule. The mill, which was installed by SMS group, represents the third full line supply of a cold rolling mill to NKS by Esmech Equipment and SMS India, both part of the SMS group. The new RCM mill has an annual capacity of 200kt and can roll
strips with widths up to 1,250mm down to a minimum final gauge of 0.11mm. The very first strip rolled had a width of 1,224mm, which is close to the maximum width, claims SMS group. Key components of the mill, such as CVC plus roll shifting technology and the X-Shape flatness measuring and control system, were supplied by SMS group from Germany.
Record high for global stainless steel MEPS forecasts that world crude stainless steel output will reach an all-time high of 47.5Mt in calendar year 2017. Continued growth in global production is expected in 2018 with a new peak volume of 49Mt forecast for next year. China’s outturn during the second quarter was lower than MEPS’ previous estimate, as mills cut back production, in an effort to comply with the government’s environmental targets. Recently published statistics by the China Stainless Steel Council indicate that output recovered strongly, in the July/September period. In Japan, 2017 crude stainless steel production is forecast at
3.125Mt, in total – an increase of just 1%, compared with the 2016 figure. MEPS’ forecast for 2018 is for an additional 50kt. In South Korea output is expected to develop strongly this year after a moderate 2016 performance. Growth of nearly 5% to a total of 2.375Mt is anticipated for this calendar year and a similar scale of expansion is predicted for next year. After recording a rise of nearly 14% last year, Taiwan’s annual outturn for 2017 is forecast to increase by a further 9% – another strong result, with around a 7% rise expected in 2018. With US Q2 output higher than previous estimates, MEPS
has upgraded it 2017 forecast to 2.75Mt. This would equate to a year-on-year increase of more than 10%. MEPS anticipates moderate growth of around 100kt in 2018. EU production during the three months from April to June, were slightly lower than anticipated, so MEPS revised its expected total, for 2017, downward, to 7.35Mt– an increase of less than 1% compared with the outturn in the previous 12 months. European mills are expected to be busier in 2018 than in the current year. MEPS predicts an annual output of around 7.5Mt next year. Source: MEPS - Stainless Steel Review
Tangshan/Primetals joint venture Primetals Tangshan Technology Services is a new joint venturebetween Primetals Technologies and HBIS Tangshan Iron and Steel Group (Tangsteel). Headquartered in Tangshan, the JV will operate in several locations within Hebei province in China. It will provide ‘comprehen-
sive technology-based services’ in off-line maintenance, equipment refurbishment, condition monitoring and operational support for Tangsteel slab casters, as well as other customers. The chief objective of the new company is to improve operational efficiency and product quality. Karl
Purkarthofer, senior vice president and global head of metallurgical services at Primetals Technologies, described the new JV as a major milestone for technology-based services in China, adding that it will elevate the successful partnership between Tangsteel and Primetals Technologies.
November/December 2017
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DIARY OF EVENTS
INDUSTRY NEWS
Astounding Facts and Figures...
Nearly 69% of all the steel being produced in the USA is by EAFs compared with only a 47% share in 2000. Source: Metal Strategies Inc.
Steel food cans are the most recycled food package. Source: Koch’s.
60% of the ArcelorMittal Orbit structure at the Queen Elizabeth Olympic Park in the UK is made from recycled steel, including washing machines and used cars. Source: ArcelorMittal Orbit
600 steel cans are recycled every second in the USA.
One year ago a gas station minimart in Osceola, AK, USA, was selling 3,000 pizza slices per annum. A year later business tripled to 9,000 thanks in large part to Big River Steel opening a steel mill on the outskirts of town. Source: Steel Times International
Steel is roughly 1,000 times stronger than iron in its purest form, and it can be recycled without loss of strength. Source: Unitech.
A steel arch being built to shield one of Chernobyl’s damaged nuclear reactors will be the world’s largest landbased moving structure. Source: UberFacts
On average, spider silk is five times stronger than steel – it is one of the only stronger materials on the planet Source: Tata Steel in Europe
November 2017 28-30 Stainless Steel World Conference, Maastrict, the Netherlands. Organised by KCI World, this event is often described as the foremost gathering of the global stainless steel community. It offers delegates the chance to exchange knowledge and build up their professional networks. For further information, log on to www.stainless-steel-world. net/ssw2017
January 2018
Source: Mughal Steel.
Common steel industry wisdom in the USA states that it’s just too expensive to build a new integrated mill when you consider that just relining a blast furnace costs around US$100 to US$200 billion. Source: Bradford Research Inc.
5
22 9th Annual Rebar & Wire Rod Conference, Planet Hollywood Las Vegas Resort and Casino. Organised by Steel Orbis, this event is entitled Expectations versus Reality. It discusses how the US long product market has fared in the last year and includes updates and forecasts on demand, production and trade. For further information, log on to www.steelorbis.com
March 2018 19-20 Metals in the Future conference, Hilton London Paddington. Organised by CRU. A new conference exploring the long-term impact of green technology on metals supply and demand. The conference covers steel, aluminium, base metals, minor metals and ferroalloys. For further information, log on to www.crugroup.com
April 2018
The number of kilograms of liquid steel made each year for every person alive globally is 200kg. Source: Tata Steel in Europe
World crude stainless steel output will reach an all-time high of 47.5Mt in calendar year 2017. This represents a 3.8% increase on the previous record figure, set last year. Source: MEPs.
16-19 IEEE PES T&D Conference & Exposition, Denver, Colorado, USA. Organised by IEEE. A conference focused on the power and energy industry. For further information, log on to www.ieeet-d.org 16-20 Tube Dusseldorf, Dusseldorf Fairgrounds, Germany. Organised by Messe Dusseldorf. Steel tubes of all types and sizes and also plants and machinery for the production and processing of tubes will be the focal point of this event. For further information, log on to www.tube.de
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INNOVATIONS
Bradbury Group introduces new Flat Trak monitoring system Hydraulic levelling technology specialist Bradbury Group claims that it is continuing to lead the industry in terms of innovation and ease of use. The company’s new Flat Trak CL monitoring system is claimed to be accurate, intuitive and easy to operate. The equipment monitors material flatness prior to shearing, which greatly reduces the amount of scrap material produced. The system incorporates a laser measurement system to acquire an accurate surface shape, says Bradbury. The laser view of the material is shown in real time and displayed on the operator screen in the form of a three-dimensional topographical view. Material shape is measured in I-units so verification of flatness is achieved per ASTM A568. “The software analyses the surface of the material and offers a suggestion to correct it. Once selected by the operator, the e-Drive leveller adjusts and the desired material flatness is achieved. Once the material is flat within the preset I-unit specifications, the software continuously monitors the flatness in automatic mode and adjusts the leveller for correction when needed,” Bradbury explained, adding that Flat Trak CL is on duty 24/7. For further information, log on to www.bradburygroup.com
Hoesch buys PROFILEMASTER Switzerland-based Zumbach Electronics recently sold one of its PROFILEMASTER SPS 800-S8 profile measuring systems to Hoesch Schwerter Profile GmbH of Germany. Hoesch is part of the Italian Calvi Holding group and produces various steel profiles on its hot rolling mill, including customised special profiles, which are used in virtually all areas of the steel processing industry. Hoesch decided to buy a PROFILEMASTER in order to meet increasing demand for
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INNOVATIONS
7
Leybold increases energy efficiency of its diffusion pumps While it is widely thought that diffusion pumps are ‘mature’ in terms of their potential for technological development, Leybold, a vacuum pump supplier based in Cologne, Germany, has ambitions for its range of products. As a result, while diffusion pumps have no moving parts and the principle of their operation is based on steam propellants, Leybold claims to have ‘significantly reduced the energy consumption of the established DIP and new DIJ diffusion pump series’ using intelligent technologies and innovations. Leybold is now offering a number of optimised models and accessories that it claims are flexible and can be implemented worldwide into the relevant diffusion pump applications. According to Leybold, the new DIJ family incorporates an optimised housing design, offering connections for both ANSI flange and ISO flange components as well as various electrical connection variants. In fact, the company’s new five-stage nozzle system of the DIJ series has been especially improved for the pressure range from 10-2 to 10-3 mbar. Through design changes, Leybold has been able to reduce energy consumption by an average of 30% without sacrificing performance, it is claimed, and there are further improvements in terms of servicabilty and integration into customer systems. Leybold believes that energy lowering offers many advantages in terms of improved energy balances as well as noticeable reductions in operating costs over the entire service life of the equipment. The greatest savings potential, claims Leybold, was achieved by selecting an improved heating
accuracy and reliability of steel profiles and increase the efficiency of its hot rolling mill. Zumbach says it will give the company a more competitive position in the market and reduce start-up and changeover times significantly. “It allows them to make a huge leap forward in manufacturing capability benefitting from the latest technological advantages,” Zumbach said. Zumbach is a leading supplier of non-contact measurement solutions for the steel industry, as well as the wire and cable and plastics and rubber industries. For further information, log on to www.zumbach.com
system and adjusting it to produce the propellant steam. An optimised arrangement of heating elements in the boiler room, loss-free energy transmission and thermal insulation saves additional energy. An optional energy regulator reduces the diffusion pump’s power consumption. “This is useful because a high heating power does not automatically lead to a higher suction capacity,” claims Leybold. “Full heating power during a typical production cycle must only be used during the initial heating up of the pumps boiler room.” Leybold says that the necessary energy supply can be controlled exactly using the controllers’ settings. Sensors in the boiler room measure the oil and heater temperature and once the optimum has been reached, the heating output is lowered. Power consumption is adapted at the operating points using an energy regulator, which is operated manually or via a PLC. Measured pump data is stored inside the regulator and can be easily integrated into the customer’s own process controller or exported and evaluated via a USB port. Depending on the propellent fluid, the optimum target temperature in which the liquid develops its respective maximum performance is adjusted by the digital energy regulator. “Compared to the energy consumption of unregulated standard pumps, energy savings of up to 50% are possible,” says Leybold, but it all depends on the process cycle. There are, says Leybold, a large number of industrial users benefitting from the economic and ecological improvements that have been made to ‘this established high vacuum pump’ and metallurgy is just one area that is reaping the benefits, the company claims. For further information, log on to: www.leybold.com November/December 2017
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INNOVATIONS
CONDAT D for steel mills
CONDAT, a market leader in the development of fire resistant fluids formulated from organic ester bases have recently received the latest Factory Mutual Global approval tests for the company’s CONDAT D fluids. This means that they have been officially certified as ‘approved fire resistant fluids’. CONDAT D46 and D68 hydraulic fluids have been widely used for many years in all industries including steel production where protecting employees and equipment against fire is essential.
According to CONDAT, CONDAT D fluids prevent fire propagation and are self-extinguishing. They reduce significantly the risks presented by the use of a mineral oil in hydraulic installations, for example, when a pipe breaks or when oil is sprayed out due to leaks near a flame. The CONDAT D fluids range have all specifications requested to control maintenance costs and consumption, such as high oxidation resistance, anti-wear properties and a high viscosity index. They are biodegradable and non-toxic, and are
classified WGK1 according to the latest German water hazard classifications. They allow users to limit their pollutant rejects and to adopt an environmentally friendly policy, says CONDAT. For the steel industry, CONDAT lubricants include HFC and HFA fire hydraulic fluids, continuous casting and hot rolling greases, and couplings and spindle greases. For further information, log on to www.condat.fr
Highest accuracy, performance and value with NDC’s W200 US-based NDC Technologies, a leading global provider of precision measurement and control solutions, claims that producers continue to look for innovative and cost-effective ways to implement high-performance measurement systems. The company says it is meeting this demand with ‘market-driven solutions for high-value hot mills’. Its W200 optical width gauge is designed to help hot mills produce higher quality products, increase productivity and realise significant manufacturing savings, says NDC. According to Mike Ramsey, director of NDC’s metals business, the IRM brand of metals gauging systems has been synonomous with providing accurate, reliable measurements to high-value hot mills worldwide. “Today these IRM products are now part of the NDC Technologies solutions portfolio and integrated with NDC’s most advanced and intelligent measurement technology,” he said, adding that ‘these expanded measurement capabilities provide hot mills with best-in-class gauging systems.’ Ramsey said that hot mills can take advantage of this ‘world-class’ performance at ‘exceptional introductory prices’. NDC’s metals gauging systems have a long heritage in the steel industry, serving the world’s leading manufacturers. The W200 Optical Width Gauge uses the most advanced stereoscopic measurement technology to accurately and consistently measure product width across a range of process conditions. This system is installed above the product in hot strip and plate
mills, and provides high-resolution true width measurement from an ultra-stable optical bench with long-life lasers. The W200 incorporates over 30 years of NDC/ IRM experience in manufacturing optical width and flatness gauges for the metals industry. Advantages include flexible scalability to meet unique application requirements, the highest measurement performance driven by the most advanced technology, and the lowest cost of ownership, claims NDC. The system can also be equipped with the Beta LaserMike LaserSpeed length and speed gauge for crop shear optimisation, marking and cutting control, discrete coil and plate length, elongation and differential speed applications. The W200 is based on NDC’s proprietary Total Distributed intelligence (TDi) architecture which, says NDC, creates a more powerful, yet simpler system – providing industry leading measurement performance, better uptime, easier maintainability and low cost of ownership. This successful architecture has been proven across thousands of different processes and applications since its introduction in 2006. For further information, log on to www.ndc.com
November/December 2017
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USA UPDATE
Trump softens tone on
11
China
The US steel industry closely followed US President Donald Trump’s five-nation tour of Asia in November, considering that the five nations in question – Japan, South Korea, China, Vietnam and the Philippines – post trade surpluses with the United States. By Manik Mehta*
INTEREST was at its peak when Trump visited China, which the US steel industry portrays as the cause of its ills. China, which posts huge trade surpluses in its trade with the US, is engaged in dumping, according to the US steel industry, because Chinese steel export prices are lower than the actual production costs. US steel companies say that China’s unfair trade practices are destroying American jobs, though some US experts maintain that this has more to do with the growing use of robots and automation. But Trump’s tough language about punishing China for what he once described as “predatory economics”, appeared dramatically softened in Beijing where he presented himself as an ideal guest while rubbing shoulders with the re-elected communist party’s strongman Xi Jinping who dangled the business carrot to make the guest forget what he was supposed to say in China. US steel manufacturers, who see China’s trade policies as a challenge for the global steel industry, blame the massive subsidies given to China’s steel manufacturers for the US steel industry’s inability to compete against less expensive Chinese steel. Many US steel pundits were disappointed over Trump’s focus on North Korea’s nuclear threat instead of on trade issues
in talks with China; of course, China will extract a price from the US in terms of trade concessions if it pressurised North Korea to tone down its nuclear activities. The Congressional steel caucus cochairman Mike Bost (R-IL), co-chairman Rick Crawford (R-AR), and vice-chairman Peter J. Visclosky (D-IN), had jointly addressed a letter to President Trump, urging him to represent the interests of the American steel industry and its workers during his visit to China. Specifically, the letter urged the President to address the issues of China’s chronic global steel overcapacity, illegal government subsidies and state-owned enterprises, and other trade distorting practices that have harmed the American steel sector. “American steelworkers are constantly threatened by the unfair trade practices of China. Today, China produces more steel than every other country in the world combined and contributes over half of the 700Mt of global steel overcapacity. We know that America makes the most innovative and cost effective steel in the world, but we cannot compete against China when they do not follow trading norms,” the letter said, adding that American steelworkers’ jobs are constantly threatened by China’s unfair trade practices. “For years, China has stated that it will work
to address the issue of steel overcapacity by imposing capacity reductions, however those words continue to ring hollow.” The letter reminded the President of the steel industry’s importance to the US national economy and the national security. Trump had already directed US Trade Representative (USTR) Robert Lighthizer, in August 2017, to start an official investigation on China’s intellectual property and technology theft under Section 301 of the 1974 Trade Act, which allows the President to order the USTR to take suitable steps to stop any foreign government from harming US commerce. The new investigation will also give US companies the opportunity to substantiate these allegations with evidence. The results of an investigation under Section 301 generally have to be filed within 12 months from the start of the investigation. According to the statute, the recommended tariffs or other sanctions can be enforced for four years. The recourse to Section 301 comes after the President announced, in early 2017, that he was considering restricting China from trading in steel with the US under Section 232 of the 1962 Trade Act, which empowers the US President to restrict trade based on reasons of national defense. He has since stated that he is postponing his
* USA correspondent www.steeltimesint.com
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USA UPDATE
final ruling on the steel issue. If the investigations indicate that Chinese steel imports are compromising national security, then tariffs may be imposed. While China has a history of IPR violations, and US and Western companies have not always been comfortable giving technology to their Chinese counterparts, as required in joint ventures, experts do not expect Section 301 and Section 232 investigations to unleash a trade war between the US and China, although this dispute could hurt the progress made since the Trump administration took office. Meanwhile, many US steel companies are investing in infrastructure and modernising their existing facilities. ArcelorMittal is the latest to invest more than $100 million at its Indiana Harbor steel mill in Eastern Chicago next year. Big capital spending planned Speaking recently at the Northwest Indiana Business Roundtable and Construction Advancement Foundation’s 2017 Business & Economic Outlook at Ivy Tech in Vaparaiso, ArcelorMittal’s Indiana Harbor general manager Wendell Carter said that the company planned $276 million in capital spending next year, including more than $100 million at the Indiana Harbor steel mill in East Chicago. Carter said the steelmaker would do work on its continuous anneal line, No. 2 coating line and cold mill complex "to improve quality and productivity, as well as meet the challenge of service to our customers." ArcelorMittal will also allocate a lot of its projected $276 million in capital spending in 2018 at its Burns Harbor steel mill in Porter County, Carter said. ArcelorMittal is “shedding the fat”, as some steel analysts say, and is now stronger and more competitive after recent cutbacks in Northwest Indiana that included the closure of blast furnaces and other production facilities, which have been common in the industry in recent years. "We have more cost-competitive assets we can run at higher levels of productivity with no loss of volume or market share," Carter said. He maintained that the US steel industry fared better since its consolidation from 16 companies in 2000 to about six today, cutting down the overheads and also administrative expenses. Meanwhile, US Steel announced recently that it was planning to partner with Kobe Steel of Japan on a continuous galvanising line in Ohio in a joint venture despite Kobe’s problems. Kobe Steel reportedly admitted to falsifying data about the quality of some of its aluminium, copper, iron ore and steel products, and has shipped sub-standard products to as many as 500 customers, including copper tube, wire, automobile, plane and bullet train makers. Steel experts in the US have been saying that Kobe’s troubles were “very serious enough” and could impair the company’s future business. Kobe Steel has hired an outside law firm to investigate how so many products were mislabeled. US Steel announced it had selected Ohio over Portage for building its new $400 million galvanising line. "We looked into multiple locations before deciding upon Ohio," US Steel spokeswoman Meghan Cox said. "We often explore multiple options when undertaking a project of this size." � November/December 2017
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LATIN AMERICA UPDATE
Mexico’s new hot strip mills ArcelorMittal and Ternium both unveiled their decision to construct new hot strip mills (HSM) in Mexico on 28 September. The choice to invest in such expensive equipment is rare in Latin America. Moreover, the announcements occuring on the same day is a remarkable coincidence. Nonetheless, the companies are increasing their vertical integration, but Ternium Mexico is short of slabs, while ArcelorMittal Mexico has more than enough. By Germano Mendes de Paula* ARCELORMITTAL has commenced a threeyear $1billion investment programme for its Mexican operations. The main project will be the erection of a new HSM, which will enable the plant to fabricate roughly 2.5 Mt/yr of flat rolled steel products, which will imply the reduction of slab sales. Why a reduction? Because ArcelorMittal will use slabs to convert into hot rolled coil instead of selling them on the market. Where Ternium is concerned, however, its hot rolled coil capacity is higher than its slab capacity, and this means that it needs to acquire part of its slab requirements in the market – and one of its suppliers is ArcelorMittal. ArcelorMittal Mexico has three steel mills, besides downstream plants (tubes and tailored blanks). ArcelorMittal Lázaro Cárdenas, located on the Pacific coast, was acquired in a privatisation tender in 1991. Since its start-up, this steel works has been dedicated to slab fabrication. A large proportion of its output is exported to the south of the USA, South America and Europe. The site is highly accessible by ocean and rail. ArcelorMittal Lázaro Cárdenas is a direct reduced integrated mill, containing two modules based on HyL technology (2.0Mt/ yr capacity combined) and one Midrex (1.2Mt/yr). The 4.0Mt/yr meltshop consists of four electric arc furnaces (EAFs). In 2016, this plant produced 1.8Mt of crude steel. Following the completion of the investment package, flat rolled steel production will reach 2.5Mt/yr, whereas slabs will total 1.0Mt/yr. The hot rolled coils (HRC) will be supplied to domestic, non-auto,
general industry customers. It is understood that ArcelorMittal does not plan to engage in further verticalisation towards cold rolled coils (CRC) and hot dip galvanised sheets (HDG). The announced investment, however, will result in an enhanced product mix at the plant. ArcelorMittal has been producing long steels in Mexico since December 2006, when it acquired Sicartsa from Grupo Villacero. The largest operation is called ArcelorMittal Las Truchas, which is also located in Lázaro Cárdenas city. It is interesting to remember that this mill was also privatised in 1991. Prior to privatisation, Lázaro Cárdenas steelworks used to operate as one single integrated site producing both flat and long steel products. ArcelorMittal Las Truchas is a 2.4Mt/yr coke integrated mill focused on rebar and wire rod. It produced 1.3Mt of crude steel in 2016. It also supplies billets to a rebar mill located in Celaya, 258km from Mexico City. As a result of an investment package, the company plans to fabricate 1.8Mt/yr of long steel products. ArcelorMittal also operates three iron ore mines in Mexico: El Volcan, Las Truchas and Peña Colorada. The latter is a 50:50 joint venture with Ternium, which is also its competitor in the Mexican long steel market and a consumer of slabs. Ternium Although Ternium’s originates in Argentina, currently Mexico is its most important
market. Ternium has three steelworks in Mexico, one focused on flat steel products (2.3Mt/yr slab capacity) and two dedicated to long steel products (1.6Mt/yr billet capacity). It has three HyL direct reduction modules (2.7Mt/ yr) and four long steel rolling mills (1.1Mt/ yr). Concerning flat steel business, Ternium’s key equipment in Mexico at the end of 2016 included: three hot rolling mills (6.0Mt/yr), eight cold rolling mills (3.7Mt/ yr), eight HDG lines (1.9Mt/yr) and six colour-coating lines (620kt/yr). Ternium’s productive structure, therefore, is characterised by the fact that its flat steel rolling mill capacity is substantially higher than its melt shops. Consequently, the company is short of slabs in Mexico. The new hot strip mill (HSM), in Pesquería, near Monterrey, is expected to start up in H2 2020. It includes an option to amplify capacity by 1.1Mt/yr after a small additional investment. The Pesquería facility has a 1.4Mt/yr cold rolling mill and a 440kt/ yr HDG line (Tenigal, a 51:49 joint venture with Nippon Steel Sumitomo). Ternium is already investing $260 million with a view to adding a 120kt/yr colour-coating line (H1 2019) and a 300kt/yr HDG line (H2 2019), both without any partnership.
* Professor in Economics, Federal University of Uberlândia, Brazil. E-mail: germano@ufu.br www.steeltimesint.com
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November/December 2017
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LATIN AMERICA UPDATE ArcelorMittal Mexico
Ternium Mexico’s new HSM is associated with the acquisition of Companhia Siderúrgica do Atlântico (CSA) – now Ternium Brasil – from ThyssenKrupp, a transaction that was concluded on 7 September. Thus, the company will export slabs from Brazil to Mexico and convert them into HRC to be sold to the dynamic domestic automotive and industrial sectors, potentially increasing its market share against imports. It should be stressed that Ternium Brasil will continue to supply 2.0Mt/yr of slabs to AM/ NS Calvert (a 50:50 joint venture between ArcelorMittal and Nippon Steel Sumitomo, which also belonged to ThyssenKrupp), due to a contract inherited from CSA, until at least 2019. AM/NS Calvert purchases slabs also from ArcelorMittal Tubarão, ArcelorMittal Lázaro Cárdenas and ArcelorMittal Indiana Harbor. Implications There are three key consequences of the new rolling mills to be discussed. By
November/December 2017
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starting up their new rolling mills, ArcelorMittal and Ternium in Mexico will be adding a combined 6.20Mt/yr of HSM capacity to the global slab market without a respective expansion of slab capacity. As a consequence, the availability of slabs to be sold to third parties will diminish. While slab production could be expanded at ArcelorMittal Lázaro Cárdenas and Ternium Brasil, by the diminution of idle capacity, this possible additional output will be insufficient to offset the impact of the new HSMs. Second, for the Mexican steel industry, the two investments will represent a
product mix enhancement, which will reduce the trade deficit. According to Canacero, the country’s net import of flat products almost doubled from 2.6Mt in 2010 to 5.0Mt in 2016. Third, both companies expect to improve their financial results. Where Ternium is concerned, JP Morgan estimates that the difference between HRC and slab sales averages around $174/tonne. Accounting for rolling costs of approximately $80/tonne, this project could deliver incremental EBITDA of around $348 million. BTG Pactual bank delivers a similar calculus: HRCslab premium of $200/tonne, a rolling cost of $100/tonne and $370 million in incremental EBITDA once fully ramped up. The same rationale should be applied to ArcelorMittal Mexico. In conclusion, while ArcelorMittal and Ternium have opposite productive imbalances in Mexico, the decision to invest in HSM will have the same effect on the global slab market, on the Mexican steel industry’s product mix and on the companies’ expected profitability. �
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22/11/2017 12:02:49
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PROFILE: BIG RIVER STEEL
Rolling on the river Some of the most sophisticated investors in the world provided US$1.6 billion of financing to help Dave Stickler realise a dream. In August this year a further US$1.2 billion was raised, proving to Big River Steel’s CEO that the smart money doesn’t believe in statements like ‘there’s too much steel making capacity and you can’t make money investing in the steel industry’. Equipped with a Flex Mill supplied by SMS group of Germany, the new kid on the block, now 12 months in operation, is set to prove that EAF steelmakers can produce any kind of steel currently thought of as solely the domain of integrated mills. Matthew Moggridge* flew to Memphis and drove to Osceola, Arkansas, to meet the man behind the world’s first ‘learning mill’.
“We’re a technology company
that just happens to make steel.” Dave Stickler
* Editor, Steel Times International November/December 2017
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PROFILE: BIG RIVER STEEL
DRIVE out of Memphis on Interstate 40, cross the Mississippi on the Hernando de Soto Bridge. Half way across the river you’ll hit the state line with Arkansas. Head north on 55 and then take Highway 61, ‘the main thoroughfare of the country blues’ according to Bob Dylan who, in 1965, released his sixth studio album, Highway 61 Revisited. An hour later you’ll be in Osceola, a town of 5,000 people in the Mississippi Delta, one of the poorest regions of the United States. The automation of farming and cotton and the moving offshore of clothing production in the region have been bad news for Delta communities, but times they are a-changing. One year ago a gas station minimart in Osceola was selling 3,000 pizza slices annually. Twelve months on and business has tripled to 9,000. Restaurants are opening in town, new housing has appeared. Things are looking up and it’s nothing to do with an alien life force. The change in fortunes for Osceola and surrounding small town communities like Blytheville, Jonesboro and Marion, has a lot to do with the arrival of Big River Steel, so named because it is located close to the banks of the mighty Mississippi river. The company chose Arkansas because of its extensive transportation network embracing highway, river and rail, and an extremely favourable electricity contract. New kid on the block Big River Steel is the new kid on the block and it’s making plenty of ripples in the marketplace mainly because, as an EAF minimill – an electric steel maker – it encroaches even further than other EAF minimills on territory traditionally reserved for integrated steel plants. “If you look back in history, 30 years ago 100% of the flat-rolled steel in the world was produced by the integrated steel community,” said a casually dressed Dave Stickler, CEO of Big River Steel. “Coming out of a caster, eight to 12 inches thick, often times letting the slab cool down then reheating that slab and then working it down to the thinness of the side of a refrigerator,” he said. “In the late 1980s a small steel producing company called Nucor Corporation announced to the world, working with SMS Group out of Germany, that they were www.steeltimesint.com
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going to produce flat-rolled steel using scrap metal instead of iron ore and coking coal, and that instead of coming out of the caster eight inches thick, we’re going to come out two inches thick,” Stickler continued. The big integrated plants of the time, many of whom are no longer with us, refused to believe that an electric steelmaker using scrap metal was capable of making anything more than garbage cans, but they were to be proved wrong. “It wasn’t too long before they started producing motor lamination steels and continued to move up the quality chain,” Stickler explained, adding that when he was involved with Steel Dynamics 20 years ago, the company was selling deep drawing quality steel to Chrysler.
Big River Steel finished hot rolled coils
According to Stickler, over the past 30 years minimills have chipped away ‘at the quality parameters that the integrated community repeatedly have said the minimills can never make’ and they continue to encroach upon ‘integrated’ territory; so much so that today, 67% of steelmaking in the USA is via the electric arc furnace and is regarded as the safest, most efficient and sustainable way to make steel. But even the electric steelmaking process evolves and with Big River Steel we are seeing the latest evolution of that process. Stickler believes that he has taken the best of both the EAF and integrated worlds. He says that the company’s cost structure is ‘right on top’ of his minimill competitors and that 70% of those costs can be attributed to scrap metal, electricity and labour.
17
For scrap, Big River Steel goes to market every month, like everybody else. “So long as you’re buying ‘at market’ and not overpaying, your cost is going to be the same as your minimill competitors,” he said. For electricity, Stickler says that the most recently built mill has the best electrical rate and the best electrical consumption per tonne of steel produced. “And there’s a couple of reasons for that; when you site one of these mills, it’s a highly competitive site selection process and you have one state playing against another, multiple utilities vying for your business, so during the the first duration contract period you’re going to have a rate that is likely the best in the industry because it’s been competitively negotiated,” he explained. “After that first duration of the contract you lose your negotiating leverage so you’re going to get an uptick. At Big River our initial contract is 11 years, but then you have to look at the fact that, over the years, industrial America has become much more energy-efficient. A perfect example is our motors and drives. Just like your car when you pull up at a stop sign, the motor stops; our motors and drives don’t stop, but they idle way, way down. Some of the minimills we’re competing with are 20-30 years old. Those motors and drives spin 24/7 and the only time they stop is when they’re down for maintenance,” Stickler said. Big River has kept its labour costs down due to the use of technology. Stickler believes that the company’s labour efficiency is ‘probably slightly above’ its competitors. “But let’s just call it even,” he adds. “On the product capability side what I look to is the fact that Big River was designed specifically with a clean piece of paper to produce steels that, prior to Big River, had never been produced by a minimill; that includes the full compliment of motor lamination grade steel, very, very efficiently,” said Stickler. And this puts Big River in a unique position. “Product that is one inch thick and 78 inches wide will allow us, with some future investments, to get into the fully processed, grain-oriented steels. We have complete product guarantees from our equipment vendors that are backed by letters of credit and refund bonds, so people put their money where their mouth is,” he said, adding that, most importantly, November/December 2017
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PROFILE: BIG RIVER STEEL
Big River Steel’s caster in action
Big River has managed to attract quality talent, people that have left long careers at some of the highest quality integrated steel mills in the world to join what Stickler admits is ‘the upstart Big River Steel’. “What really tells me we’re on to something is that people are voting with their feet,” said Stickler, referring to those who had jumped ship from the big integrated plants. Trump, trade and tariffs Stickler is all about getting on with the job with as little fuss as possible, so when it comes to issues like trade and tariffs, he wants no-nonsense decision making, not shilly-shallying. “It wasn’t too long ago that some of our domestic competitors were in the paper every other week saying ‘we’re going to go out of business and go bankrupt unless the Chinese cut their production’.” Stickler maintains a house in China and claims that there would be social unrest if China was forced to shut down half of its steel mills. “What are you going to do with all those workers? Remember, a Chinese mill doesn’t have 450 workers like we do, some of them have over 100,000. You can’t have those people out on the streets, right?” Big River believes in fair trade. “We have to stand on our own two feet whether tariffs and quotas are in place or not. If they are, we benefit; if they’re not we’ve got to be able to compete, that’s how we originally raised our US$1.6 billion in financing,” he said. Stickler’s view on Section 232 is simple: “Whatever the administration’s going to November/December 2017
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do, all I ask is that they hurry up and do it. Either it’s implemented or not implemented because uncertainty is not good for anyone, not the steel producers, not the buyers to the steel industry or the consumers of steel. All I ask is that they make their decision and everybody lives with that decision whatever it is,” he asserted. “We have a job to do, which is to continue to operate safely, to create good, high-paying jobs in the local community, produce steel that our customers are interested in buying from us and doing all of that profitably, that’s our job,” said Stickler, adding that he believes Big River has the tool that allows the company to compete no matter what market dynamics are in play.
Introducing the ‘Flex Mill’ The tool in question is the Flex Mill, developed in conjunction with SMS Group, and, effectively, the latest evolution of electric steelmaking. It means that with the cost structure and footprint of a minimill and the product capabilities of an integrated steel plant, Stickler believes he has ‘the fortress to withstand all market conditions’. “We can flex and hopefully be able to compete competitively with the minimills on the products that they’ve historically produced, yet flex the other way and compete, certainly with a lower cost structure, but with the same quality that the integrated mills have traditionally produced,” beamed Stickler, pleased without a doubt that the term ‘flex mill’ is not just a product but a new process of electric steelmaking, another rung on the evolutionary ladder of the process. Big River Steel has trademarked the term ‘Flex Mill’ and Stickler asserts that the company has the flexibility to move from market-to-market depending on market conditions. “If automotive falls from 17 million vehicle builds per year to 14 million, that’s not going to have a dramatic impact on us, unlike some of our integrated competitors that are very heavily focused on automotive. We can pivot to the energy sector or the construction industry,” said Dave. “Our company, with further investment, is well-positioned to service the electric vehicle market, not only the cars themselves, but the charging stations. Think of it: you’ve
Steel strip entering the hot mill in Osceola
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PROFILE: BIG RIVER STEEL
When phase two is ready, Big River Steel’s capacity will be 3.2Mt/yr
got to build an entire network, not of gas stations but of charging stations. Those electrical chargers, depending on their design, chew up a lot of steel,” he said. Advanced high strength steels The big prize, of course, is to be a fully fledged supplier of advanced high strength steel (AHSS) to the automotive industry. Big River Steel is selling steel to the automotive industry, but not directly. “Steel is produced right here in Osceola, Arkansas, and some of our first 12 months of steel production is in cars that are on the road today,” he said, referencing Ford, Toyota and Chrysler. “To be fair, those aren’t high strength steels where you have to go through the certification process, they’re for less critical components, but then again, I’m very proud that in the first 12 months our steels are already driving around the United States.” Stickler said that Big River Steel was
designed to produce AHSS and already has the necessary talent on board that is knowledgable on the subject. Furthermore, the buyers of AHSS have shown a willingness to work with Big River Steel, which is the only steel producer to become a member of the Centre for Collision Safety & Analysis (CCSA) at Georg Mason University, a government-funded organisation based outside of Washington DC where cars can be crash-tested using advanced computer simulation technology. “We’re a member of that organisation and the factor there is tolerances. A particular steel grade from a specific mill has a tolerance range from X to Y and the automakers need to design to the lowest common denominator. If you narrow that tolerance range the automaker is going to have much lighter steel. If the tolerance range is wide they’re going to have heavier steel,” Stickler
explained, adding that Big River Steel is in a very good position to be able to tighten up those tolerances, and, therefore, take weight out of the car. There were a number of reasons why Big River Steel joined the CCSA, one being the company’s embracement of machine learning and artificial intelligence, another being its willingness to challenge industry norms, but also, says Stickler, a mutual understanding between the technical brains at Big River Steel and the CCSA with respect to tightening up the aforementioned tolerances. Technology’s role Technology has played a major role in the development of the Big River Steel project. Stickler has famously said that when he first started in the steel industry it was 80% brawn and 20% brains, whereas today at Big River it’s 90% brains and 10% brawn. He also said (at AISTech in Nashville earlier this year) that the ‘status quo steel industry is not known for innovation’ and while that could be taken two ways, Stickler meant that the steel industry is not often recognised for technological achievement. “If you go into a university or a degree programme and talk to engineers or people on the cutting edge of technology, the first thought of theirs is not the steel industry,” he said. “We’re out to try and change that by showing the world that there is a tremendous amount of opportunity for technology evolution in the steel industry,” he said, leading nicely on to another well known Dave Stickler quote: “We’re a technology company that just happens to make steel.”
In the control room...
November/December 2017
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22/11/2017 16:11:28
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PROFILE: BIG RIVER STEEL
Big River Steel was designed and built in conjunction with SMS group of Germany. “We went to SMS and said we’re interested in producing these particular products and we asked them: do you now have the capability to produce them? The answer was ‘two thirds of it, yes’ and the other third was ‘let’s work together and see if we can’. With regard to machine learning and artificial intelligence, we knew that the technology evolution had advanced significantly so we really put a concerted effort into making sure that we had the capability from A to Z on this mill to collect the data,” explained Stickler. Stickler and his team were confident about data analytics, but acknowledged that the company wasn’t there yet. “We have the talent, we have the interest and we have the drive to get significantly better at analysing that data,” he said, adding that an age-old problem in steelmaking – that of longitudinal cracks appearing on product leaving the caster – was a still an issue but that with more data coming through the system and being analysed, it will be possible to further reduce longitudinal cracks. The importance of Industry 4.0 Stickler adheres strongly to the view that Industry 4.0 – or ‘smart manufacturing’ – is important for the entire steel industry. “My goal is to help people have the perception that the steel industry in the United States is at the forefront of the next generation of the industrial world. We have the luxury of having started with a clean piece of paper,” he said, stressing that Big River Steel’s capabilities with regard to machine learning are high because of the huge amount of data the company has be able to accumulate over its nine months of operation. “More than probably any other steel company in the world,” he added. “I tell our team I want to know as much
about the steel mill’s operation as GE [General Electric] and Rolls Royce know about those engines that are flying up in the sky,” he said, stressing the need to ‘monitor, monitor, monitor’ and the importance of predictive maintenance. “We call ourselves a ‘learning mill’– the more we run, the more this mill is going to learn, just like the autonomous
Big River Steel’s electric arc furnace in action
vehicles. I just heard the other day that we’ve already analysed and collected over 100 million data points, that’s everything from temperature, vibration, pressure; we look for correlations in everything we do,” Stickler said. “We want to find the patterns, the trends, the predictors that say okay, you’re now going from a zero % probability of a break-out to a 40% probability of a breakout to a 70% probability of a break-out to ‘hello Mister Operator, 90% probability, you’d better do something’,” he said,
adding that, ultimately, the operator won’t have to do anything as the mill will then self-correct. “We’re not there yet, but we have the infrastructure and the tools, we have a path to get there. It’s not going to be easy, it’s going to be a challenge, but we’re up for that challenge.” The end of integrated mills? It all begs the question: has the integrated mill in the USA had its day? Less than 45% of flat-rolled steel is produced by integrated mills and in 10 years it will probably be less than 35%, says Stickler. “If you look at the historical trend one would question what the survivability of the integrated steel community in the United States is; I’m not bold enough to say they will go away completely, but they certainly have lost a significant amount of market share over the last 30 years and a significant portion of that over the last 10 to 15 years,” he said. Stickler and his team are busy ramping up the mill. It’s been operating for 12 months, expanded its customer base and has gone from seven customers in month one to 120 currently. “The thing I always look at is the number of repeat customers because if people are repeatedly buying from you, you must be doing something right. If we had a low retention rate I’d be extremely nervous, but fortunately that’s not the case,” he said. The plan is to double plant capacity and up the workforce by 200 to produce 3.2Mt/ yr with a total of 600 workers. “The State of Arkansas says that if we announce an expansion prior to June 2018 there are certain benefits we would receive, but no decision has been made. We have the environmental permits to double the capacity, and we have spent money already on foundations, piping and ductwork,” he said. �
Coil awaiting shipping to customers
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PROFILE: BIG RIVER STEEL
“We are a lifecycle partner” Big River Steel in Osceola, Arkansas, USA, is the most progressive and state-of-the-art steel mill in the world. It has been in operation for almost 12 months and is proving to be a great success. We asked Harald Rackel* of SMS group for his view on the project 1. When did SMS group first hear about the plan to build Big River Steel in Osceola, Arkansas? We have been in discussion with the spiritual founder John Correnti for several years to repeat the success of his investment in Mississippi that is now a part of SDI. The actual discussion from start to finish including the equity and site search probably took around two years. 2. Was there a competitive tender for the Big River Steel contract and if so why do you think the contract was awarded to SMS group? This is a prime example of a joint development effort and was not tendered as such. 3. How did the project progress, were there any major stumbling blocks along the way and did everything finish on time and on budget? BRS needs to answer this one as we have no insight into their budget and they were responsible for the erection. 4. Bearing in mind that Big River Steel was a greenfield project, what kind of scope/freedom did this give to SMS group in terms of plant design and equipment? There was no real heritage to consider so all we could think about was what is the best way to do what we need to do. That is obviously an advantage. In the end, though, available capital, markets, environmental standards and people’s experience also have to be considered. This had to be evolutionary and not so much revolutionary as the capital providers and lenders were looking for proven technology. So we had
to provide the best proven technology in an ideal mix – or at least always have a fall back position where things were a little more revolutionary. 5. Could such a plant at Big River Steel be retro-fitted onto an existing plant? A plant like Big River Steel can be built anywhere where someone is willing to start thinking from the market he wants to serve and then find the ideal set up with regard to infrastructure and supplies to do this. Retrofitting it into an existing plant is technologically possible, whether it creates the same success story depends mainly on the above. 6. Big River Steel’s CEO Dave Stickler likes to refer to BRS as “a technology company that happens to make steel” – what do you think he means by this statement? To us that is reflective of the attitude Big River has within its team. They do not want to be just another steel maker, but somebody who focusses on using technology to improve what they can bring to the market – and that happens to be the steel industry. Steel is not just big, old and dirty but can actually be quite sexy once you look at it from a technology angle and are willing to think openly. 7. They say ‘great minds think alike’ – to what extent did SMS group share the Big River Steel vision and how much ‘creative freedom’ did you get? This was a team effort from day one. We sat together several times in the course of the project inception to play devil’s
advocate to each other to come up with where we are today. 8. Did the Big River Steel project – more so than any other steel project – give SMS group the opportunity to explore the endless possibilities of high-tech manufacturing and SMS’ strengths in the world of digitalisation and Industry 4.0? BRS has granted SMS full access to the data produced in the plant. This has contributed to a wide range of activities revolutionising economic steel production based on the use of digitalisation and AI. 9. Dave Stickler has referred to Big River Steel as being the world’s first ‘learning’ mill – what does he mean by this? BRS and SMS will use the collected data of the facility to constantly increase, with the means of digitalisation, the throughput, availability and the quality of the products. This is the result of linking independent planning circles of production planning, maintenance planning and quality surveillance together. 10. From SMS group’s perspective, what were the key challenges involved in the development of the Big River Steel plant in Osceola? One of the largest obstacles in creating Big River Steel was finding the capital. Dave and his team together with our financing group and our sales team did a great job of marketing this to the investment and banking community. You have to realise that steel is not your typical start up environment today.
* Member of the Managing Board of SMS group. November/December 2017
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PROFILE: BIG RIVER STEEL
you are doing things and then find the best available way to do it – not the one you have always used. This included thinking beyond today.
11. In terms of 21st Century steel production, how will the Big River Steel plant change the way steel is produced around the world? With regard to production they are not really changing anything, but evolving and bringing together everything available today; and they are open-minded enough to also consider the future. The whole spirit of getting rid of “This is the way we have always done it” is the true rebellious part about Big River Steel. Ask yourself as to why
12. If (or when) a second plant is built will it be even more technologically advanced than Osceola? That would be our expectation; however that will also depend on the market that the second plant will have to serve. If a duplicate does that best, it will be a duplicate, else we would expect Big River Steel to again think from the market, the available infrastructure, operating skills and technology to come up with the best solution available. If you involve early on in your projects your supplier, to our experience is that you get a better result than doing it on your own. Two teams from different backgrounds go further than just one alone. 13. How does SMS group’s ongoing
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relationship with Big River Steel work now that the plant has opened for business? We are a constant factor in their operation. Through our US Service entity we perform several services such as caster maintenance and roll shop work every day. In addition, of course, we are always discussing improvements and potential growth opportunities. It is our aim to keep a substantial amount of SMS blue shirts among all those green shirts in the plant. We are a lifecycle partner. 14. One could argue that Big River Steel, being as technologically advanced as it is, must represent a key moment in SMS group’s history as a plant builder. You must be very proud of the end result. We are. We think we have provided them with a great tool, but now it is also up to the Big River team – boys and gals of the south or of rural America, as John Correnti used to say, to bring this to a success. �
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sms Q AND A.indd 2
November/December 2017
21/11/2017 15:29:16
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ELECTRIC WARRIORS
Sustainable steelmaking Philip K Bell, president of the US-based Steel Manufacturers Association (SMA) says there are plenty of challenges facing the North American electric steelmaking industry, but he’s optimistic for the future, claiming that things can only get better and that if market conditions stabilise, just imagine what can happen. Matthew Moggridge* met him in Brussels at the World Steel Association General Assembly. * Editor, Steel Times International
November/December 2017
SMA interview.indd 1
22/11/2017 12:01:38
ELECTRIC WARRIORS
ONE of the key challenges facing electric steelmakers in the USA is having a coherent and consistent trade policy, says Philip K Bell, president of the Washington DC-based Steel Manufacturers Association (SMA). A case in point, he says, is the current Section 232 investigation, initiated by the Trump administration in April. It’s a process that takes around a year to complete: nine months to render a report and then another three for President Trump to evaluate the report and take the necessary action. “The [Trump] administration created these self-imposed deadlines and a lot of expectations around my members, which has led to a spike in steel exports to the USA,” Bell told Steel Times International at the recent World Steel Association General Assembly in Brussels. “Think about it: people are trying to get in under the 232 decision, so what we have now is a deadline that has come and gone, domestic priorities that have taken precedent over the 232, such as tax, healthcare and infrastructure, and now a steel industry that’s scratching its head and saying ‘what’s the big rush?’. Bell says that industry CEOs will express the same sentiments, namely that Trump needs to get on with it. “The most important thing is getting that report done and getting it out as soon as possible; that way we can move on whether there’s a positive outcome, a negative outcome or no outcome,” Bell explained. He said he was confident of a positive outcome because President Trump made trade protectionism the centrepiece of his presidential election campaign. Section 232 timelines are 16 January 2018 for the report to be finalised and then there are 90 days in which to act after that. The absolute deadline is 16th April 2018. “Anyone who continues to try and predict this should stop because everyone has been wrong, despite the doubling down by the administration and the hints and signals, they themselves did not live up to a selfimposed deadline, a deadline they didn’t have to make,” Bell said. Global overcapacity is another massive issue for the SMA. Bell says that China has made some progress having identified and taken out 100 million metric tonnes of induction furnace capacity, but he argues that there is still a lot more work to be done. “We need to see that this can be www.steeltimesint.com
SMA interview.indd 2
sustained,” said Bell. “It’s one thing to do it once, but it’s something else to do it continually, and I’ve said this to several people here at the conference: if you want to look at how to reduce capacity, look no further than the United States.” In 2000 there were over 22 steel companies in the USA that had 1.8MMt of capacity or more. Today there are only 10. “That’s because in the US we have mechanisms in place where you can systematically eliminate inefficient production,” he said referencing US bankruptcy laws and the mergers and acquisitions process. “Once a merger or acquisition takes place, there’s evaluation
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faceted way.” The G20, says Bell, has led the way in a diplomatic sense, facilitated by the OECD Steel Committee, but it remains to be seen how well or how sustained this will be. “We’ll take a ‘wait and see’ approach,” he said. The SMA takes a very broad approach to national security. “This isn’t just a military procurement exercise; national security is also to do with your energy grid, with critical infrastructure such as sea ports, airports and military bases. It’s to do with water distribution systems, highways and bridges, so when you look at it from that regard, there’s no doubt that imports pose
EAF at Nucor Steel Hickman Arkansas
of capacity and it’s rationalised,” he said, claiming that some M&A activity abroad is ‘in name only’. In other words, more of a mask and little changes in terms of head count and capacity reduction. While there appears to be an element of suspicion surrounding the Chinese and their ability to solve the nation’s steel overcapacity issue, Bell argues that China was a participant in the G20 Global Forum on Overcapacity and provided ‘by-company’ and ‘by-mill’ data. “And they continue to sit at the table, which is great news” Bell said. “And while there are critics of the global forum, I think we need to understand that the issue has to be addressed in a multi-
a threat to our country’s national security,” Bell said. He argues that a simple, straightforward, broad-based solution is needed, one that has impact and is easy for people to understand. “So in order to be impactful we support a straight tariff remedy where a tariff is applied on top of any existing tariffs and it’s on the broadest range of countries and products possible; and we think if that’s done, it’ll be easy for the president to understand and communicate, easy for the public to understand, and it will send a strong message to the markets that we’re serious and that market-distorting behaviour needs to change.” November/December 2017
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ELECTRIC WARRIORS
It is argued that tariffs and protectionism are not the way ahead and that they lead to tit-for-tat behaviour and, ultimately, job losses on a massive scale, as George W Bush discovered in 2002. “When the US files trade cases, when it’s fighting on these issues, all we’re trying to do is make sure that companies and countries obey our laws and that they follow rules-based trade,” countered Bell. He argues that there is no such thing as purely free trade. “All trade has rules based on free market principles,” he said. “I think Bush did learn because if you know the 201 safeguard he put in, it lasted about 18 months, so that was not something put in for a long period of time; but since then there really hasn’t been anything to help US steel producers. In fact, there’s been two crisis periods in the US steel industry over the last 20-25 years: one occurred from 1999 to about 2001 and that’s when we got the 201 safeguard and immediately after it was put in place, capacity utilisation went back up to 85-90%,” Bell explained. ‘Go file a trade case’ The second steel crisis was between 2007 and 2009 in conjunction with the global economic crisis. At that time, said Bell, the US government didn’t put any safeguards in place. “They pretty much told the steel industry that if it thinks there’s a problem, go file a trade case and so that’s what we’ve been forced to do and during that period [and beyond] our capacity utilisation rate has hovered around the 75% range,” he said. “In fact we haven’t been at 85% capacity utilisation in the US in over a decade so this ‘new normal’ that you see shows that trade cases alone are not working. There is low capacity utilisation and imports are still high.” US steel imports stand at around 26% and some months hit 30%. This means that any increase in steel demand are gobbled up by imports, which are often unfairly traded. Bell said trade cases alone are not enough, they are not guaranteed, they take a long time to pursue and cost a lot of money. “And all the time you’re preparing for a trade case, you’re laying off workers, idling or closing mills, losing market share and losing control of pricing. So even if you win, that victory is very hollow,” says Bell. November/December 2017
SMA interview.indd 3
All the SMA wants, says Bell, is to make sure that trade continues to be rules-based and that the laws of the USA are followed and enforced. He is confident this will happen and believes that not only are trade cases ‘the new normal’ but that it’s not just the USA. “Most of the growth in safeguards and tariffs are coming from non-OECD regions and I know we have a lot of trade cases out there, but it might be because there’s a lot of dumping and subsidies in place,” he said. Donald Trump is a big global story and, like Marmite, you either love him or hate him. The steel industry loves him, but as Bell points out, he needs to turn his political rhetoric into political reality. “It’s very easy
Steel coils at Big River Steel
to say things, tweet things, proclaim things, but at the end of the day that has to be met with some kind of substance, some kind of legislative policy or other success that puts meat on the bones of some of his statements,” Bell said. “I like to think that Trump’s victory was due in large part to the many steelworkers in key battleground states like Pennsylvania, Ohio, Michigan and Wisconsin, and I think he needs to make sure that the promises he made to those people are kept,” Bell said. But Trump is a friend of the steel industry and not just on the trade front. “I think when you look at some of the products he’s articulated on regulatory overreach and on
tax reform, he’s in a good place and there are a lot of people familiar with our industry that have advised him or been a part of his administration: Dan DiMicco being one of them, Wilbur Ross another,” said Bell. Electric steelmaking accounts for 67% of total US production and the sector’s future looks bright. “I think its success is because it’s one of the safest, most efficient and sustainable ways to make steel,” he said. EAF steelmakers have quietly continued to work on their processes and technological advancements. Bell said they are making ‘calibre products’ that were unheard of 20 years ago and continue to make in-roads into flat-rolled sheet and the automotive sector. “We’re getting to the point where EAF producers can pretty much produce anything they’re prepared to set their hearts and minds to. I think this is due to the fact that you’ve seen technological advancements in continuous casting, you’ve seen advancements in the use of ore-based metallics, such as HBI and DRI, in their scrap mix in order to lower residuals and to make higher quality products. You’re also seeing advancements in energy consumption, digitalisation and you can never discount the culture of EAF producers,” he said. The EAF culture That culture is the entrepreneurial spirit on which the sector was founded, people with big ideas, like Iverson, Bussey, Casey and DiMicco. “These are the people that really instilled a spirit in the men and women that work in this industry and that gives us a competitive advantage,” Bell said. However, converting from a blast furnace steel industry to one dominated by EAFs is not a walk in the park. “You need a good scrap reservoir and high quality scrap and you need to have the capital to invest it,” said Bell, adding that he believes there will always be a need for integrated mills, ‘just due to the fact that steel made from virgin iron units is important’. That said he believes that the growth of electric steelmaking is undeniable and a trend that can’t be ignored. There is a glut of Chinese scrap at present, but the fuel that powers the North American EAF industry is generated domestically and in plentiful supply. “There are rising concerns about scrap quality, but the scrap market in the USA is primarily a www.steeltimesint.com
22/11/2017 12:01:46
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ELECTRIC WARRIORS
domestic one. In fact, we export quite a bit of scrap,” said Bell. Bell believes that scrap availability will be ‘pretty steady’ for the foreseeable future. The big question? How much will China develop it’s EAF industry over the next decade to 15 years? Another big mover would be if China decided to aggressively export scrap; that, said Bell, would determine market pricing. China’s EAF market China’s EAF market represents around 10% of overall capacity and there are no real initiatives to build EAF furnaces, mainly because China is trying to reduce capacity, but a decade or two down the line it could be something worth monitoring, according to Bell. Most big EAF players in the USA have ‘captive scrap supplies’, according to Bell. SDI owns Omnisource, Nucor has DJJ, Gerdau has large supplies of scrap and Commercial Metals Company started out as a scrap business. In other words, it would be hard to second-guess the market dynamics of a situation where China aggressively exports scrap and who is to say it would arrive at US ports? It might go to Turkey, Japan or South Korea. The residuals problem hasn’t risen to concerning levels yet, but it is something Bell believes is worth monitoring. “I don’t think it’s at a serious level, but it’s always something we need to be cogniscent of,” he said. Image is important too and while the EAF sector has a far superior carbon footprint when compared with integrated mills, it’s not something the SMA has shouted loudly about – and perhaps it should, argues Bell. “The SMA is working on ways of doing that and I think we need to understand from a sustainability standpoint that, compared with blast furnaces, the EAF is far superior. It’s not a minor difference, it’s a huge difference,” he said. “We have made it too hard for the general public and even the Government to understand life cycle assessment and sustainability and I think we need to find ways to calculate and communicate it in a way that is easy and clear and differentiates between the processes as well as the regions of the world,” Bell said. It is worth stressing at this juncture that, according to Bell, the EAF sector recycles November/December 2017
SMA interview.indd 4
more steel by weight than aluminium, plastic and paper combined. “And yet when people think of recycling they think of putting their newspapers in a bin,” said Bell. “The good news is that worldsteel, through its communications committee, has done a really good job of showing people the other side of our industry through initiatives like Love Steel and Steel University,” he said. The general public don’t view the steel industry as ‘high tech’, says Bell. “And yet steel is one of the most highly engineered products in the world. To make steel you need a good knowledge of chemistry, physics, instrumentation and electrical
Big River Steel, Osceola, Arkansas
controls and I don’t think we get enough credit for the amount of intelligence it takes to make steel.” He doffs his cap to ‘new kid on the block’ Big River Steel with its high tech approach to electric steelmaking (see profile feature, pXX), and Commercial Metals Company, which is developing micromill technology. The term ‘micromill’ relates to a mill with a smaller footprint than a minimill and a smaller product line serving a more specific geographical area – it’s nothing to do with the size of the equipment, but is based on the market it serves. “CMC successfully did a micromill in Mace, Arizona, and I’m confident they’re going to replicate that success in Oklahoma,” he said.
Whether the EAF market is leaning towards CMC’s micromill approach or Big River Steel’s Flex Mill is hard to pinpoint. Bell says trends are dictated by market conditions and what’s needed. “Big River sees a need for high quality flat-rolled steel so they have a large 1.6Mt/yr facility and a capability to make steel grades that both integrated and EAF producers can make; CMC saw a niche in a region of the world where rebar and long products were needed so they took the minimill route,” he explained. Geographic location Another EAF trend that goes unreported, says Bell, is where the market is growing. “The congressional district in the United States that has the second largest concentration of steel is North Arkansas. It’s the first congressional district, led by Congressman Rick Crawford, and it has more steel intensity than any other district in the United States, except North West Indiana, which, of course, has ArcelorMittal Burns Harbour. “But what is interesting about the Northeast Arkansas phenomenon is the diversity of steelmakers that have located there,” says Bell, referencing Nucor, Big River Steel, TMK IPSCO, Gerdau, Commercial Metals Company and Arkansas Steel Associates (in association with Sumitomo). “So when you look at EAF growth, most of it is taking place in the Southern part of the United States and there’s a huge concentration in Arkansas,” Bell added. Arkansas’ geographical location makes business sense; there are good interstate highway systems, excellent rail access and, of course, highly favourable water access for barge transportation, thanks to the Mississippi river. “So it makes sense to be there,” said Bell, adding that the region urgently needed economic development and good high-tech jobs. Bell is optimistic for the future, but what he’s most optimistic about is the people in the USA’s electric steelmaking community – his members. He praises them for their resiliency and for surviving every type of economic, political and trade environment. “It can only get better and if market conditions improve and stabilise, just imagine what can happen.” � www.steeltimesint.com
22/11/2017 12:01:47
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MINIMILLS
Together in electric dreams Do integrated steelmakers dream of electric arc furnaces? Perhaps they should because US EAF mills are increasingly encroaching on their business sectors and have even made big forays into the world of advanced high strength steels. As Myra Pinkham* reports, the only downsides for the likes of Big River Steel, Commercial Metals Company and other leading minimills, are scrap quality and a worrying shortage of carbon graphite electrodes
ALREADY the dominant steelmaking process in the United States, electric arc furnace (EAF) steelmakers continue to gain market share from integrated producers, continuing the trend of the past several decades. This is not just because of recent additions of electric steelmaking capacity, but their continued moves into what has long been considered to be traditional integrated steel markets, such as automotive and appliances. Currently nearly 69% of all the steel being produced in the USA is by EAFs compared with only a 47% share in 2000, observes Christopher Plummer, managing partner of Metal Strategies Inc., West Chester, Pa. In fact, especially with the blurring of the line between EAF and integrated steel markets, it is widely believed that it is very realistic to assume that EAFs will account for more than 70% of the US steel market by the end of the decade. But while EAF steelmakers will continue to make even more inroads going
U.S. EAF and BOF Steel Production
forward, Philip K. Bell, president of the Steel Manufacturers Association, admits that there will always be a need for an integrated steel industry given its ability to achieve the purity and quality that certain steel-containing products need through the high percentage of virgin iron units they use. In fact, according to Mark Bula, chief commercial officer of Big River Steel LLC, Osceola, Ark., integrated steel producers are currently healthier than they were several years ago. “But there continues to be some concerns about the long term viability of certain integrated producers, especially with all of their legacy costs,” he says. Becky E. Hites, president of Atlantabased Steel-Insights LLC, points out that the overall US steel market has been experiencing a “revival of sorts” in 2017, including a 2% year-to-date rise in crude steel. She observes that during the first half of this year EAF steel mills were operating at 83-94% of their rated capacity while
Bayou Steel Group hot rolling mill, La Place, Louisiana
Ratio, U.S. No.1 Bushelling Scrap to Cliffs Average Realized Pellet Price
* USA correspondent November/December 2017
Minimills myra.indd 1
www.steeltimesint.com
22/11/2017 11:58:25
MINIMILLS
integrated mill utilisation remained at 5067%, with 70% of their product categories delivering positive comparable shipments year-to-date through June. That includes “some hints” of recovery in the use of steel in the energy market, yellow goods (construction and mining equipment) and white goods (appliances). This comes as virtually all of the recent additions to US steelmaking capacity is at EAF steelmakers, and that is likely to continue to be the case going forward. “It is just too expensive to build a new integrated mill,” Charles Bradford, president of Bradford Research Inc., says, noting that
giving EAF operators more flexibility to respond to changes in the market while also giving them greater ability to control production costs, John Ferriola, chairman, chief executive officer and president of Charlotte, N.C.,-based Nucor Corp., points out. Also, according to Peter Campo, president of Gerdau Long Steel North America, the EAF technology allows mills to tap into the sizeable domestic scrap reservoir and recycling network, as well as abundant energy resources. “The greater challenge, however, is not necessarily competing with integrated producers, but rather being forced to
Transporting steel by barge on the Mississippi at Bayou Steel in the USA
just relining a blast furnace costs about $100-$200 million. There are also a number of advantages of EAF steelmaking, especially the ability to start up and shutdown mills more quickly, www.steeltimesint.com
Minimills myra.indd 2
compete with state-owned and statesupported producers abroad who are not concerned with profitability,” Campo says. Largely coming from two new greenfield mills – Big River Steel, Osceola, AK and Commercial Metals Company’s 350kt/ yr plant in Durant Okla – but also certain incremental increases in capacity at existing mills, this year there could be greater than 2.1Mt more EAF steelmaking capacity in the United States than had existed a year ago, according to Plummer, who points out that even more is being planned for the next four years. Big River Steel is still ramping up its 1.7Mt/yr flat rolled and speciality steel
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facility in Osceola, AK, that first started up in December last year. Commercial Metals Company’s 350kt/yr plant in Durant, Oklahoma (a rebar micromill) is on track to come online by the year-end. In mid-September Nucor announced plans to build a bar micro-mill in either Nebraska, Kansas, Missouri, South Carolina or Florida and expand capacity at either its Illinois or Ohio merchant bar operation. Big River is reportedly considering building a second EAF, either in Osceola or elsewhere, by 2020, and Acero Junction Inc. – the former RG Steel Inc. Mingo Junction plant – could be restarting its EAF. JSW Steel USA is planning to install an EAF at its plate and pipe mill in Baytown, Texas, and several pipe mills, including TPCO, might add EAFs, Metal Strategies Inc’s Plummer says. This is in addition to further incremental capacity investments at Nucor, Steel Dynamics Inc. and Charter Steel, SMA’s Bell points out. In today’s market, EAF producers, however, are facing some challenges that could affect their competitiveness, at least in the short- to medium-term versus integrated steelmakers, including how they will be impacted by the current shortage of carbon graphite electrodes that are essential for the EAF steelmaking process. The roots of this shortage could be traced to China and the shuttering of electrode production capacity there due to the unsustainably low prices of electrodes late last year, although the main driver, according to Robert Simon, chief executive officer of Bayou Steel Group, LaPlace, La., has been the supply and cost of the needle coke that is used to produce the electrodes. It is believed that, at least temporarily, needle coke availability will get even tighter with US Gulf Coast refineries either being shut or operating at reduced levels in the wake of Hurricane Harvey. It is, however, hard to quantify the current and future impact of the electrode shortage upon EAF steelmakers. There is no question that electrode prices have been skyrocketing. Plummer observes that they have already jumped to over $16 per lb. from their low of $1.20 per lb. at the end of the fourth quarter of last year. But, according to John Anton, director of steel analytics for the pricing and purchasing service of IHS Markit, even at these elevated prices electrodes remain a very small percentage of EAF producers’ November/December 2017
22/11/2017 11:58:29
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MINIMILLS
Continuous caster at Bayou Steel, Louisiana
total costs. The bigger impact, he says, is that the shortage could mean that they might not be able to produce all of the steel that they need to meet their customers’ requirements. “But I doubt it will be a disaster,” he says. “It remains an unstable situation with more clarity yet to come,” Bayou Steel Group’s Simon says, noting that different companies will see different effects based upon their location, size and contractual arrangements. It is likely that the full impact will remain uncertain until electrode contract negotiations are concluded later this year. Another challenge is the deterioration in the quality of scrap, which is partly due to the increase in EAF steel share as scrap from EAF steel tends to have more residuals, especially copper content, than integrated steel scrap. To counter that, especially as they seek to produce higher quality steels, the mills need to either install special equipment, such as degassers (including an RH degasser like the one that Big River has), into their production line or add more virgin iron units, such as direct reduced iron (DRI), pig iron or pelletised iron ore. “That is why Nucor has decided to make its own DRI and why Cleveland-Cliffs Inc. is planning to build a DRI plant in the United States,” Bradford points out. This is what makes it hard to determine whether the EAF or integrated producers currently have a raw materials cost advantage. “Our ratio of scrap to integrated metallic cost at 0.85 indicates that the EAFbased mills enjoy a cost benefit currently, but with the carbon sweeteners required to dilute ‘pollutants’ in the scrap stream, this ratio isn’t as pure an indicator as it once was,” Steel-Insights’ Hites says. Also while global iron ore prices have moved up to about $75 per tonne, US November/December 2017
Minimills myra.indd 3
integrated producers are not currently paying that price, Anton observes, as they buy most of their iron ore on annual contracts. He maintains that iron ore prices are currently overpriced and will likely retreat, perhaps to $45-50 per tonne by the end of the fourth quarter. While scrap price trends tend to lag those for iron ore by four months or so, Anton predicts that, after “wiggling” a little this year, scrap prices could weaken next year especially if destruction of autos, appliances and buildings from Hurricanes Harvey and Irma result in a bulge of scrap. That, however, depends a lot upon what happens with exports to Turkey and elsewhere. It has been reported recently that Turkish steelmakers have been buying more billets from Europe and China in an effort to conserve their electrodes. Blurring lines continue to blur Meanwhile the line between EAF and integrated steel end use markets continue to blur, continuing the trend that was begun when EAFs began to be used more widely by steel companies in the late 1960s and 1970s. “When Nucor entered the steel business we were told time and again that we would only be able to make the most basic steel bar products,” Ferriola recalls. “We were told we could not produce flat-rolled products, but then we did. We were told we couldn’t make structural steel products, but then we did. We were told that we could never achieve the quality levels required to produce steel for the automotive market, but we are supplying steel to automakers today and growing our share of that market.” In fact, SMA’s Bell says that at least in the United States EAF producers can do just about anything an integrated mill could
do. But while several EAF steelmakers, including Nucor and Steel Dynamics, have been pushing into making more high strength steels for automotive, including more and more critical grades, George Koenig, director of business and technology development for Pittsburgh-based Hatch Management Consulting, says there are still – at least for the time being – some grades of steels, especially those for exposed automotive applications, that need to be made by integrated producers. Already they are making many types of extremely high quality steels, Plummer says, including those that are allowing them to sell into more appliance applications as well as some higher API grades for pipe and tube and even to operate in a bigger way for low- to mid-range advanced high strength steels for structural automotive components. It might be possible that they could eventually make such steels as ultra-high strength or third generation advanced high strength steels, Plummer says, but it would require the use of 85% to 100% pig iron or its equivalent in virgin iron units in their hot metal mix plus very stringent clean steel practices and the use of a degasser – at least a tank degasser, but possibly an RH degasser, like the one at Big River Steel. “It isn’t so much a question of whether EAF producers have the ability to make such steels,” Bradford says, “But whether they could do so at a reasonable cost given their need to add DRI and other alternative iron units.” While many EAF long product mills are still struggling, Plummer says that this year has been a better year than last year and that next year could be better yet, with continued, albeit a little slower, incremental growth into traditional integrated steel markets. � www.steeltimesint.com
22/11/2017 11:58:30
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COATINGS
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Strip coating solutions for steel Coil coating is the continuous and highly automated industrial process for efficiently coating coils of metal. Because the metal is treated before it is cut and formed, the entire surface is cleaned and treated, providing tightly bonded finishes. Coil coated metal (often called pre-painted metal) is widely considered more durable and more corrosion-resistant than most post-painted metal. The strip coating solution applies to many types of metals: carbon, silicon or stainless steels, aluminium and zinc. Fives, an international industrial engineering group, has been developing technologies for stand-alone or combined galvanising-painting lines since the 1950s. The first industrial installation of a combined line (galvanising and painting) started operation in 1984. By Olivier Grosse* and Santiago Gil** THE basic concept of the combined line is to provide galvanising and painting sections in one processing line. The main advantages of such a line is reduced investment and operational costs as well as improved quality and safety by avoiding coil handling and treatment between the galvanising and painting processes, thanks to a shorter production cycle. A major European steelmaker contracted Fives to design and supply two combined lines with a capacity of 400kt/yr of prepainted steel production. It was the first
production facility (Fig.1) in the world to produce a multitude of colour-coated products. Such combined lines were equipped with in-line painting sections (induction and gas heating) designed by Fives. In order to adapt to changing market demand, one of the lines was later modernised and upgraded to increase production capacity and allow processing of 100% painted product on the galvanised strip, thereby improving overall product quality. The lines were re-equipped with new pre-
and post-treatment, and primer and finish painting sections, inductors and gas heating ovens designed by Fives. The customer was able to steadily produce 100% colourcoated products in extremely short times for express delivery. Curing ovens The purpose of the curing ovens used in the painting and pre-treatment sections in the colour coating line is to cure strip paint at a proper temperature and with good homogeneity to ensure a perfect final strip coating quality. Fives designs and
Fig 1. Galvanising and painting line
* Senior sales engineer, Fives DMS (France). **Head of sales department, Fives Stein Bilbao (Spain). Email: olivier.grosse@fivesgroup.com; santiago.gil@fives group.com www.steeltimesint.com
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COATINGS
supplies Stein Curing ovens (Fig. 2) and cooling systems to process high quality strip coating for different applications, such as automotive, construction, home appliances and white goods. Fives’ range of products in this field includes a wide range of ovens with different types of heating media (gas, induction, direct, indirect) and adapted cooling systems (air, water, cooling rolls). Fume treatment solutions are provided to eliminate volatile organic compounds and recover energy via recuperative or regenerative thermal oxidisers with direct or indirect re-injection air systems. This technology is the best value for money, taking into account initial investments, operating and maintenance costs as well as product quality. It allows: • 100% painted product • High versatility and flexibility • Multiple colour changes within the same coil • Steady operation in the process section • Reduced CAPEX and OPEX In 2016 Asturiana de Laminados S.A., a leading producer of zinc strips and sheets, entrusted Fives with a contract to supply curing ovens for its new colour coating line at its plant in Asturias, Spain. Asturiana de Laminados, operating under the brand elZinc, offers a wide range of zinc strip and sheets designated for classical and modern architecture applications. The new colour coating line in Asturias is the first coil coating line to produce both zinc and aluminium colour coil coated and the second to produce zinc coil coated worldwide. The zinc strip, a fragile and new product, requires a high-tech design of the equipment and production technologies. The project includes design, construction and supply of two Stein Curing ovens, fume treatment and energy recovery systems with a thermal oxidiser and Stein dry blow equipment for the chemical pre-treatment section. Stein Curing ovens are specially designed for easy access inside and quick maintenance. Special attention has to be paid to the changing characteristics of the different strip formats and base materials during the curing process of the paint. Using a newly developed independent force convection blowing system and position controls in each control zone of the ovens (primer and finish) has solved the problem. November/December 2017
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Fig 2. 3D configuration of the Stein curing oven
Exhaust gases + VOCs
Natural gas consumption Recuperative thermal oxidiser
Regenerative thermal oxidiser
Start up
647 Nm3/h
160 Nm3/h
Standby
162 Nm3/h
40 Nm3/h
Monolayer (24000 Nm3/h)
160 Nm3/h
4 Nm3/h
Bi-layer (36000 Nm3/h)
260 Nm3/h
4 Nm3/h
Table 1
Fig 3. Vertical arrangement of induction curing ovens
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21/11/2017 09:22:17
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COATINGS
parasite air in the line, directly related to consumption, especially in this type of project with RTOs. • They avoid contact between exhaust gases containing VOCs and strip cooling water, reducing its pollution. • They avoid fugitive solvent emissions inside the building.
Fig 4. Dynamic seal CFD simulation
Unlike floatation type ovens, no energy is required to support the strip. Furthermore, there is no risk of strip vibration with this technology. Stein Curing ovens (as well as all gasfired Stein dryers) are equipped with all the necessary instrumentation, control systems and safety devices that comply with current European regulations (EN 1539, EN 746/2). They feature reduced energy consumption, easy threading and maintenance access. Pre-assembled technology can be used throughout the installation to minimise erection times. New developments In 2011, Fives installed a complete colourcoated section into an existing galvanising line in Spain. The section is composed of a first treatment section to allow pretreatment of colour coated products or post treatment of galvanised products and two coating sections for primer and finish coating applications. This line features all-induction heating in a vertical arrangement (Fig. 3). Inductors for this type of application can also be installed in a horizontal arrangement depending on the space constraints of the plant. Process speed in these type of lines can reach 180 m/min. The line is equipped with a CELES induction heating system, which allows: • Shorter curing time, hence a high line speed • Quick response time, hence maximum flexibility • Instantaneous adjustment of the curing kinetics to suit each type of coating together with the maximum output November/December 2017
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In addition, it was the first combined line in the world with a regenerative thermal oxidiser (RTO) to treat solvents, an atmosphere separating device (dynamic sealing device) (Fig. 4) by pre-heated air injection and a bypass system, both patented by Fives to ensure the correct operation and avoid any fumes and solvent deposits inside inductors and ducts. The advantage of RTOs is reduced fuel consumption due to their technologies and design. It can be measured as shown in Table 1. Tailor-made equipment The sealing device is tailor-made equipment that is adapted to the requirements of each specific project. The main features of this device are: • Reduction of the inlet flow of
Pre- and post- treatment equipment There are different technologies available for drying a metal strip (carbon, silicon, stainless steels, aluminium or zinc), as well as for the different types of chemical coatings (passivation chrome free, zinc phosphate, anti-finger print, resin coat, inorganic and organic coating) with different types of heating (gas or induction, direct or indirect) and adapted cooling systems (air, water cooler, cooling rolls…). A wide range of pre- and post-treatment solutions cover continuous strip treatment with horizontal or vertical ovens. There are also combined flexible solutions specially adapted for modernisation of preand post-treatment for the final protective application of pre-coated and coated steel. Fives provides Stein dryers (direct fired, indirect, recirculated hot gases) (Fig. 5), coolers (air or water type), squeegee roll assemblies (vertical or horizontal) and air knives (vertical or horizontal, cold or hot type). Today, there are more than 100 processing lines that are equipped with Stein Curing ovens and pre- or posttreatment systems to produce galvanised and/or painted finish products. � Fig 5. 3D configuration of a Stein dryer
Velocity vectors colored by velocity magnitude (m/s)
ANSYS FLUENT
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21/11/2017 09:22:18
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PERSPECTIVES: CHEMCOATERS
A breakthrough in corrosion protection? Chemcoaters is the steel industry’s equivalent of ‘David facing the Goliath of the world of galvanised steel’ – or so says William Capizzano (pictured), president and chief operating officer of the company which has just begun the worldwide launch of ‘a revolutionary compound’ – InterCoat ChemGuard 1. How are things going at Chemcoaters LLC? Is the steel industry keeping you busy? Until the development of a new revolutionary compound for the galvanising industry, we had been quite busy and focused on applying RoHS coatings to coils for US clients. We have about 85% of the acrylic dry film lube application market. With the development of this new innovative product, we have diverted much resources to testing this new discovery, but are on track for the year.
technology through galvanising steel mill production facilities, we expect worldwide distribution. The compound (we gave it the product name InterCoat ChemGuard) is currently patent pending in North and South America and is patented in the European Union, Japan and Australia.
7. Where ‘green issues’ and emissions control are concerned, how is the steel industry performing? In our niche, the ‘greenest’ issue is the use of hexavalent chrome as a treatment over galvanised product to enhance corrosion protection. This carcinogen is banned in Europe, and is under great pressure to be banned in the US and Canada. The need and its use can be eliminated when our product is applied over thin coating weights of zinc.
2. What is your view on the current state of the global steel industry? My 34 years in the industry has shown a deserved reputation for slow consistent growth, cautious innovation and a very stable and competitive price focus. As is most of our country, we are awaiting word on the President’s position on Section 232 restrictions, which would enhance the price stability and some control of imports this industry desperately requires. 3. What is your niche area of the steel industry? We are a very niche toll processing coil coater, with green products and a focus on efficiency and quality. But our new discovery will now move us into becoming a chemical manufacturer and international licensor, as the volume and logistics of reaching the worldwide galvanising industry as simply a coating applicator is prohibitive. 4. Where in the world are you busiest at present? Our role as a coatings applicator is strictly limited to the US and Canadian markets, but as we move to supply our new
for the future of your new product offerings? Very important. As the price of zinc has climbed, up to 40% in the last year, the related cost of all galvanised material has had to escalate too. Any product that promises reduction of this essential component will attract attention. Our tests (five years) have shown the heaviest zinc coatings (G235) can be reduced by 87% (down to G30) with improved performance at much lower cost.
5. Can you discuss any major steel contracts you are currently working on? The InterCoat ChemGuard product substantially reduces zinc coating weights on galvanised products. Therefore we are generating a great interest in several vertical markets, with the galvanising mills, service centres and large galvanising consumers engaged at various levels of testing. One of the largest steel producers in the world is currently evaluating its effect on the massive galvanising operation it operates on several continents. 6.
How important is the cost of zinc
8. In your dealings with steel producers, are you finding that they are looking to companies like Chemcoaters LLC to offer them solutions in terms of energy efficiency and sustainability? If so, what can you offer them? Producers (and increasingly, their manufacturing clients) are seeking efficiencies by reduction of processing steps and ancillary costs. Fewer steps, faster line speeds, longer machine life, lower energy costs, and smaller inventories are all desired and actively sought. We believe we can demonstrate these cost reductions with our new product.
* President and Chief Operating Officer, Chemcoaters November/December 2017
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PERSPECTIVES: CHEMCOATERS
9. How quickly has the steel industry responded to ‘green politics’ in terms of making the production process more environmentally friendly, and are they succeeding or fighting a losing battle? Currently, most US steel producers offer a dangerous Hexavalent chrome chemical treatment free of charge to customers looking for galvanising services. As opposed to having to invest in green processes, there is actually a lower net cost when these treatments are no longer charged to the producer. Lower zinc coating weights, another benefit of our compound, reduces zinc runoff in waterways, and there is no cost involved. There is also less investment required for environmental impact reporting and residue capture, as there are no HAPs and extremely low VOCs in the formula of the product as applied at the mill. 10. Where does Chemcoaters LLC lead the field in terms of steel production technology? There has been very little technology advancements in the galvanising industry for 70 years, until today. A lightweight coating of zinc yielded very little corrosion protection, and the heavier applications still needed enhanced properties for lubricity, www.steeltimesint.com
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storage, and transportation to make it a viable product. Today all of that has changed to a single compound applied over a light zinc coating. Our new product upends the economics of the industry. 11. How do you view Chemcoaters LLC development over the short-tomedium term in relation to the global steel industry? We are in our infancy with our new discovery, but have tested it extensively and are currently having steel producers confirm our results. There is no question that, as it pertains to the global galvanising effort, the endeavor will shift from many passivations (chemical treatments) and heavy zinc coating weights, to our RoHS compliant compound and the new industry standard, light zinc coating weights (G30). The economics are too compelling to be ignored. 12. How optimistic are you for the global steel industry going forward and what challenges face global producers in the short-to-medium term? There has traditionally been a resistance to new movements in the steel industry, with customer demand often driving progress
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and advancement. In the short-to-medium term there will be a need to overcome this reluctance and to be more nimble and entrepreneurial to create sustained growth. New developments, new processes and a more proactive approach to both market expansion and cost reduction will need to be sought and supported. Self-interest has often been eroded in the steel industry by complacency and caution. 13. Apart from strong coffee, what keeps you awake at night? I personally drink coffee right up to bedtime with no effect, but occasionally I am concerned that as a David facing the Goliath of world galvanised steel, we have just the right message to show the effectiveness of our new ‘stone’. We will prevail, but we need to have just the right aim. 14. If you possessed a superpower, how would you use it to improve the global steel industry? The steel industry is just fine, but I would encourage a much closer relationship with and focus on the current needs of its customers. Sometimes progress moves ahead of the producers when they have the opportunity to lead it. And should. � November/December 2017
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HISTORY
The first documented evidence of a blast furnace in Ireland is the establishment of a furnace at Mallow, County Cork, in 1590, 100 years after the process arrived in England from the Walloon area of present day Belgium and Holland. By Tim Smith*
Ireland’s blast furnaces THE first furnace appears to have been built on Raleigh’s lands at Mogeely, County Cork (southern Ireland) by Sir Thomas Norreys in 1593 and was still operating in 1606. Over 150 water-powered ironworks – furnaces, finery forges and bloomeries were identified over the following two centuries, extant ruins of a number of blast furnaces still remaining. Richard Boyle, 1st Earl of Cork, – and father of the scientist Robert Boyle who also owned ironworks in Ireland – built a number of iron works, most of which were unprofitable except from 1626 to 1631 when wartime demand required increased output above that of the domestic market. A slag that is rich in iron Irish ores were generally of poor quality consisting of bog ores, siderite (carbonate), bedded haematites and limonites and laterite ores. The best ores were sourced in Ulster in the north – today largely the province of Northern Ireland. Indeed, three quarters of the charge to some of the furnaces relied on imported bloomery slag from England’s Forest of Dean where, in the pre-blast furnace era, the rich haematite ores used in direct reduction bloomery furnaces had produced a slag rich in iron, which could be recovered in the blast furnace. Such was the demand for these ‘cinders’ that exports were eventually stopped. Timber for charcoal was initially abundant and attracted English ironmasters to set up works, but lack of woodlands management resulted in rapid depletion of the forests requiring net imports of wood by 1711. It required around half an acre (2,000m2) of woodland to make the three tons of
charcoal necessary to make a ton of iron, and annual output per furnace ranged from 120 to 400 tons, thus depleting the forests around each furnace by between 60 to 200 acres annually. Coal was also scarce and it was not until 1788 that the first coke fired furnace was established, 79 years after Abraham Derby used coke at Coalbrookdale. Peat charcoal was tried as an alternative fuel, but was commercially unattractive. By 1778, only three charcoal blast furnaces remained, one at Enniscorthy, County Wexford, (SE Ireland), one at Mountrath, County Laois (central Ireland) and one at Woodford, County Galway (W central). Only in two areas, Arigna in County Roscommon (N central) and Creevela, in County Leitrim (north of Roscommon) could large scale ironmaking continue into the 19th century using coke. From the late 18th century ironmaking was concentrated at ports where raw materials could be imported. Workforce Many of the furnaces were built and operated by foreigners; English and Walloons from present day Belgium and Holland. Sir Charles Coote employed some 2,500 foreign workers at his Leitrim and Roscommon works and at Mountrath (C Laois). 800 Englishmen worked at William Petty’s Kenmare ironworks, County Kerry (SW Ireland) as well as English workers at Enniscorthy, C Wexford (E central). Walloons worked at Ballinakill (C Laois) and
Main picture: Derryoober furnace, County Galway, showing vaulted arch. Below: Cast iron ‘saddle’ at Blackstone furnace
at Tuamgraney, County Clare (Central West). The settlement for workers included accommodation and 200-400 acres (81-162 hectares) of land to farm. Construction Surviving Irish furnaces differ significantly from most of their English counterparts in that the blowing and tapping arches are almost exclusively a vaulted structure with no supporting lintels. Indeed, only one lintel has ever been found in Ireland, at Woodford furnace, dated 1681. Also they were built of unfaced stone-rubble unlike most English furnaces, which were faced with ashlar masonry. Intriguingly, two furnaces in Cumbria, NW England, Nibthwaite (built 1735) and Duddon (1736), exhibit at least one vaulted arch as well as Glen Kinglass (~1722-5) in Scotland. The latter was built by Irish immigrants, and charcoal and skilled manpower travelled between Barrowin-Furnace in Cumbria and Ireland in the 18th century. No early British furnaces remain extant, which leaves the possibility that early furnaces used the vaulted arch structure, more angular arches supported by lintels being a later simpler construction. The last blast furnace to operate in Ireland was at the Creevela works, County Leitrim. Built by a Scottish concern, two large and one small coke fired furnace started production in 1852 and closed in 1896 with several periods of inactivity between these dates. Local coal was used for coke production, but from 1861 peat charcoal was used instead of coke. �
* Consulting editor, Steel Times International November/December 2017
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AS ONE We are stronger
Two powerful companies in the metals industry have forged together. Mitsubishi-Hitachi Metals Machinery and Siemens VAI Metals Technologies have united to become the new global force in metals technologies. Creating the future of metals as one. primetals.com
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200 YEARS OF FUTURE! The CMI Group proudly celebrates its bicentennial
Innovative technologies for the metals industry
Cold rolling § Strip processing § Chemical processes § Thermal processes Mechanical equipment § Automation § Extractive metallurgy DESIGN
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ENGINEERING
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COMMISSIONING
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TECHNICAL
A S S I S TA N C E
&
TRAINING
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AFTER-SALES
CMI Group, two centuries of engineering in the service of the industry Cockerill Maintenance & Ingénierie: a long history, inextricably linked to that of the industrial revolution… In 1817, the British businessman John Cockerill begins his industrial activity in Wallonia by supplying weaving looms to the wool industry. He rapidly diversifies his activities: blast furnaces, industrial boilers, warships… Passionate about steam machinery, in 1835 Cockerill builds the first working steam locomotive to run on the European continent.
power plants, rolling mills and steel processing lines, reheating and heat treatment furnaces, boilers for thermo-solar power plants... From the outset, the ‘Cockerill factories’ have been anticipating trends and playing a determining role in worldwide technological advances.
The tone was set. This thirst for innovation has driven the generations of engineers who, for the past two centuries, have been introducing new processes bearing the Cockerill brand onto the market: engine designed by Rudolf Diesel, guns, boat engines, water tube boilers, locomotives, heat recovery steam generators for electric
John Cockerill also laid the foundations of the international vocation of CMI today. A great industrial explorer, he made many visits abroad, always on the lookout for new technologies and new projects. His conquering spirit has thrived through the decades. Thus, in 1890, the ‘Cockerill company’ was involved in the construction of the first major Chinese steelmaking complex, located at Hanyang, designing equipment and assisting the client in raising capital, assembling the installations and training the local workers.
1 In the 19th century, a team from the ‘Établissements Cockerill’ at Seraing (Belgium) receives Viceroy Hung-Chang from the Chinese province of Zhili.
1 In the 21st century, the teams from the CMI Group perpetuate the John Cockerill tradition, sparing no effort to meet the expectations of their clients.
Today, with the benefit of this centuries old understanding of industrial processes, and driven by the conquering and innovative spirit of its founder, the CMI Group continues to design, install, modernize and maintain equipment across the whole world, and to provide its clients and partners with valueadded services and its expertise in international project management.
Technological, international, robust This technology driven group places numerous beneficial assets at the disposal of its client industries: a unique combination of engineering and maintenance expertise, a vast geographic and technological scope, and an ability to innovate in accordance with the operational needs of its customers. CMI has never stopped enlarging its geographical reach and its portfolio of technologies. The Group today counts operational units in Africa, Brazil, China, Europe, India, New Caledonia, Russia and the United States. In all, some 4 600 members of staff within the Group constitute a pool of talent commensurate with CMI ambitions. With the benefit of this organization, CMI today serves an ever more diversified client base. Whatever their specific needs, in CMI they find a partner of choice, whether as an EPCM services provider across all technologies, for solutions involving reducing the ecological footprint of industrial processes, for specialized services or for the Group’s dynamism in terms of innovation.
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