Aluminium International Today May/June 2016

IRAN UPDATE

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CONTENTS 1

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LEADER

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NEWS 2 MINUTES WITH...

7 Volume 28 No. 3 – May/June 2016 Editorial Editor: Nadine Firth Tel: +44 (0) 1737 855115 nadinefirth@quartzltd.com

EVENT REVIEW

COVER IRAN UPDATE

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ROLLING

HEAT TREATMENT

Alusolutions Success

EVENT REVIEW

UPDATES

Consulting Editor: Tim Smith PhD, CEng, MIM Production Editor: Annie Baker

www.aluminiumtoday.com May/June 2016—Vol.28 No.3

THE JOURNAL OF ALUMINIUM PRODUCTION AND PROCESSING

Sales Sales Manager: Anne Considine anneconsidine@quartzltd.com Tel: +44 (0)1737 855139

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IRAN - Investing in industry

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USA - Casthouse Insight: USA after the cuts

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ASSOCIATION UPDATE: Let the good times roll

Sales Director: Ken Clark kenclark@quartzltd.com Tel: +44 (0)1737 855117

ROLLING

Advertisement Production Production Executive: Martin Lawrence Managing Director: Steve Diprose Chief Executive Officer: Paul Michael

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Trendsetting in foil production

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Wear-resistant precision flat bearings

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Less dross and higher energy efficiency

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Aluminium ingot pre-heating

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Nitriding solutions

R&D

Supporters of Aluminium International Today

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Shaping the future

LIGHTWEIGHT VEHICLES 11

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to start shedding weight?

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REALCAR reaps rewards

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PROJECTS & PRODUCTS JOINT VENTURES

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Old risks and new challenges

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2 COMMENT

INDUSTRY NEWS - PRIMARY

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Alcoa power agreement Alcoa has reached an agreement with the Bonneville Power Administration (BPA) that will help improve the competitiveness of its Intalco smelter.

As a result, the smelter will not curtail at the end of the second quarter as previously announced by the company.

The amendment to the power

Read all about it One thing we are proud to do here at Aluminium International Today is bring readers the latest industry news from across the value chain. With six issues of the magazine a year, it can sometimes be a tricky task to keep it as up-to-date as possible, which is why we also publish news daily on www.aluminiumtoday.com We understand that news means different things to different people and so you might notice a slight change to the way we have presented it in this issue... Hopefully it will help you get straight to the point when it comes to finding information, or taking a break with a cup of coffee.

While that coffee is still hot, I recommend a read of the Iran Update on page 11, which looks at the rise of this new industrial region and the opportunities it could open up for the aluminium industry.

The figures show that Iran could be producing up to 1 million mt by 2020, so it is certainly one to watch.

Moving further downstream, I was lucky enough to visit the grand opening of Constellium’s new University Technology Centre at Brunel University London, which is dedicated to product development in the automotive sector. You can read more on page 38.

There is all of this, as well as technical articles on heat treatment technology, a dedicated projects and products update and a very interesting piece on joint ventures and the risks and challenges they can pose.

I’m off to make a coffee... nadinefirth@quartzltd.com

contract is effective July 1, 2016 through Feb. 14, 2018 and provides for additional access to market power during this period.

This short-term amendment with BPA, combined with the state of Washington’s $3 million budget proviso for workforce training, are key factors in helping Intalco remain competitive.

Alcoa thanks Governor Inslee; its federal delegation led by Senators Murray and Cantwell, and Representatives DelBene and Larsen; the state legislative delegation led by Senators Ranker and Ericksen; and BPA for their support.

Intalco Works, located in Washington State, has a capacity of 279,000 metric tons per year.

Hydro and Vale end negotiations Hydro and Brazilian mining company Vale has ended negotiations on the possible acquisition of Vale’s 40% interest in Brazilian bauxite producer Mineração Rio do Norte (MRN).

The two companies entered into a letter of Intent (LoI) regarding the possible transaction in October 2015, but have not been able to agree on commercial terms.

Hydro will continue to own 5% of MRN, as well as to purchase bauxite from Vale under commercial agreements entered into in 2011.

Hydro acquired Vales’ other Brazilian aluminium assets in 2011, including the 57% interest in the Alunorte alumina refinery, the Paragominas bauxite mine, a 51% interest in the Albras smelter, and their 61% interest in the CAP alumina refinery project, all locat-

ed in the state of Para. The 2011 agreement also included commercial agreements for Vale’s bauxite offtake in MRN. MRN is situated in the westernmost part of the state of Para, home to Hydro’s other Brazilian operations, and is Brazil’s, and one of the world’s largest produc-

ers of bauxite.

In operation since 1979, MRN currently employs around 1,400 employees and a significant number of contractors. MRN’s current shareholders are Vale (40%), Alcoa (18.2%), South 32 (14.8%), Rio Tinto (12%), CBA (10%) and Hydro (5%).

Malaysia extends bauxite ban According to reports, Malaysia is extending its ban on bauxite mining by another three months, to July 15, 2016 in order to clear stockpiles and curb air and water pollution caused by the sector in the past two years.

The country emerged last year as a major provider of bauxite after leading producer Indonesia banned ore exports to encourage more processing at home.

From January to November,

Malaysia shipped some 20 million metric tons of bauxite to China, the world’s biggest aluminium producer.

That was nearly half China’s total bauxite imports and a sharp increase from 3.25 million tons in the same period in 2014.

But the activity took its toll on the environment and the public quickly turned against the country’s largely unregulated bauxite mining industry, accusing it of

turning the waters and seas red near Kuantan, the capital of Malaysia’s third-largest state.

As a result, the country’s natural resources and environment ministry imposed a three-month ban early this year and froze new permits for the export of bauxite.

While the ban will now last until July, the issuing of export permits will resume as soon as existing stockpiles disappear.

UC Rusal and Guinea agreement UC Rusal and the Republic of Guinea have signed an annex to the Dian-Dian concession agreement and also reached an agreement on resuming operations at

the Friguia bauxite and alumina complex.

The agreement splits the development of the Dian-Dian bauxite mine into three stages.

The first stage will be completed by the end of 2017 and foresees the construction of a mine with the annual bauxite capacity of 3 mln tonnes.

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INDUSTRY NEWS - DOWNSTREAM 3

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New extrusion plant Kobe Steel, Ltd. will manufacture and sell aluminium extrusions for the automotive sector in the USA. The new business will operate through a company called Kobelco Aluminum Products & Extrusions Inc. (or KPEX) in Bowling Green, Kentucky.

KPEX will make bumper materials for cars and car frame materials. The new company will have an integrated production facility, with operations ranging from melting to fabrication. Plans call for construction of the plant to begin this summer.

Fabrication will start in the latter half of 2017, and the melting to extrusion processes will begin in the latter half of 2018. Total investment is expected to reach $46.7 million, and KPEX is anticipated to create 110 jobs.

North America is the world’s second largest automotive market and car production is forecast to continue to grow in the future.

In addition, higher Corporate Average Fuel Economy (CAFE) standards for 2025 are accelerating the need to lighten car bodies. As aluminium extrusions are an effective way to reduce the weight of cars, demand for bumper beams, car frame materials and other extruded products is expected to greatly expand.

Kobe Steel has been supplying aluminium bumper materials to Japanese automakers since the 1990s. The company has over 20 years of experience in the Japanese market and has established a strong track record. Kobe Steel’s original weight-saving proposals covering both product development, such as for high-strength 7000 series aluminium alloys, and cross-section design technology have received high acclaim from customers.

The establishment of KPEX will enable Kobe Steel to manufacture and supply the same high-quality aluminium extrusions and fabricated products available in Japan in the North American market.

Through innovative weight-saving proposals, Kobe Steel aims to gain the trust of automakers in North America.

KPEX will also contribute to strengthening Kobe Steel’s overall supply network, which covers Japan and the United States.

KPEX will be Kobe Steel’s second manufacturing operation in Bowling Green after Kobe Aluminum Automotive Products, LLC (or KAAP), which began production in 2005. KAAP makes aluminium forgings for automotive suspension systems and aluminium cast rods for compressors.

Sapa record results Sapa has delivered the strongest first quarter since the company was established in 2013.

The demand for lighter cars in both North America and Europe, resulting in aluminium substitution in the automotive industry, is contributing positively.

Owners Orkla and Hydro reported to the financial markets Sapa’s results for the first quarter of 2016. Sapa continues to deliver strong results.

Underlying EBIT improved with

46% compared to the same quarter previous year to NOK 571 million.

Performance improved across all business areas mainly due to the effects of the improvement programmes, increased share of higher margin business, positive currency effects from the weakening Norwegian krone against the US dollar and Euro and seasonally stronger demand. Total revenue for Q1 was NOK 13.905 million.

APPOINTMENTS Alcoa Executive Appointments

Kalban, Chief Executive Officer of Emirates Global Aluminium, who stands down at the end of his two year tenure.

Hilde Merete Aasheim

Karl Tragl

Alcoa has announced that Karl Tragl, Group President of Transportation and Construction Solutions (TCS), has been appointed Group President of Engineered Products and Solutions (EPS), succeeding Olivier Jarrault, effective May 16.

Succeeding Tragl as Group President of TCS is Tim Myers, currently President of Alcoa Wheel and Transportation Products (AWTP).

Constellium Constellium has announced that the Board will nominate Jean-Marc Germain as an Executive Director at the company’s next Annual General Meeting of Shareholders to be held in June 2016, with the view to him becoming Chief Executive Officer.

Jean-Marc Germain will succeed Pierre Vareille, who announced in March 2016 his desire to retire as the CEO of the company.

Wagstaff Steve Anderson, formerly Director of Engineering at Wagstaff, Inc. has been promoted to Vice President, Sales & Marketing, following the retirement of Lee Swartling, Vice President, Sales & Marketing.

Tim Myers

IAI Chair Hilde Merete Aasheim, Executive Vice President of Hydro’s primary metal business, has been appointed Chair of the International Aluminium Institute (IAI), at the 89th meeting of its Board of Directors in Shanghai.

Aasheim takes over from Abdulla

Steve Anderson

Correction notice Please note corrections for the “US extrusions: Market overview” article published in the March/ April 2016 issue.

Steve Schabel, chief sales and marketing officer, Alexandria Industries, said: 1. “Our industry’s carbon footprint is much less when using secondary billet.”

2. “Our business saw a 10%

increase from the solar sector in 2015.”

3. “He believes that with subsidies from their government, Chinese billet prices have fallen. Also due to their use of natural forms of power, billet prices from the Middle East and Iceland are also being offered at lower prices than certain less efficient North American plants.”

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4 INDUSTRY NEWS - SECONDARY

NEWS IN BRIEF Real aluminium pacakaging rate The national recycling rate in the UK for all aluminium packaging now stands at 55% (previously 48%) and the estimated recycling rate for aluminium drinks cans has reached 69% (from 60%), but the figures could be even higher, indicates the Aluminium Packaging Recycling Organisation (Alupro).

Sapa opens auto focused R&D lab

New recycling line Hydro has commissioned a EUR 45 million facility aiming to recycle up to 50,000 tonnes of used beverage cans per year at its Neuss plant in Germany.

The facility is located in the heart of a growing can market, as Europeans are now using more than 30 billion cans a year. That equals 450,000 tonnes of used beverage cans (UBC) to recycle.

Waste for some, “silver” gold for others, Hydro turns this urban-mined resource into material for new can tabs, ends and bodies, closing the recycling loop.

Countries collect cans in various systems. Where collected, the bulk often contains impurities and materials other than aluminium.

“Hydro’s facility in Neuss is the first to adopt a patented, advanced sorting technology for UBCs, able to process collected aluminium material with up to 20% impurities – making the new recycling line the best place to be for any used beverage can,” said Hydro President and CEO Svein Richard Brandtzæg.

With the new UBC line, Hydro further optimises its sourcing of

metal for subsequent fabrication.

Its rolled products for packaging help protect food and medicine, while automotive body sheet allows for lighter and more efficient cars and other applications secure functionality and resource efficiency.

UBC recycling in Neuss will save 350,000 tonnes of CO2 emissions each year, compared to use of primary aluminium.

Energy needed to produce primary aluminium for one can is enough to recycle aluminium for 20 cans.

Ford recycles 20 million pounds Sapa Technology Americas is the first facility of its kind in North America dedicated to the research and development of extruded aluminium solutions for the automotive industry.

“In total, we have around 1,000 engineers working in research and with application development throughout the world. This is a new step forward in our work to provide customers with the solutions that improve their products,” says President & CEO Egil Hogna.

ASI holds first AGM More than 120 representatives from across the aluminium value chain attended the Aluminium Stewardship Initiative’s (ASI) inaugural Annual General Meeting (AGM) event, held on Tuesday 26 April at the Audi Forum, Ingolstadt, Germany.

The AGM successfully ratified ASI’s new Constitution, and acknowledged ASI’s new Directors-Elect, and the newly elected Standards Committee.

This marks another important stage in the evolution of ASI as a standards-setting and certification organisation that recognises and fosters the responsible production, sourcing and stewardship of aluminium.

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According to recent reports, Ford recycles as much as 20 million pounds of aluminium stamping scrap per month using the closedloop system at Dearborn Truck Plant which builds the F-150.

That is the equivalent of more than 30,000 F-150 bodies in the largest configuration – a Super-

Crew body including doors, plus hood, tailgate and 6.5-foot cargo box.

Opting for aluminium over steel in new automobile construction is the best way to reduce energy consumption and carbon emissions, according to Oak Ridge National Lab.

Making circular economy happen On 21st April 2016, European Aluminium hosted an event dedicated to promoting a circular economy.

The new circular economy holds the promise that Europe will reach its full recycling potential and its core environmental and sustaina-

bility objectives.

European Aluminium decided to invite top decision makers, thought leaders and stakeholders to have a fundamental debate about how we can make it happen.

Panellists and the audience were

invited to debate around two angles: The Circular Economy in real life & how to make the Circular Economy proposal fit for purpose?

You can view the event highlights on Twitter (@EU_Aluminium) or using #GoCircular.

EAFA launches ALUNCH The ALUNCH event in Brussels throughout April and May, staged to promote the benefits and convenience of aluminium foil products across the range, has had a great start with lots of happy, smil-

ing participants.

Many young men and women, living, working and studying in the city have been attracted to the Grapevine restaurant, near the European Parliament, to enjoy a

‘feast in foil’ and pay for it using only aluminium bottle closures.

Organised by the European Aluminium Foil Association (EAFA), ALUNCH is running each Thursday until the end of May. Invitations to ALUNCH are being posted on Social Media, including Facebook and Instagram as well as around the restaurant.

EAFA hopes to see the ALUNCHers post pictures of their experiences and spread the word about both the event and the value of aluminium foil.

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6 INDUSTRY NEWS - END USER NEWS IN BRIEF Alcoa Arconic Alcoa has unveiled the name, logo and tagline of its future Value-Add company: “Arconic. Innovation, Engineered.”

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Emiroll aluminium coil plant Emirates Aluminium Rolling (Emiroll), a joint venture between Dubai entities and Singapore-based industrial group Mars, is set to build a new plant in Abu Dhabi, UAE, at an investment of Dh440 million ($120 million).

The facility will be located on a 900,000-sq-ft area in Khalifa Indus-

trial Zone Abu Dhabi (Kizad) amidst surging demand for flat-rolled aluminium products designed for applications in downstream industries across the UAE and GCC countries.

Both Mars and Dubal Holding, a subsidiary of Investment Corporation of Dubai (ICD) with a focus on investing in energy, commodities

and industrial projects, have a 35% stake in Emiroll, while the other entity Dubai Investments, the leading, diversified investment conglomerate listed on Dubai Financial Market, has the remaining 30%.

The new plant is expected to go on-stream by the third quarter of 2017.

Alufoil Trophy winners announced The future upstream company will operate under the Alcoa name. The company’s separation into two, independent, publicly-traded companies in the second half of 2016 remains on track.

Flat-pack aluminium Swedish furniture giant Ikea is all set to take on the transport market by launching a self-assembly aluminium bicycle, known as the Sladda.

IKEA spokesperson Annique van der Valk believes that the Sladda will also be a hit with the company’s environmentally-aware customers. The fact that it is made from aluminium makes it “a perfect fit with what IKEA stands for,” says van de Valk, “offering customers healthy and environmentally-sound solutions.”

Bahrain ‘green’ buildings Bahrain is working on 40 environment-friendly building projects as part of its sustainable development initiative aimed at reducing power and water consumption besides carbon emissions at these facilities.

The initiative will likely boost the demand for aluminium construction systems in the Gulf country.

Auto alloy growth The global alloy market for automotives is projected to grow at a CAGR of 7.69% from 2016 to 2021, to reach a market size of USD 177.47 billion by 2021.

The growth factors identified in a recent report are growing vehicle production, increasingly stringent regulations governing fuel efficiency and emissions, and the rising weight of the vehicles.

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The aluminium foil sector’s annual premier awards competition, the Alufoil Trophy brings out the best in both multinational and specialist foil manufacturers and converters.

This year is no exception with 65 entries across the five major categories producing 10 outstanding winners, plus an Overall Excellence winner, which scored extremely high marks in all categories.

The Alufoil Trophy is organised each year by the European Aluminium Foil Association (EAFA).

The competition is open to products which are either made from aluminium foil or contain aluminium foil as part of a laminate, structure or packaging system, as well as aluminium closures. Categories cover every aspect of aluminium foil usage across many diverse markets,

particularly those for packaging and technical applications. The classifications are Consumer Convenience; Marketing + Design; Product Protection; Resource Efficiency; and Technical Innovation. The judges also have discretion to award an Alufoil Trophy for products displaying excellence across a number of categories, or for an outstanding or clever application.

You can view the winners online: www.alufoil.org/alufoil-trophy-2016.html

2016 DIARY June 07 - 09 HARBOUR’S 9th Outlook*

July 12 - 14 Aluminium China*

October 03 - 06 ICSOBA*

HARBOR’s 9th Aluminum Outlook Summit is the largest and most strategic aluminium market gathering in the world. www.harboraluminumsummit.com

Aluminium China 2016 will return to Shanghai at SNIEC Hall W1-W3. www.aluminiumchina.com

The International Committee for Study of Bauxite, Alumina & Aluminium (ICSOBA). www.icsoba.org/icsoba-2016canada

29 - 30 2nd Global Bauxite Conference

August 10 - 12 MMMM 2016 Now in its elevent year, the event is sponsored by The Indian Institute of Metals – Delhi Chapter (IIM-DC). www.mmmm-expo.com

November 08 - 11 Metal Expo*

Gathers leading bauxite and The 22nd International Industrial alumina market players to share Exhibition will be held in Moscow. ideas and business opportunities. www.metal-expo.ru www.bauxite.enmorebiz.com *Pick up a free copy of Aluminium International Today at this event For a full listing visit www.aluminiumtoday.com and click on Events Diary Aluminium International Today

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1. How did you get into the aluminium industry?

It was the outstanding personality of my first boss in my professional life, Juergen Ulmer, who was the CEO of the German non-ferrous metal association who promised me that ‘metals will be always exciting.’ He was right.

2. What is the biggest industry topic that needs addressing?

The aluminium industry can be proud that 75% of aluminium ever produced is still in use.

However, we need to further minimise the losses after use, and that needs new business models along the whole aluminium supply chain.

3. Best piece of advice?

Credibility first.

4. Something we don’t know about you?

My passion for Africa – its nature and people – which goes back to the early 90s when I was working for the United Nations Environment Programme (UNEP) in Nairobi.

5. Funniest work memory?

I am a German; some say a ‘typical’ German, and an awful singer! When on a business trip with a French President in Japan, he did not accept my sincere refusal to sing in the Karaoke bar in which we stayed with our Japanese friends. He insisted I should at least join him in a duet.

What else can you do if your President ‘insists’? So, I joined him. After we finished, he ‘seriously’ told me: If you do that again I will fire you.

6. Individual you admire?

It was Heinz-Peter Schlueter, the founder and owner of Trimet Aluminium, as an exceptional entrepreneur-and leader; he cared for and supported his people and the industry as a whole. He and his team supported me on several quite unusual stakeholder projects with unions, schools and even churches, for example on the occasion of the World Youth Day to communicate and live the social responsibility our industry stands for.

8. Prized possession?

A symbol of freedom – a pocketknife in a leather cover with the initials “H.P.”, which I found when washing my hair in an ice-cold glacial river in Yukon. That was during my five months of backpacking and canoeing in Alaska and Yukon in 1983 – living on less than $5 a day, without any time pressure, just the opposite to life today. I sadly recently lost the pocketknife. What I really regret is that whoever will now enjoy “H.P.” does not know its worldwide history, and that it also served “S.G.” very well for decades. *Chief Executive Director, European Aluminium Foil Association (EAFA) Director General, Global Aluminium Foil Roller Initiative (GLAFRI) May/June 2016

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EVENT REVIEW

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AluSolutions Success The AluSolutions conference and exhibition took place at the Abu Dhabi National Exhibition Centre on 10th – 11th May 2016.

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Top: 1. Mohammed Al Jawi, EGA 2. Dr Stian Madshus, Elkem Carbon AS 3. Mrs Habiba Al Marashi, EEG 4. Geoff Matthews, Energia Portior Ltd 5. Max Weber, JLR 6. Dr Fiona Solomon, ASI 7. Dr Mark Dorreen, Energia Portior Ltd 8. Salam Al Sharif, BMR 9. Erik Fossum, Hydro 10. Graham Bruce, Taha International Bottom: 1. Annika Shelly, UNEP 2. Ammar Alul, Schüco Middle East 3. Dr Hossam Mahmoud, Gulf Extrusions 4. Sebastian Ebers, TOMRA Sorting 5. Melanie Williams, Sustainability Consultant 6. Stylianos Tsokoridis, TALEX 7. Jerome Lucaes, UC Rusal 8. Sandro Starita, Director, European Aluminium 9. Alberto Bergamaschini, Engitec Technologies SpA 10. André Schmoker, DHZ

The aluminium industry is committed to promoting the sustainable benefits of aluminium. We all know it is lightweight, strong and infinitely recyclable, but what efforts are going into creating a sustainable working environment when it comes to the production and processing of this miracle metal?

This was the aim of the AluSolutions conference – to provide a platform to look at recent technological advances and increased environmental awareness, so that aluminium made today is more sustainable than ever.

The conference The environmental theme was clear with the green colour scheme that ran throughout the exhibition and conference. More than 500 visitors from 28 countries across the international aluminium industry walked the green carpet and a green ribbon was even cut in the opening ceremony.

The organisers, Quartz Business Media, were honoured to welcome Senaat's ACEO, H.E Eng. Jamal Al Dhaheri, who inaugurated the event and led the opening ceremony. He welcomed the event to the region and highlighted the growing aluminium industry in the Gulf.

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The opening session saw presentations by representatives from Emirates Global Aluminium (EGA), Gulf Extrusions (GULFEX), The Bureau for Middle East Recycling (BMR) and Emirates Environmental Group (EEG).

The sessions continued throughout the first day with a look at tracking aluminium through the supply chain, downstream development and recycling and sorting technologies.

In the dedicated downstream session, Mr Stylianos Tsoktouridis, general manager, introduced the new Taweelah Aluminium Extrusion company (TALEX) as the most advanced aluminium plant yet, which is due to be fully operational by the end of 2016.

Day two saw the Aluminium Stewardship Initiative (ASI) host a panel session with a selection of its member companies. Dr Fiona Solomon, director of the ASI gave a detailed presentation of the work of the organisation within the aluminium industry and its plan to encourage and recognise responsible sourcing and production of aluminium.

Representatives from UC Rusal, Norsk Hydro and Schueco Middle East each presented their company’s role in working towards a sustainable aluminium industry. The panel then

took part in a question and answer session with delegates and some very interesting discussions ensued. Erik Fossum, Head of Commercial (Senior Vice President) in Primary Metal, Hydro presented a new standard with the Karmøy technology pilot and looked at how this is testing the world’s most energy-efficient and climate-friendly smelter technology.

Jerome Lucaes, UC Rusal, Marketing Director, Sustainability, gave the audience food for thought with the idea to move to a carbonconstrained world and how this transition could be managed in the industry.

Finally, Ammar Alul, General Manager, Schüco Middle East (SME) looked at aluminium’s environmental benefits in construction and the company’s efforts to reduce the carbon footprint of modern and existing buildings.

European Aluminium were also announced as a new member of the ASI and presented on the Sustainability Roadmap towards 2025, which highlighted aluminium as an essential material for a sustainable economy. Europe is dedicated to leading on sustainability and climate change and Sandro Starita, EHS Sustainability Director certainly presented some great initiatives that the whole value chain can Aluminium International Today

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EVENT REVIEW 9

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Senaat’s ACEO, H.E Eng. Jamal Al Dhaheri opened the AluSolutions conference, along with Steve Diprose, Managing Director, Quartz Business Media and Nadine Firth, Editor, Aluminium International Today.

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be involved in Networking To round off the events, TALEX hosted a networking lunch to introduce the new plant and meet with companies to discuss their involvement in the project.

Exhibition Alongside all of this, the AluSolutions exhibition provided visitors with the opportunity to view sustainable aluminium technologies in action and spend time with primary influencers and decision-makers. Exhibitors included TALEX, GULFEX, ABB, Elkem Carbon AG, Gillespie & Power Inc, Hyster, Cast Aluminium Industries, Engitec Group and Magneco/Metrel.

There were also displays from Ford and Jaguar Land Rover, which both showcased aluminium in all its automotive glory.

Thank you to everyone who participated or visited this year’s AluSolutions. We hope to return in the future, with more sustainability challenges and technology to present as aluminium works towards a greener future.

For more information on AluSolutions or the content provided, please visit: www.alusolutions.com Aluminium International Today

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IRAN UPDATE 11 5

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Investing in industry

The significant relaxing of international sanctions against Iran, following the signing of the Joint Comprehensive Plan of Action in relation to Iran’s nuclear programme, may mark the beginning of a new era; presenting both opportunities and challenges for the regional aluminium industry.

Although strict international laws and regulations (mainly related to counterparty and regulatory due diligence as well as regulations strongly controlling the types of aluminium products which can be sold to Iran) will remain in place and govern the conduct of companies seeking to do business in Iran for some time to come, in the short to medium term there are likely to be opportunities for both primary and semis metals, as Iran invests in expanding and upgrading its basic infrastructure.

This is likely to benefit demand within the power generation and distribution, construction and transportation sectors.

In the post-sanctions era, Iran will focus on rebuilding its out-dated infrastructure – transport, housing, construction, railways, water treatment plants, and ports. Without this basic infrastructure, the country will find it difficult to achieve its ambitious goals.

In 2015, Iran produced 357 kmt of primary aluminium from 487 kmt of capacity, represented by three smelters (Bandar Abbas, Hormozal and Arak)1.

There are other projects in the pipeline, totalling around 500 kmt of smelting capacity. In total aluminium production capacity in Iran might be close to 1 million mt by 2020. According to the Twenty Year National Vision Plan, or Vision 2025, Iran is poised to produce at least 1.5 million tons of aluminium per year by 20252.

The apparent consumption of primary

aluminium in Iran was around 300 kmt in 2014, taking into consideration 350 kmt of primary aluminium production and 47 kmt commodity ingots net-exports.

Aluminium consumption per capita in Iran, with a population of 79 million and GDP per capita USD 5353 in 2014, is currently at 3.8kg. Based on Vision 2025 and the development plans in the aluminium industry, the figure is projected to increase to more than 580 kmt in 2020 (7 kg per capita and 83.4 mln population) and exceed 900 kmt in 2025 (10.8 kg per capita and 86.5 mln population3). It means one can expect aluminium demand growth in Iran with a CAGR of 10% over the next five years. These drivers have the potential to make Iran one of the fastest growing markets for aluminium.

Taking into account Vision 2025, demand levels of 900 kmt compared to production up to 1.5 mln mt means we could assume that Iran might be a net-exporter of primary aluminium. Nevertheless, the demand growth is more visible, while smelting capacity development could stay a little behind demand growth and require a significant level of investment, including the powering of aluminium smelters.

Nowadays, Iran is a net-exporter of commodity ingots and net-importer of aluminium alloys. The latest available trade statistics of commodity ingots shows that Iran imported 135 kmt and 182 kmt was exported in 20144. While Iranian smelters

are located in the South and central Iran, the majority of the downstream producers are in the North and centre of the country.

It seems the transportation costs from Bandar Abbas and Hormozal smelters from the Persian Gulf to the North of Iran are less attractive compared with its export parity. This geographical feature provides a great opportunity for suppliers, who can serve the Iranian market via the Caspian Sea, not only for commodity ingots, but also for value added products.

The most heavily demanded value added products in Iran are aluminium billets. Extrusion represents the biggest downstream segment with a share of over 50%. Three mills represent the rolling industry with a combined capacity of just over 100kt per annum. The product mix at the mills is dominated by less complex alloys such as building sheets, standards and foil with operating rates of 4060%5. The aluminium-casting segment is estimated at 50 kmt per year, whilst aluminium wire & cable production is around 45 kmt.

Construction industry From the industrial end-use perspective the building and construction sector currently makes up the biggest downstream consumer of aluminium in Iran. Approximately 1.5 million housing units are needed each year to address a crippling shortage of homes. At present,

By Inga Simonenko, head of market intelligence, RUSAL Aluminium International Today

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12 IRAN UPDATE

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production facilities in Iran in order to take the opportunity provided by a faster growing market.

It is clear that the automotive sector in Iran will support greater aluminium demand, from aluminium wheels to “Body-in-White” production.

754 663 601 446

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Power generation industry In the last two decades, Iran’s power industry has undergone a major transformation to respond to its growing domestic needs, intensified industrialisation, and electricity export ambitions. Despite the adverse impact of sanctions and the lack of technology and financial challenges, the electricity sector has continued to meet the country’s fastpaced growing power demand, albeit in an inefficient and uneconomic manner, leading to occasional blackouts during peak demands. In the last eight years in particular, burdened by severe capital constraints and a lack of investment, the industry has gradually weakened; the growing number of incomplete projects and the decline in the number of new projects lagging behind this rising demand provides clear evidence of these problems17.

The electricity market in Iran has grown at a CAGR of 6.5% over the past 10 years, which is far beyond its GDP growth rate, which is currently less than 3%. These market developments require an additional capacity of 5,000 MW each year along with enhancements and new investments in the distribution and transmission network. Poor efficiency in the power generation and transmission infrastructure results in a huge loss to the economy that needs to be urgently addressed through new investments18.

In order to support industrial growth, Iran will need to heavily invest in its power generation and transmission lines, which is very promising from an aluminium demand perspective.

2013

Residential Units Completed by the Private Sector in Urban Area (thousand units7)

Automotive industry The automotive industry in Iran is the second biggest sector in the country after Oil and Gas and contributes more than 10% of GDP. Iran has traditionally been a high-volume automotive market, whose geographic advantage has given it the potential to serve as a production hub in the Middle East. The peak level of vehicle production within the automotive industry came in 2011 when the country produced 1,649 thousand vehicles.

Vehicle production in Iran9 Nowadays, the domestic Iranian automotive industry is estimated to have a yearly nominal production capacity of two million cars, comprised of 18 automakers (Public & Private). Despite being the largest automotive market in the Middle East in 2014, with sales of more than 860,000 cars, Iranian suppliers’ processes leave a lot to be desired in terms of efficiency and product reliability. A key reason for this was the technology void left in the passenger vehicles market due to the long American boycott of, and early European exit from, Iranian markets.

The current Car Park is outdated, with decades-old, locally assembled models and designs. It is certainly one of the primary drivers of the pent-up demand within Iran, but several other factors make opportunities in the market even more appealing. The country’s population is nearly 79 million, which is a similar size to Germany, and of this, a majority are young consumers10. Following the lifting May/June 2016

IRAN.indd 2

of international sanctions, new car sales are likely to grow from 2015 onward with a CAGR of 16% p.a. until 2020 in an optimistic scenario11.

Iranian OEMs lack the powertrain technology, build quality and finesse of foreign companies, and would benefit immensely from partnering with them12.

According to officials, cars produce 48% of Tehran’s pollution and motorcycles 22%13.

Iran’s pollution, a decades-old issue, has steadily increased in recent years, claiming lives and damaging healthy lungs. That is why Iran’s authorities have introduced various initiatives to cut emissions and modernise the Car Park.

It was announced very recently that PSA Peugeot Citroen had signed a joint venture with Iran Khodro to produce a range of cars. The two partners are expected to invest up to €400 million ($435 million) over five years, and the joint venture is expected to produce up to 200,000 cars a year out of a factory in suburban Tehran. Production is scheduled to begin in 201714. Additionally, the press reported that The Renault-Nissan alliance is ready to expand its manufacturing footprint in Iran once sanctions are lifted15. Daimler said it would cooperate with Iran Khodro Diesel (IKD) and Iran’s Mammut Group, establishing a joint venture for the local production of Mercedes-Benz trucks and powertrain components16. We could expect that other auto makers and OEM suppliers would be interested to establish

1,800 1,600 1,400 Thousands

a mere 700,000 units are successfully completed annually6.

According to Project Iran, the construction sector has a project pipeline worth more than USD 200 Billion, for housing, energy and transport infrastructure. The Government, through initiatives such as the Mehr Housing Scheme, is planning to build four million new residential units8. RUSAL* expects that the Construction sector will make a significant contribution to the growth in aluminium demand in Iran.

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Packaging and consumer goods Classified as an upper-middle income

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IRAN UPDATE 13 5

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country, the domestic market for consumer goods presents a real opportunity following the lifting of international sanctions. The growth will be supported

by Iran’s youthful demographic profile, where the median age is 27 and 43% of the population is aged below 2519. Iran’s population is forecast to reach 83.4m by 2020, making it the second-largest consumer market in the Middle East and North Africa region. The increase in the working population together with the income per capita creates a strong platform for aluminium consumption growth in the packaging and consumer goods segment.

With respect to the aluminium industry, investment into high margin value-added aluminium products manufacturing is growing as a number of new projects come on stream, including SALCO and KALCO. In addition, the downstream industry requires more production capacity to support growth in each individual end-use segment. The current lack of scale and absence of modern downstream technology will hamper any immediate significant increase in internal semis output. However, analysts expect local semis producers to start investing in upgrading equipment beyond the next three to five years. 

Conclusions The relaxation of international sanctions in Iran could provide significant opportunities for demand growth, but substantial investment will also be required to realise this potential. Moreover, the legal challenges to ensure that foreign investors sufficiently segregate US interests from any investments into Iran as well as the close monitoring of aluminium products exported to Iran, means that the legal and regulatory challenges of doing business there cannot be underestimated.

References 1. CRU estimation, UC Rusal analysis 2. Iran International Magazin, IMIDRO Exclusive 3. https://populationpyramid.net/iranislamic-republic-of/2020/ 4. Trademap.org 5. WoodMackenzie. Iran:a metal and mining perspective.March 2016 6. The White Rose Group. Construction Industry in Iran. February 2016 7. Knoema, CBI 8. Frost & Sullivan. Iran Steeling for

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Growth - Automotive, Infrastructure, Energy, Construction and Aviation to Witness Increased Steel Demand. January 2016 9. ILIA Corporation, Iran Automotive Industry Outlook 2025 10. PwC. Iran: next frontier? Opportunities an drisks within the automotive sector. October 2015 11. Poland Berger. Iran - A historic opportunity for automotive OEMs. March 2016 12. Frost & Sullivan. Is IRan the Next Global Automotive Hotspot in the Middle East?

August 2015 13. Iran’s Struggle with Air Pollution 14. The World Street Journal. Peugeot Signs Car Deal with Iran Khodro. January 2016 15. Al Arabiya. Renault-Nissan ’ready' to expand inIran, with caution. January 2016 16.

Reuters. Truck maker Daimler signs agreement to return to Iran. January 2016 17. Energy Pioneers. Iran’s Power Industry Analysis Investment Risks & Opportunities in Post-Sancitions Era. 2015 18. Frost & Sullivan. Iran is on an Aggressive Growth Path to Develop Renewable Energy to Manage with Capacity Shortages. December 2015 19. The Economist. All that glitters Assessing opportunities and risks in post sanctions Iran.

2016

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Aluminium International Today

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May/June 2016

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14 USA UPDATE

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Casthouse Insight: USA after the cuts

By Eoin Dinsmore*

US primary aluminium production will drop to 0.8Mt in 2016, down from 1.6Mt in 2015. The strong US dollar, relatively high power prices, and low metal prices are behind this major reduction in output.

Ingot production will be the hardest hit, but the continuation of slab casting at Alcoa’s Warrick plant will lessen the impact on slab. The large fall in US ingot supply will ratchet up the need for ingot imports to meet demand. Despite the best regional dynamics, billet and primary foundry alloy upcharges in the USA will not rise in Q2, as high netbacks (the margin a producer earns) – on low ocean freight rates – encourage higher exports to the USA.

German billet upcharge picks-up $/t (left axis), c/lb (right axis) Implied German billet upcharge US Midwest spot billet 400

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Ingot taking all the heat In the USA, ingot demand will surge in H2 2016 as Alcoa halts primary production at its Warrick smelter but keeps the plant’s slab casthouse operational with remelt ingot replacing liquid metal. At the same time, US ingot production will drop to 105,000t in 2016, down from more than 500,000t in 2015. The sharp fall in production is due to the full closures of ingot producing smelters at Wenatchee and New Madrid and reduced ingot production elsewhere.

US spot billet premiums for 6063 material delivered Midwest at 11.5¢/lb are below the 2016 contract premium of 12.5¢/lb and will come under further pressure in Q2. Spot market activity in the USA has dried up and imports continue to rise, building on the 11.5% y-o-y surge in 2015 to 790,000t for the full year. The implied German billet upcharge remains below this level and after accounting for the 4% European import duty on billet, the US still remains the most attractive export market, for Russian and GCC producers.

A new look US slab market Alcoa’s Warrick casthouse in the USA is the largest producer of primary aluminium slab in the world. In 2015, CRU estimates that the plant produced

373,000t of slab, accounting for almost 9% of primary slab production outside of China. In March, the smelter halted production, but the casthouse will continue to operate; in addition Alcoa is restarting slab production at its 120,000tpy Texarkana, Texas casthouse.

Elsewhere in the USA, Alexin will start remelt rolling slab production from Q4 2016. This big increase in rolling mill and independent slab production will provide a major boost to ingot demand.

US wirerod supply down on Noranda cut US primary wirerod production, ‘000t

Rising gap in US wire rod market The closure of Noranda’s New Madrid smelter in the USA has reduced US primary wire rod supply by 64,000t. In addition, the company was close to completing its 40,000tpy rod expansion. Noranda is currently in Chapter 11 bankruptcy and there is a chance that a buyer may surface for the rod capacity. But, in the short term supply has been lost and as a result we expect spot wire rod premiums to increase.

Nevertheless, the fundamentals for EC grade rod for bare overhead conductor will lag alloyed rod. Even when closures reduce conductor rod supply, importers can step in, which will keep the up-charge in check. In the US foundry market, lower silicon prices contributed to a decline in the 7% Si PFA upcharge in 2016. US premiums for annual contracts dropped to 11.5¢/lb, and at present there is limited spot activity and buyers can expect to secure volumes below this level.

Best market for exporters: USA offers the highest netbacks across all products.

Major risk: A return to a sustained LME backwardation would pressure ingot premiums. And, low transatlantic freight rates limit the possible upside to premiums from a rising US import need.

Short-term opportunities: Low freight rates present an excellent opportunity to relocate inventories to the structurally short US market. 

140 120 100 80 60 40 20 0 2008

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This insight is an excerpt from the March 2016 quarterly update to the Aluminium Casthouse Shapes Market Outlook. This new quarterly update is in addition to the main annual report. The updates include a one-year ahead forecasts for ingot, billet, slab, wire rod and primary foundry alloy premiums and netbacks.

The report also includes supporting analysis and a top-level view of demand and supply fundamentals by product form. For additional information on the CRU Aluminium Casthouse Shapes Market Outlook please contact sales@ crugroup.com

*Principal Consultant CRU: Aluminium May/June 2016

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16 ASSOCIATION UPDATE

www.aluminiumtoday.com

Let the good times roll One year on from the formation of the Global Aluminium Foil Roller Initiative (GLAFRI), Nadine Firth* spoke to the four GLAFRI Board members – Manfred Mertens, President; Simon Chan and Fabiano Urso, Vice-Presidents and Stefan Glimm, Director General – to see if the first 12 months have delivered the organisation’s initial objectives and what new opportunities and challenges still lie ahead.

How have the past 12 months gone for the organisation?

MANFRED MERTENS: We believe the organisation has made a very promising start. The association already represents 49 members from 27 countries on four continents. Our ambition to speak for the sector with ‘one voice’ is widely recognised.

Membership has significantly increased and we have an exciting programme planned for the year ahead, culminating in the fourth Global Aluminium Foil Roller Conference (GLAFCO) conference in Shanghai in September 2016.

The World Economy did not deliver the expected recovery in the way forecasters predicted. Has this affected GLAFRI’s plans and the industry at large?

MERTENS: While it is true the global economic recovery is both slow and patchy, the aluminium foil sector delivered solid growth of 2.4%** in 2015 and we anticipate this year will continue that growth at a rate of between 2-3%**.

Certainly the slowdown of the Chinese economy, declining demand in North America and flat demand in Europe has impacted on aluminium foil production and demand.

But, although growth rate slowed down in China, foil production and demand continued to increase, the same as several other emerging economies.

Our expectation is that aluminium foil production worldwide will exceed five million tonnes** in 2016. **Data from CRU International

What did GLAFRI do to help stimulate this growth and knowledge about foil?

STEFAN GLIMM: The initiative was formed to help the sector speak with ‘one voice’ on issues such as sustainability and recycling – to develop a common position.

We started the first year with priority given to activities in China, India, Europe and the USA. Since we last spoke we have been very active, with no less than six presentations at major events across the globe. In particular, GLAFRI representatives were invited to China, India, Thailand and the USA, as well as Dubai and Kenya, to deliver and explain our messages. There were also meaningful projects and membership campaigns in Bangladesh, Mexico, Malaysia, Japan and Korea. There was a truly worldwide reach for our ‘voice’.

In addition, we issued six press releases and produced circulars on subjects as diverse as health, material substitution, innovation and recycling. Also there was an important feature in this magazine which, we were honoured to see, was republished in a special edition of Aluminium 2015 Highlights. Our sponsorship of the World BBQ championships also offered us a very positive platform.

SIMON CHAN: There were stand out activities in China, particularly a press conference in September to introduce GLAFRI, where we launched a social media campaign about aluminium foil containers. This followed our presentation of Alufoil Trophy winners during the

ALUMINIUM China exhibition in July.

Our work is greatly assisted by the active support and efforts of Mr Dong Chunming, who is GLAFRI’s coordinator in China.

He and l are aware of the importance of further enhancing home consumption in China through the promotion of foil’s many advantages here. The Initiative is in an ideal position to stimulate interest and a better understanding of the benefits foil can offer China.

GLAFRI has increased its membership. Who has joined the group?

GLIMM: We were pleased to welcome six new foil roller members over the last 12 months who all underlined the international nature of the Initiative.

We recently gained Buildtrade from Bangladesh, Lotte from South Korea and Gränges based in Sweden and China. In the second half of 2015 we welcomed Garmco from Bahrain, Gujarat Foils in India and UACJ Foil based in Japan and Malaysia. In addition, we welcomed two new supplier members, Actega and Otto Junker who join our founding members in this category IAI, Achenbach, Kampf, Thiel & Hoche and Novelis PAE. Their perspective is very important to the work of GLAFRI. What will GLAFRI’s focus be to encourage more growth in 2016?

GLIMM: Different regional initiatives can focus on, and take advantage of, local market circumstances. We highlighted this during my presentation at the AFSA

*Editor, Aluminium International Today May/June 2016

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ASSOCIATION UPDATE 17 which is increasingly important to the aluminium foil sector. The theme is highly appropriate: “Driving Aluminium Growth through the Global Foil Initiative.” As well as an overview of global foil and closure markets we will explore regional differences and identify drivers for aluminium foil demand. Substitution challenges will be addressed and the initiatives to support market growth.

Manfred Martens

Simon Chan

Stefan Glimm

Fabiano Urso

International Aluminium Conference and Exhibition, in Cape Town, South Africa this March. The subject, More (Foil) is Less (Waste): Contributions of Aluminium Foil and Closures to Sustainable Lifestyles is, of course, a globally relevant topic and can be rolled out across other regions. GLAFRI will take every opportunity to deliver our message.

and we will devote much of our attention to these areas. The per capita consumption in my own market of Brazil is 0.4kg; in India the figure is less than 0.1 and in China 0.2. This compares with 1.2 in both USA and the EU 28 and 0.9 in Japan.

GLAFRI is also looking into possible strategic partnerships, for example with exhibitions or other conference providers to generate regular opportunities to present on benefits of foil applications.

FABIANO URSO: Additionally, we will continue to be active in explaining the benefits of aluminium foil to reduce food waste as well as its contribution to sustainable lifestyles. Foil is a functional barrier, and longer shelf life is correlated to reducing food waste. It is the same for portion packaging, where semi-rigid containers, as well as thin foil, can play a major role.

We also continue to promote the animation video ‘More is Less’, which is available in more than 10 languages and could increase this year. New membership means we have additional distribution channels to roll it out to a wider global audience.

There are good and promising opportunities to grow the foil markets in emerging and fast developing economies Aluminium International Today

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What activities are planned for GLAFRI during 2016?

MERTENS: The big event in the calendar is the fourth Global Aluminium Foil Roller Conference, GLAFCO, which this year is being hosted by our colleagues in Shanghai, China from 7-9th September.

This biennial event truly brings together the ‘world of aluminium foil’ and enables us to discuss all the current issues affecting the industry from a global perspective.

URSO: As well as the presentation in South Africa already mentioned, we will be attending and presenting at ALUMINIUM BRAZIL from 7-9 June 2016 in Sao Paulo.

This is another major opportunity to speak to the Latin American market,

GLIMM: The programme of promotion will also include funding to help establish regional Alufoil Trophy competitions and supporting specific projects with both medium-term and a continuous impact in their markets and looking at ways these might be adapted for other areas.

What are the challenges for achieving growth?

MERTENS: The general slowing of the world economy is having an impact on every sector. But the aluminium foil industry is well placed to respond to upturns and downturns – it has been through them before. Plus, the markets we serve globally are always running at different levels, even from region to region. So, food might be buoyant while the automotive and building sectors depressed, or vice versa. We are currently seeing growth in most of the industries we serve, with different factors affecting different national markets. Balancing supply and demand is always a challenge, but again, through the improved communication networks and joint activities GLAFRI is building networks to alleviate these problems.

Overall how are you feeling about GLAFRI’s first year of operation?

MERTENS: I believe GLAFRI has exceeded all our expectations in its first year. Based on the success of the three previous global foil conferences, it seemed a logical step to set up GLAFRI, which is to my knowledge the first global aluminium downstream organisation. As more markets become global we need associations like ours to brand and represent their relevant sectors and products worldwide. This is due to cost efficiency reasons, as well as to meet the needs of multinational customers who expect a common approach to issues in different parts of the world.

GLAFRI wants to continue to clearly show the benefits of aluminium foil with its barrier functions, food waste savings potential, recyclability and now resource efficiency, which will all help to improve the image of aluminium foil in packaging and other existing and potential uses.

We would particularly like to encourage even more of our foil rolling colleagues to join and support our mutual interest in growing foil markets worldwide.

May/June 2016

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Trendsetting in foil production ASAŞ expands production with new Achenbach Foil Rolling Mill and a further OPTIFOIL® Separator

As a strong brand in the market for aluminium extruded products, ASAŞ Alüminyum Sanayi ve Ticar-et A.Ş. - can look back on four successful years of building an ultramodern production plant for aluminium flat rolled products. By recently placing an order with Achenbach for another extra-wide aluminium foil rolling mill and one additional aluminium foil separator, ASAŞ introduces the next expansion stage.

In the near future, ASAŞ will be producing up to 50,000 tons per year of high-class aluminium foil for a range of flat rolled products, mainly sophisticated packaging such as blister packaging for the pharmaceutical industry or intelligent compound packaging for the food industry for the national and international market.

With six large production facilities, plus an AIRPURE® exhaust air purification system, two roll removal devices and several highgrade auxiliary systems from Achenbach ASAŞ clearly commits to Achenbach as leaders in technology.

This large investment is backed by the concept of an integrated production site: ‘From liquid aluminium up to prefabricated aluminium foil’ and it is a fact right now, that the new production plant of ASAŞ in Akyazi-Sakarya is on the point of representing one of the most modern foil production plants in the world.

The first shipment of Achenbach machinery comprised one universal aluminium foil mill with the required process and media systems for exhaust air purification and microfiltration of rolling oil as well as each one OPTIFOIL® Doubler, Separator and Heavy-Gauge Slitter. The good cooperation particularly between competent and highly motivated engineers on both sides is emphasised by Achenbach and by ASAŞ. In combination with a high-bay storage to be installed later, an unmanned transport system for automatically material handling has

Bülent A. Atabay, General Manager at ASAS, Mehmet Kilimci, Achenbach Representative (FLTR)

already been considered in the design.

It is essential in this context, that the Achenbach machinery meets the most recent safety standards, considering both, conceptually and with regard to each and every component.

The universal aluminium foil mill is the key component of the foil production plant and produces aluminium strips with an entrance thickness of 0.7mm down to a final thickness of 0.006mm at rolling speeds of up to 2,000m/min and a width of up to 2,170mm with high coil weights of 16 tons. With regard to the combination of strip width and coil weight, this rolling mill is setting new trends worldwide. The foil rolling mill is equipped with a VCroll and disposes of the most modern generation of inspections systems. It is energy saving with three phase alternating current technology. Optimum strip flatness is guaranteed by the new Achenbach nozzle bar technology in combination

with the VC-roll. This also applies in the present case of enormous dimensions and high production speeds.

An AIRPURE® exhaust air purification system as well as a SUPERSTACK® II filtration system is the latest design for rolling oil microfiltration and are essential components for securing the quality rolled products. Furthermore, the extremely high quality of the recovered rolling oil is achieved by innovative design details of the process and media systems from Achenbach.

The OPTIFOIL® Doubler is the world’s biggest doubler with regard to width and coil weight. The doubler prepares the aluminium coils coming from the rolling mill for the last rolling pass at speeds of up to 1,200m/min. The newly developed, precisely controlled application of minimum rolling oil quantities as mould oil is beneficial for short annealing times. Optimum process

*Dr. Gabriele Barten, Head of Marketing, Achenbach Aluminium International Today

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20 ROLLING

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OPTIMILL® Foil Rolling Mill

OPTIFOIL® Aluminium Foil Doubler

conditions when applying the mould oil and strict adherence to the desired on-site exhaust air values are achieved by a newly designed fume hood, which is connected to the AIRPURE® fume exhaust air system.

Also the Achenbach aluminium foil separator is a trendsetter referring to its dimensions: It separates and slits the coils of 6 µm aluminium foils forwarded from the rolling mill with strip lengths of up to 2 x 210,000m into finished rolls of max.1,000mm in diameter. The OPTIFOIL® Separator delivers the starting material for the further processing to a range of foil products and it is equipped with the latest generation of inspection systems.

Another technical highlight is the fully automatic above floor portal crane, which enables extremely short unloading times and therefore effects an especially high productivity.

To some extent, the huge aluminium foil coils in a strip thickness of 300µm up to min. 40µm are transferred from the rolling mill directly to the Heavy Gauge Slitter type OPTIFOIL® Heavyslit: The heavyweight coils of up to 19t are slitted in comparatively narrow slits of up to 1,830mm in diameter. These coils mainly serve as starting material for manufacturing ribs for the automotive sector. Two of the technical highlights Achenbach is holding a patent for, are firstly the high precision oil applicator, May/June 2016

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OPTIFOIL® Aluminum Foil Separator

SUPERSTACK® II Rolling Oil Filtration System Scrubber of the AIRPURE® Exhaust Air Purification System

OPTIFOIL® Heavyslit

which guarantees the trouble free further processing for e.g. thermoformed products. Secondly the new developed horizontally shiftable rewinder, which ensures a maximum smooth rewinding by being decoupled from the central part; the new patented single contact roller system guarantees a steady winding density of each and every slit. A particular benefit of the Heavyslit is the single layer slitting and the double layer separation and slitting of the material, which considerably increases the operational flexibility of the slitter.

The technical highlights of each and every Achenbach machine or system are guaranties for success with regard to the desired competitive advantages of ASAŞ in its market. Furthermore, ASAŞ is convinced of the synergy effects resulting from the fact that the machinery for the foil production plant is built ‘from a single source’. After the successful commissioning and operating of the first Achenbach machines, ASAŞ relies on Achenbach OPTIFOIL® technology not only in rolling mill machinery but also when it comes to processing the rolled foils in the subsequent processes of winding, separating and slitting.  Contact Juan Rigau, Executive Director Sales www.achenbach.de

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Service

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GRANCO CLARK’s Service and Spare Parts Departments are available 24/7. Our global team of trained service technicians are available to keep your production facility running smoothly at all times. They will find the best solution to meet your needs and provide on-site service (in most cases, within 24 hours) and spare parts whenever necessary.

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• +1-800-918-2600 • customerservice@grancoclark.com

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Remote support means less downtime if equipment goes down.

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7298 N. Storey Road Belding, MI 48809 +1-800-918-2600 gcinfo@grancoclark.com | www.grancoclark.com USA | Brazil | Argentina | UAE | India | Thailand | Singapore | Australia | New Zealand | China MayJune2016.indd 1

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Introducing an aluminum mill de-drossing solution that’s versatile, easy to use and reliable Gradall is introducing an XL 4210 V maintenance machine that is the proven solution to efficiently skim dross and maintain the walls and bottoms in aluminum furnaces. With a 49-foot (14.9 m) boom reach and mobile crawler undercarriage, this unique Gradall can quickly and accurately skim the molten surfaces in one or more furnaces while minimizing door opening times.

For an actual case study, visit: www.Gradall.com/Novelis Call 330-339-2212 to learn about Gradall metal mill maintenance machines engineered to meet your needs — another reason why nothing works like a Gradall.

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DROSS skimming

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Wear-resistant precision flat bearings

By Jochen Corts* and David Passon** Aluminium is the metallic material of the future. The worldwide demand of aluminium rises rapidly from year to year.

It is already ranked number two of the total consumption of all metals. And due to its well-known advantages the demand will only keep rising.

Especially the demand for flat rolled aluminium, which is expected to increase due to its major advantages in lightness.

Besides the aviation and real estate industry, the automobile industry is one of the major consumers of aluminium.

For example, in an ordinary car, 150kg aluminium is used – in an Audi A8 it is more than 600kg and even the complete bodywork of the current Ford F150 is made of aluminium.

But despite the demand, the competition and quality standards are soaring.

Therefore, the total production quality and lowering costs have become the driving force for successful manufacturers.

Aluminium rolling mills are at the forefront of quality consciousness and new technology. This new technology in the designing of new mills or revamping of old mills is focused on:  Reduction of production steps and cost through the hot rolling of cast slabs down to 1.2 – 1.5mm of thickness and below  Increasing the width of thin, hot rolled sheets  Increasing precision of rolling dimensions, and  High metallurgical quality and varieties The equipment that accomplishes these new engineering objectives are: Thin slab casting and highly precise rolling mills with automatic gage control, roll bending, roll shifting using the continuous variable crown technology. Realising these technological gains, integrating this equipment into practical operation and challenging newly established rolling principles means re-examining central parts of the mill, such as the overall mill window geometry and the flat bearing system (wear plates) between housing and chocks.

Mechanical influence on the mill stand precision The main components of the rolling mill stand are the housings and the roll chock assembly. These main components are exposed to movements and the transfer of rolling energy through these two critical areas:  The rotational oil film and roller bearing of the rolls in the chocks  The flat bearings (wear plates) between the chocks and housing

Fig 1

the rolling mill might be impaired (fig 2). It can be seen that the impact of the rolling energy is distributed through extremely reduced areas creating point loads. Due to the fact that normal wear plates are by design not protected against the highly abrasive influences and corrosion caused by cooling and descaling water, these normal plates wear down quickly. This is why they are called wear plates. Under the old-fashioned design criteria, soft and hard materials were combined to transmit wear to the component, which is easy to maintain at relatively low cost – the chock liners. Examples of the outdated wear technology were bronze and steel or steel liners of different hardness grades paired together. The result is engineered wear, not effective wear protection and a lack of overall reliability.

Causes and consequences of flat bearing wear The degree of flat bearing wear is determined by outside influences and mechanical effects. Functions of the mill, clearance between the housing and chock liners, as well as the influence of cooling and descaling water and rolling scale must be considered. Each one causes a specific type of wear and can be broken down into three categories:  Abrasive wear  Corrosive and erosive wear  Impact wear

During the rolling process, pressure and mechanical forces are transmitted from the roll faces to the roll journals, from the journals to the rotational bearings, from there to the chocks and from the chocks finally to the housing window and fixed structure, which is the immovable reference of the mill stand (fig 1).

The impact of the rolling mill energy should be dispersed over as much chockliner-surface as possible. The precision and durability of these main bearings has a major influence on the mechanical behaviour of the entire mill stand. If these flat bearings exhibit too much wear the precise mechanical, hydraulic and electronic control circuits of

The result of one or combinations of all three wear factors damages the bearing surface and severely reduces the liner thickness through surface destruction and erosion. The end result of engineered wear is the increasing gap between housing and chocks, which leads to the undesirable effects of chock and roll displacement as shown in fig 2.

The increased gap leads to tilting, oscillation and horizontal displacement of the chocks, as well as vertical cross rolling.

The work and back-up roller bearings, chock clamping mechanisms and the chock bodies are exposed to excessive strain. The results are high repair and spare part costs along with unscheduled

*Managing Director, Josua CORTS Sohn GmbH & Co.KG and CORTS Engineering GmbH & Co. KG, **Sales Manager, Josua CORTS Sohn GmbH & Co. KG Aluminium International Today

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liners bears the risk of damaging the valuable equipment, causing expensive and time consuming repair and on-site milling operations as shown in fig 5.

Fig 2

Design tolerances (good parellelism)

Deviating tolerances (roll crossing)

Ideal, good roll alignment Strip gap wider on one edge Requires operator intervention Strip gap narrowest in the middle resulting in low crown As in 2 above Cross rolling situation high thrust loads Loss of shape Bearing failure

downtimes and rolling errors in the final product quality. Examples are chatter marks, ripples, skid marks, strip breaks and cobbles as shown in Fig 3.

The practice of engineering wear is mounting bronze or soft steel liners on the chocks and hard liners on the housings. This moves the wear to the chocks which are easily maintained in the roll shop. In this case either the liners are replaced with new ones or hard or soft steel shims between the liners and the mounting surface of the chocks are used.

Abrasive wear is fought by hardness, corrosive wear by stainless steel alloys and impact wear through ultimate strength or material. The common technique is to provide wear resistance by installing through-hardened liners and plates of different hardness grades (Fig 4).

Due to their high hardness these materials address abrasive wear when used as flat bearings. However, they do not protect the more expensive mounting surfaces of the chocks and housings. Due to their through-hardened character, these wear liners are stiff and brittle and not able to compensate the dynamic influences of the rolling process. The possible consequences are the elastic and plastic deformation of the mounting surfaces of the chocks and housings, loosening of screws, doughnut crackMay/June 2016

ROLLING passon.indd 2

Fig 3

outs, deformations and corrosion of the valuable mounting surfaces of the chocks and housings. Consequently, tremendous costs are involved to repair the chock and housing surfaces and additional related costs due to downtimes and production losses are occurring. To compensate the loss of thickness due to the engineered liner wear, the chock liners are shimmed by thin sheets which are mounted between the liners and chocks. As they are very thin, soft shims are quickly hammered through and hard shims can damage the mounting surfaces.

In any case, the use of through-hardened

The CORTS solution In order to solve the problem of high wear resistance and at the same time protecting the mounting surfaces, CORTS has developed a new class of materials to provide a through-hardened bearing surface with an elastic, shock absorbing capability. The technology of CORTS Compound Steel provides the possibility to combine the advantages of two completely different alloys. These two alloys are metallurgical bonded. The solid, high-alloyed tool-steel bearing surface with a thickness of 25% of the total thickness is through-hardened to 62 HRC in the CORC-g-Standard quality and 56 HRC in the CORC-g-Stainless material (fig 6) while the through-hardened, stainless steel bearing surface is applicable where corrosion and erosion are present. The mild steel base material (75% of the total thickness) acts as a shock-absorbing portion between the bearing surface and the mounting surface of the valuable equipment (housings and chocks).

As shown in Fig 7, the zone of possible elastic and plastic deformation is transferred from the machine body into the compound steel liner. CORC-g liners not only protect against wear but also offer long lasting protection of the valuable mounting surfaces of the equipment. The CORTS philosophy (hard against hard) is as simple as the principle of a ball or roller bearing where all bearing components are as hard as possible and corrosion resistance is utilised whenever necessary.

Housing and chock liners made from CORTS Compound Steel of the same hardness; mated as bearing pairs, act as a precision flat bearing, maximising friction reduction. This principle replaces the paired through hardened liners of

Fig 4

Surface wear 1045 wear plate

Surface wear Bronze wear plate

Surface wear Corroded wear plate

Aluminium International Today

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Stressometer速 Systems. Turning aluminium into gold.

With the Stressometer速 System, you will improve speed and productivity in your rolling mill. Improvements include yield increase and reduction of strip breaks, rejects and pass time. Altogether, it adds up to hundreds of thousands of dollars/euros in savings and increased profit. No wonder all our customers believe we are turning aluminium into gold.

Stressometer 速 System. www.abb.com/stressometer

ABB AB Measurement & Analytics Force Measurement Phone: +46 21 32 50 00

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Dynamic load of the rolling process

Fig 5

through hardened liner stiff and brittle

Fig 6

The top layer of 25% is offered as CORC-G Standard and CORC-G Stainless with hardnesses of 62+/- 2 HRC and 54 +/-2 HRC respectively

Full dynamic load to the screw result: Loosening

The base material of 75% is always made out of unhardened carbon steel

elastic material like shims or rasin between plates and machine body

elastic compression zone of the machine body

Compound steel combines the required hardness on the surface with shock absorbing body that protects the housing and chocks reference surfaces

Corrosive wear of the reference surfaces of housing and choocks

Dynamic load of the rolling process

Fig 7

Elastic compression zone of the CORC-G Compound Steel Liners

different hardness and materials like bronze where engineered wear is the objective. Fig 8 shows an example of corrosion protection of a CORC-g-stainless liner compared to a normal surface hardened steel liner – both liners were in operation for 12 months. After this year of operation, the grinding marks were still visible on the stainless CORTS compound liner while the hardened standard steel liners are severely worn out.

The result of using CORC-g liners is a significant reduction of friction, support of low-friction mechanical design and the significant reduction of surface wear from 0.8-1.2mm per year (old-fashioned liners) down to 0.1-0.2mm per year, depending on the specific mill conditions. Utilising CORC-g compound steel flat bearings helps the mill to maintain the design engineered total clearance over much longer periods of time, thus increasing and stabilizing the quality of the rolled aluminium.

The economic point of view As mentioned before, the average wear of a normal steel liner is approx. 1mm per year. Therefore, most mills that are equipped with CORC-g liners experience five times and in some cases 10 times the life of a traditional wear liner technology.

The initial purchase cost of CORTS May/June 2016

ROLLING passon.indd 3

25% hard steel protects against corrosion, abrasive and impact wear

Fig 8

75% soft steel protects the housing and chocks’ machine surfaces

precision flat bearings for rolling mills may be slightly higher than conventional wear parts due to their high material quality and complex production process. However, the mid-term and long-term investment will certainly pay off. Using precision flat bearings (wear plates) made from original CORTS Compound Steel enables you to reduce wear, maintenance costs, and downtimes to a minimum. Mill operators and maintenance staff will benefit from permanent precision, optimal production quality and high plant efficiency while simultaneously reducing the Total Cost of Ownership (Fig 9).

Mounting surfaces and Mill Window Geometry Hardened liners can destroy the mounting surfaces through transferring the impacts from the rolling process directly to the mounting surfaces of chocks and housings. In addition to that, corrosion and erosion can damage the surfaces and will influence the size accuracy of the defined gap between the chock and housing liners. Due to high rolling forces and several million tons of rolled material per year, the mill housings are exposed to high static and dynamic loads. After many years of operation these loads drive to changes in the mill window geometry.

Even the foundation and fixation of the

mill housings can be destroyed due to the high dynamic loads and forces especially in reversing mill stands.

If the mounting surfaces or the mill window geometry are not in perfect condition, even the best liners won’t drive to the best possible output of any rolling mill. It is comparable with a car that is equipped with the best available tyres – if the geometry of the car’s undercarriage is not aligned the best tires won’t perform as intended. Therefore, it might be necessary to analyse the 3D geometry of the mill windows and chocks and rebuild it to its original geometry and conditions – consequently increasing the output as well as the earnings and decreasing the produced scrap to a minimum.

The approach to reach this goal is shown in Fig 10.

Solutions for Chocks Chocks hold the rolls in place and therefore directly influence and maintain the roll position related to the rolled material. Due to the paramountcy of the chocks middle axis, the first step is the survey of the chocks related to this invisible middle axis.

The chock geometry has a major influence on the equipment of any rolling mill and is the base for the overall geometry. All other relevant surfaces are oriented to this axis (Fig 11).

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ROLLING 27

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Comparison old and new components

The standard way to control the chock geometry is to measure the outer dimensions by big bow-screw. But unfortunately this way is impossible to measure the relation of the outer chock surfaces to the invisible middle axis.

For the necessary 3D-survey and visualisation of the respective results, CORTS Engineering offers a threedimensional format, which enables easy interpretation across the different fields of responsibility in a rolling mill.

Solutions for Housings The housings of any rolling mill are the foundation of the rolling process, keeping the back-up and work-roll sets in place and controlling the rolling geometries.

Therefore, detailed knowledge of the precise 3D-geometry of the mill window with all relevant bearing surfaces is imperative for a controlled, reliable rolling process.

Mill Window Analysis Besides the chock analysis the mill window analysis is the second important step to understand the given mill window conditions. In order to optimise the geometrical conditions of the mill, CORTS Engineering offers its brand new, internet based DGA – a thought through App for a remote Digital Gap Analysis (DGA) giving clear indications of the actual GAP situation of your mill stands. Based on that unique DAG you will get a clear and reliable indication where and how your mill window GAP situation can and should be optimized. An on-site survey of housings and chocks as well as a detailed Finite Element Analysis (FEM-Analysis) is a secure way to optimised rolling conditions and profitable rolling results.

Having a clear understanding of the given mill window Situation with the proven optical CORTS 3D-Housing survey system, it is possible to precisely measure the mill window in its given position, relative to the mill-foundation and pass line. The combined survey results of chocks and housings are presented in a 3D-projection, magnifying the given deviations for further analysis of the geometry and its consequences for the Original geometry as drawn

Fig 10

Fig 9

accuracy and reliability of the rolling process. (Fig 12) GAP-Optimisation In order to optimise the geometrical conditions of the mill, CORTS Engineering offers a detailed Finite Element Analysis (FEM-Analysis) of the housing. Knowing the precise slimming of a mill stand under various rolling forces opens up the possibility of minimising the gap between the bearing surfaces of housings and chocks.

On-Site Machining Once the geometrical information and overall condition of the mill has been surveyed and analysed, CORTS Engineering offers the revamping of the basic components, housings and chocks, corresponding to the newly designed and optimised measures.

On-Site Machining of Housings For this task CORTS Engineering has at its disposal high precision milling machines, designed and built especially for use in

1. Mill survey

2. Reengineering

4. Maintenance & optimisation

3. On-site machining rebuild

on-site environments. After the milling the housings and chocks will be equipped with our CORTS precision liner plates (wear plates) to protect the redesigned mounting surfaces and reduce the wear to minimum (Fig 13).

On-Site Refurbishment of Chocks For the on-site refurbishment CORTS Engineering together with partners, developed a set of technologies and procedures to repair and optimise the chock geometry on site close to the customer’s roll shop.

Through its global network CORTS Engineering offers different models of inand outsourced turn-key solutions for an up-to-date, high tech, sustainable chock refurbishment.

Here the main target is to avoid the traditional expensive, time consuming and risky welding of chock bodies. The results are highly precise, long term corrosion protected reference surfaces for the valuable oil-film and roller bearings as well as the corrosion and abrasion protected CORTS chock liners (Fig 14).

Typ: von Mscs-spannung Enhelt MPs 11.04.2016, 13:35:13 73,03 Max

Fig 12

66,94 60,86 54,78 42,61 36,53

30,44 24,36

Fig 11

18,27 12,19 6,11 0,02 Mn

Middle axis

Max: 73.03 MPa

Aluminium International Today

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Fig 13

Fig 14

Conclusion The competitive worldwide market for aluminium-rolled products has its own principles and the massive investments in Asia interrupted the established market conditions and fundamentally moved the world markets equilibrium. We are not able to replace the existing rolling mills in the traditional western world with new plants, but CORTS solutions can make sure that your mill is able to survive and compete in the current and future market conditions.

The mills in the western world still have potential with new opportunities in the future – even for aged mills.

We have to remember our origin, analyse the existing rolling mills systematically and repair and revamp them to ensure a sustainable and innovative future for the western world’s aluminium production.

As a result, we will be able to provide the world market with innovative rolled products of the highest quality and continuously offer new applications for the fascinating material aluminium. î ˛ Contact www.info@cortsconnect.com

May/June 2016

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FURNACES/HEAT TREATMENT 29

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Less dross and higher energy efficiency The QUADRAFLO SWEEP© Aluminium Melting System is an oxygen based combustion system. Of course oxygen burners are generally more energy efficient than cold air or pre-heated air burners, but how is it possible to reduce the dross so drastically, when applying oxygen combustion technology? By Benjamin Köster, Rui Fontes, James Nabors & Bill Andrews*

Aluminium is the third most abundant material in the earth´s crust. It has a strong affinity for oxygen and because of this affinity, aluminium does not occur as a metal naturally.

Therefore you may ask how and why is it possible to use pure oxygen with natural gas to melt aluminium without increased oxidation? It is achieved through proper application of oxygen burner technology within an aluminium melting or holding furnace.

XOTHERMIC Inc. has developed the QUADRAFLO Sweep© Aluminium Melting System. Instead of applying a burner used in other high temperature applications like glass, steel, copper or other related fields, XOTHERMIC researched aluminium melt applications and developed an optimal design through field trials. According to the company, the melting technology offers the highest energy efficiency and lowest dross formation for the best economics.

As a direct partner for the industry, Hotwork International has the license for the QUADRAFLO SWEEP© Technology, in cooperation with XOTHERMIC Inc. Design pholosophy Our initial penetration into the aluminium market was secondary aluminium reverbratory furnaces. This is the traditional furnace utilised worldwide for both primary and secondary aluminium melting. It is primarily a refractory lined steel box with energy input from a combustion system, an exhaust port, cold metal charge port, and in some cases a separate dross port and molten metal discharge port. There are many configurations of this design, however the basic principle of operation is the same for all designs. A heat source

Two QUADRAFLO SWEEP© burner flame pattern

from the combustion system transfers heat into the cold metal with sufficient force to cause the metal to retain the heat until the melting point is reached (657°C on average). During this process, it is most desirable to do this heat transfer with minimum amounts of oxidation. Further heating is required to provide sufficient energy to maintain the aluminium in a molten state during the final end process of the production cycle (750°C on average).

What causes excess oxidation?

All aluminium forms an oxide layer from interaction with the oxygen in the atmosphere. This degree of oxidation depends on the age of the metal and its condition, such as paint, enamel or other types of passivation. In most cases, this is minor. The oxidation that is referred to is oxidation created during melting as a byproduct of the combustion process. Excess oxidation is generated from exposure

of the cold charge to excessive heat and oxygen concentrations.

How to prevent excessive oxidation?

This is the main premise behind the design philosophy of the QUADRAFLO SWEEP© Aluminium System. We designed a burner system to minimise generation of a hot spot on the charge material. This was achieved with the use of a flat fishtail shaped flame that moved or swept across the charge. Another requirement is that burner velocities are low in momentum to minimise disturbing the molten metal bath. The flame movement is up to a 45°angle. Moving the flame over a period of several seconds allows the heat to be transferred over a significantly greater area than a fixed flame.

Fixed flame burners heat an area of the charge to excessive temperatures in an effort to transfer heat to other parts of the pile. This creates significant hot spots

*Hotwork International Aluminium International Today

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30 FURNACES/HEAT TREATMENT

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40 mton tilting reverb

Air fire

Oxygen burner competitors

Quadraflo sweep

Burner position

end wall

end wall

roof

Cycle time (h)

13

11

8

Cycles per day

1.8

2.2

3

Melting capacity mt/d

42.5

50.2

70.5

Melting rate mt/h

1.8

2.1

2.9

Capacity increase

-

18.2

66

NG demand NM/mt

120

70

55

DROSS AVERAGE

8%

8%

7%

-

-

225.6

Metal savings per year mt

Table comparison

Burner block and typical set-up

and greater dross formation. Flow control systems are also provided to maintain a very close tolerance on the oxygen to fuel ratio. This is vital as you are paying for the oxygen and therefore do not want to waste it. Excess oxygen, even with air, creates more dross. It must be understood that regardless of the oxygen source, air or pure oxygen, the excess oxygen is still the same, on the order of several percent.

Because pure oxygen is used, it does not mean the dross will go up. It is the excess temperature that has a greater effect. In fact, putting a blanket of pure oxygen over a bath of molten aluminium at 657°C and no flame will show little or no increase in dross over a blanket of air at 21% oxygen.

Application and experience As mentioned before, there are numerous reverb and other furnace designs, therefore there is a demand for individual design modifications unique to the particular furnace design and application.

Tilting reverb Regenerative to Oxygen Conversion Oxygen burners produce about 60-80%

less exhaust gasses than an air burner, as the nitrogen has been removed. This results in better energy efficiency, less NOX production and less gas to clean prior to exhausting to the atmosphere. The energy efficiency compared to regenerative burners can be as high as 50%. On top, the furnace pressure can be reduced significantly, avoiding flames during high fire that can damage refractory and furnace doors.

The furnace generally operates cooler with an air fuel burner. Various conversations have proven: Energy saving: 35-40% Dross reduction: 20-40% Melt rate increase: 20-40% Oxygen to Oxygen Conversion Existing oxygen combustion systems produce localised overheating and as a result, increased dross. Low momentum QUADRAFLO SWEEP© Burners with full automatic controls are installed. The roof mounted QUADRAFLO SWEEP© burners utilise a greater area of the furnace for melting with a very even heat and no localised overheating, as the flame is not fixed in one spot.

The charge pile melts down evenly with less oxidation. Post combustion, to compensate for hydrocarbon gases from burned off coating etc., can be achieved with the automatic control system. In addition to the production increase, a corresponding increase in energy efficiency and metal recovery can be seen:

Energy saving: 15-25% Dross reduction: 20-40% Melt rate increase: 20-40% Tower melters The QUADRAFLO System also includes burners for the Tower Melter. This melter operates primarily with clean scrap and ingot and is used by continuous casters.

This is not a batch operation nor is alloying done; most ingot is at specification. Because of this, it is possible to have a continuous pour operation. This suits the Tower Melter design very well.

A major supplier of cast aluminium auto parts required an increase in capacity, as there was insufficient room for additional furnaces. Emissions were also a concern; therefore there was a need to minimise the pollutants from the process while increasing production. A Tower Melter has a tall refractory lined shaft with a melt box at the bottom that serves as the main melt zone, as well as a preheat for the incoming charge and an exhaust conduit. The molten aluminium flows from the melt box into the holding chamber over a raised ledge.

The holding furnace attached to the tower served only for holding, with no melting.

The initial design used an oxygen burner in one of the air fired burner positions. The production was increased from 1.4mton/ hr to 2.1mton/hr or 50% with a reduction in dross by 1%.

It was observed that greater yields could be achieved through the use of hot gas recirculation using an oxygen

Left and right: Reverb furnace with QADRAFLO SWEEP© burner

May/June 2016

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TAILOR-MADE INNOVATIONS FOR ALUMINIUM ROLLING MILLS PUSHER FURNACE FOR PREHEATING AND HOMOGENIZING SLABS

HORIZONTAL HEAT TREATMENT (HHT) LINE FOR PLATES

ALUMINIUM 2016 STAND 10E42 29TH NOVEMBER - 01ST DECEMBER 2016 DUESSELDORF OTTO JUNKER GMBH Jaegerhausstr. 22 52152 Simmerath Germany

Phone: +49 2473 601 0 | Fax: +49 2473 601 600 E-Mail: info@otto-junker.de

WWW.OTTO-JUNKER.DE

WE

UNDERSTAND METALS

32 FURNACES/HEAT TREATMENT

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Tower Melter with QUADRAFLO SWEEP© burner

QUADRAFLO SWEEP© burner hot face

QUADRAFLO SWEEP© typical flame

burner to heat the hot recycled gas as it entered the melt box at the bottom of the tower. An outside supplier in conjunction to the burner technology provided the hot gas fan. The increased volume from the recycled gas, which provided energy savings by coming in at 900 to 110°C, increased melt rate and reduced both energy consumption as well as dross. The melt rate was increased to 3.5 mton/hr or 150% over the air burners. Dross was reduced significantly by over 60%. The emissions were also within the legal limits set by the State.

inclusion of oxygen burner technology, the Rotary Furnace has come of age.

Depending on the application, rotaries come in either fixed bed or tilting designs.

It can be used to demag aluminium, used for irony scrap, dross processing and general scrap aluminium melting.

We have found that by providing a low momentum, high luminosity burner with an adjustable flame pattern as well as an adjustable bracket, it is possible to tailor the burner operation to the specific use for maximum energy efficiency, maximum metal yield with minimum down time. The

ranges as the type of material dictates the ultimate benefits from oxygen conversions: Energy saving: 40-60% Dross reduction: 20-40% Melt rate increase: 15-30%

Holding/melting Many processors utilise two furnaces that complement one another. One such application was for a Rotary/Holding furnace. The customer wished to increase holding capacity and add some melting capability to the holding furnace. The problem was that the holding furnace had absolutely no room for air burners and the bulk of the material to be melted was silicon for alloying and sows. The rotary was providing in excess of 80mtons per cycle to a holding furnace that was in excess of 120mtons. Approximately 10% of the holding furnace capacity was charged as silicon as one charge.

The solution was two 1800 kW nominal (900 to 3600) QUADRAFLO Automa tic Sweep burners mounted in the roof.

After conversion from cold air fired burners and furnace enlargement, there was a significant reduction in energy consumption and a 20% reduction in dross. The customer was impressed to the point of ordering a second system within a month and two new furnaces with the QUADRAFLO Automatic Sweep burners within the year.

Rotary furnaces One traditional furnace that has undergone numerous improvements is the rotary furnace. With the advent of new and better refractories and the May/June 2016

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QUADRAFLO SWEEP© burner typical skid on roof installation

bracket can be moved, thus moving the burner and placing the heat where it is needed to do the most good. Burner life is dependent on plant maintenance. Periodic cleaning of the area around the burner ensures maximum life for the burner. A monitoring system can be installed for dirty scrap, which allows an increase in oxygen to help burner up volatiles as they evolve off the charge. Additional features in our automatic control monitor when the charge is melted minimises metal loss by firing longer than needed and burning metal. Typically, one can expect the following benefits from converting to oxygen from air firing. These numbers are

The control system for any of these installations is fully automatic and can be expanded to cover such items as furnace pressure, temperature and associated items such as bag houses for emissions control.

Process controls and instrumentation Hotwork and XOTHERMIC utilises combustion control equipment with various types of PLC controllers and HMI touch screens. Electrical and mechanical systems are CE rated for European compliance. Flow sensing is from 0 to maximum flow with a high degree of accuracy. Ratios and temperature control is by PID control. NEMA 12 rated electrical enclosures are used to protect the electrical components. Upon request by the customer we can incorporate into the control system other mechanical and electrical components of the furnace.

Some common additions are: Chlorine injection monitoring and control, molten metal pump control, furnace pressure, door opening and closing, bag house monitoring. The customer’s furnace design and control is often incorporated into the touch screen displays for convenience.

Conclusion Today, focusing on environmental friendly production and products, such as lighter products in vehicles and air crafts, Hotwork International is facing these challenges with its oxy-fuel aluminium Melting Technology.

With lower emissions and higher efficiency, the QUADRAFLO SWEEP© burner assists customers in reducing their CO2 footprint, getting credits and improving production all at the same time.  Aluminium International Today

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Aluminium ingot pre-heating Saving energy and cost, By Andy Darby* Preparing a direct-chill (DC) cast aluminium ingot for hot rolling is both time and energy consuming. It can require about 1.2 MJ of energy per kilogram of final product to perform the homogenisation and pre-heating operations. This compares with about 0.2 MJ/kg for the hot rolling process itself.

Pit-type furnaces for pre-heating are still in widespread use by rollers of aluminium flat products. Although they may not be the most efficient method of pre-heating, they do provide a flexible store of ingots to maximise availability of metal to the ‘hot line’ (rolling mills). There are different configurations of pit furnace – some with the heating air flowing top-to-bottom (or vice-versa), others with the air flowing horizontally. There are also ‘pusher-type’ preheating furnaces, where generally the airflow is from bottom-to-top – albeit over the shorter length of the width of the rolling face of each ingot.

A key role of the pre-heat facility is to ensure that the ‘hot’ mills, where the greatest capital is tied up, are kept occupied with production. Fig 1 shows a schematic of a gas-fired pre-heat pit furnace also showing the major sources of energy loss from the furnace.

The pre-heat furnace usually performs the dual functions of homogenising the metal and of holding it at a temperature suitable for rolling. In order to achieve satisfactory final properties, the temperature distribution in the ingot following the pre-heat must be uniform.

For this reason, pre-heat cycles are sometimes excessive in length to ensure that uniformity has been achieved – bearing in mind that the only information a process operator has to go on is one or more surface temperatures. It would be an advantage to know the temperature distribution in the ingot throughout the pre-heat so that duration of heating cycles can be optimised. Shortening cycle time is one of the best ways of saving energy per kilogram rolled, as heat is lost from

the furnace even when the ingot is simply being held at temperature. Improving the temperature uniformity within the ingot prior to rolling is one of the best ways of reducing losses (scrapped material) at all subsequent stages further down the process line – thereby reducing energy consumption and incurred costs through wasted effort everywhere.

Furnace modelling It is possible to model the temperature at all locations within the ingot during the pre-heat cycle. Fig 2 shows how the ingot may be discretised for modelling purposes. A model may perform [3D] transient calculations of temperature at the centre of all the elements in the ingot, shown in Fig 2, throughout the heating cycle. The boundary conditions for the model are the air temperature and the heat transfer coefficients (HTC) on the ingot surfaces. These can be determined from first principles and then the model calibrated against experimental data from furnace trials. In general, these types of furnaces rely on the flow of heated air, usually using one or more fan units. Except

Exhaust gas losses

in unusual circumstances, the airflow will not be uniform around and over each surface of the load of ingots, and hence the model will benefit from a means of estimating the flows for each surface.

Consequently it is possible to model the effects on energy consumption of a range of different ingot sizes in a given load and different furnace geometries. The best heat transfer coefficients are achieved where local air velocities are highest.

However, significant heat transfer can also be achieved by using very hot air. For some aluminium alloys however, melting may occur at temperatures well below the frequently and usually remembered 660°C. Fig 3 shows the temperature distribution inside the ingot in the vertical plane at the mid-width position for a typical pre-heat process after five hours in the furnace.

There could be about 100°C difference at this stage between the top and bottom of the ingot. As the air passes down over the ingot it loses energy (temperature) into the ingot. The rate of heat transfer is not often uniform everywhere on the ingot surface.

Fig 1. Schematic of a typical gas-heated, direct-fired Pit furnace with recuperator

Burner Air leakage from lid

Stack

Burner

Recuperator

Burner

Ingot load

Fan Cold air leakage into furnace

Heat loss through walls & structure

Fan Cold air leakage into furnace

*Senior Consultant Engineer, Innoval Technology, www.innovaltec.com Aluminium International Today

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34 FURNACES/HEAT TREATMENT

thi

Air flow

Height

HTC (top)

HTC (edges) HTC (sides) HTC (bottom)

Fig 2. Division of an ingot into elements for modelling

Shortening heat-up times One of the important methods of judging how to improve the cycle is by minimising the gap between the hottest (leading) and coldest (lagging) temperatures anywhere in the ingot through the cycle. Fig 4 shows the leading and lagging temperatures through the heat-up time for a typical pit furnace. In order to achieve the required material properties for rolling, the temperature difference between ‘lead’ and ‘lag’ must be minimised (ideally, zero) and this can easily be assessed with a calibrated model. It may be noted from Fig 4 that in this illustration the ingot temperature does not become uniform until quite close to the end of the heat-up period.

The generalised heat transfer equation may be expressed as: Q=h*A*∆T Apart from making design changes to the furnace and fan equipment (effectively controlling the overall heat transfer coefficient ‘h’), the other part of the governing equation worthy of attention is the temperature difference ‘∆T’ – in this instance the difference between ingot surface and hot air temperatures.

It is often possible to accelerate the early part of the cycle by using higher set-point air temperatures. Fig 4 shows significantly higher than target air temperatures used at the beginning of the heat-up. The model indicates that for the time the high air temperatures are used, there is no danger of over-heating any part of the ingot. Because a model effectively can give warning of excess temperature anywhere on the ingot it allows a more aggressive heating regime which can enable a reduction in overall heating time without danger of damaging the ingot.

This technique pre-supposes that there is sufficient power in the burners (or heating elements if electrically heated) to maintain May/June 2016

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the air temperature at or near its set value. It is important to include the power limits in the modelling and thus calculate the actual air temperature, not just the set-point value. The problem of power limitation is most acute at the start of the cycle when the ingots can absorb heat at a high rate because they are relatively cold.

Uniformity of heat transfer In the main, ingots are heated up by being exposed to heated air flowing over their exposed surfaces. The higher the velocity, the better the heat transfer coefficient is likely to be, and therefore the resulting rise in ingot temperature. Air, being a typical fluid, will however always find the path of least resistance in its path around the furnace and load. Generally speaking it will predominantly tend to flow through the largest openings.

One of the advantages of the pusher-type furnace is that the ingots are automatically evenly spaced (by the ‘shoes’ they sit on to be transported through the furnace). In a pit furnace, difficulties in loading ingots into confined spaces can easily lead to narrow gaps between adjacent ingots or ingots resting against furnace walls for example. Together with the natural gaps created by loads of dissimilar ingot sizes, it is easy to see how air flows may not be uniform and hence not treating all the ingots equally.

In extreme cases, air may not flow over parts of the ingot surface at all – socalled ‘dead spots’ can arise. This is not to say that the parts of the ingot in such 500°C TOP

AIR FLOW

width

ckn ess

Ingot

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BOTTOM

403°C Position through thickness

Fig 3. Modelled temperature distribution inside an ingot after five hours of heating. The temperatures are shown in the plane through the thickness at the mid-width position

regions will not heat up at all, they will – but the local heat transfer coefficient will be different (and lower most probably) and lead to even greater temperature variations than those illustrated in Fig 3.

The modelling approach is able to identify the effects of such non-uniform ingot loading and enable suitable remedial approaches to be taken.

Reducing energy consumption As seen from Fig 1, energy is lost by conduction through the furnace walls, up the exhaust stack (when gas-fired) and by leakage of air into and out of the furnace.

It is typical for about twice as much energy to be supplied to the furnace as is required to raise the temperature of the ingot. A small but not insignificant proportion of this is the electrical energy expended to circulate air around the furnace. Efficient and appropriate fans (and motors) are essential to minimising the costs of operation of these furnaces. Electrical energy is more expensive than gas energy and has a bigger carbon footprint so it is worth minimising its use.

Recuperation In a direct-fired gas furnace, a mass of air corresponding to the combustion gas and air must be extracted from the furnace and exhausted up the stack. This represents a significant energy loss. However, it can be considerably reduced by the use of a recuperator which recovers heat from the exhaust stream and transfers it to the incoming combustion air. A recuperator is a heat exchanger consisting of a tube stack enclosed in a shell or box. The hot exhausting air passes through the recuperator tubes and the incoming combustion air is drawn over the external surfaces of the tube stack. The air is thus heated on its route to the burners. Fig 5 shows the benefit which may be obtained by using a recuperator.

As energy becomes more expensive and as the drive to reduce carbon emissions increases, recuperators will become more and more attractive. Sometimes the recuperators are fitted to the burners themselves. These are known as recuperative burners. They are generally smaller and cheaper but less efficient than stand-alone recuperators.

Air leakage Another contribution to the energy lost from furnaces is due to air leakage out of or into a furnace. If no recuperator is fitted, it is possible to tolerate quite large leakages of air out of the furnace without affecting the energy efficiency. This is because the combustion air must be extracted up the stack and air leaking out of the furnace simply reduces the flow up the stack by the same amount. However, if the air leakage Aluminium International Today

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FURNACES/HEAT TREATMENT 35

Temperature

Air temperature set-point

Leading ingot temperature

Lagging ingot temperature Time Fig 4. Leading and lagging temperatures in an ingot during the heat-up part of a pre-heat cycle

exceeds the combustion air requirement then there will then be significant energy loss. This can more easily occur towards the end of the cycle when the gas firing level is low. Furthermore, if a recuperator is fitted, even modest levels of air leakage out of the furnace are important as the recuperator can only recover heat from air, which passes through it.

Usually there are parts of the furnace, which operate below the ambient static air pressure. This is often near close to the intakes of the re-circulating fans.

If the furnace is not well sealed in this

region, cold air can be pulled into the furnace from outside. This has a more serious affect than air leaking out, as the in-coming cold air must be heated right up to the operating temperature of the furnace. Fig 5 also shows the effect of a possible leakage of air into a pit furnace.

The energy loss over the 25-hour period can amount to an increase in energy of 10%. Leakages of air into the furnace are not as obvious to the operators as there are no visible effects, in contrast to what occurs with air leaking out.

Damage to furnace structures, refractories and skins is all too easy – and cumulative. Even with skilled and careful operators, ‘placing’ ingots weighing upwards of 20 tonnes, often suspended beneath a gantry crane, over a very hot furnace pit is likely to result in a bump or two. Punctures to the furnace skin or welded seam damage may not be easily visible, but air ingress can result nevertheless.

Summary This modelling approach can yield practical pointers to shortening ingot preheat times by enabling more aggressive

Effect of air ingress

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Effect of recuperator Time Fig 5. Effect of using a recuperator and of air leakage on the energies supplied

heat-up schemes, without danger of overheating the ingot. It also indicates ways of reducing the energy losses of the process.

Models are being used more and more as part of the process control and it is possible to envisage that in the near future these furnace models will be running online, calculating the best future settings for the furnace and providing warnings of furnace malfunction much earlier than would otherwise be recognised.  Contact www.innovaltec.com

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36 FURNACES

RGB Ltd has shipped a large gas nitriding furnace to Texas, USA. The gas nitrider is used for nitriding extrusion dies for extruders across the United States. Keith Watkins* explains

Nitriding solutions A gas nitriding furnace is used to form a very hard surface onto extrusion dies. Both brand new dies and used dies are nitrided between each use, as they get older. This is normally carried out in a 535oC ammonia rich atmosphere.

Nitriding is initiated when gaseous ammonia is cracked or “dissociated” using a steel surface as the catalyst at about 480oC. Active nitrogen produced during this reaction moves into the surface of the steel and combines with Chromium and other alloy constituents to form their respective “nitrides”.

RGB has built and supplied the furnace in association with Thermserve Ltd, of Telford, UK. Furnace characteristics include PLC/HMI control for fully automatic operation. Mass flow control is incorporated for accurate nitriding potential function; along with an accurate ammonia gas analyser. Multi-programme recipes are included and the furnace is equipped with fast cooling, hydraulic lid and complete dissociation control.

In the business of aluminium extrusion, the extrusion die is arguably the key production tool. If the die does not perform to its optimum, then the efficiency and profitability of the extrusion plant is reduced.

RGB Ltd has been able to make enhancements to the control philosophy and software to provide end users with fully automatically regulated systems.

Efficiency and profitability are established by continuous extrusion of sections, which are to size specification, with acceptable surface finish and fulfil order commitments in the minimum time.

If the die shows premature wear or surface damage then this flow is interrupted, resulting in lower plant efficiency. Die reliability is essential.

There are a number of factors affecting die performance; some concerned with the quality of the die itself and some concerned with die management and extrusion practices.

Extrusion dies loaded into gas nitrider

Die quality - major factors  Die design  Steel selection – analysis (H13, H11 etc)  Steel cleanliness  Die bulk heat treatment  Die surface hardening.

Extrusion practices - major factors  Extrusion temperature  Extrusion speed Die management – including cleaning, correction and die pre heating** **Die pre heating is an extremely important factor regarding conservation of the quality of the nitride case. Ideally, it should be in a specially controlled atmosphere die oven for a maximum of eight hours.

There are many published papers and points of view on all these important factors, and as a supplier to this industry, it is important to have a reasonable understanding of the issues involved in the extruding of aluminium, especially where they impact on the performance of the product supplied. All of the production factors listed above can have dramatic effects upon die performance and many can reduce the effectiveness of any surface hardening treatment.

There are a number of die surface hardening techniques and while many have been tried and discarded some are still being used. These include Hard Chromium plating, Ion implantation, TiN and other exotic ceramic combination coatings. However, possibly due to its apparent simplicity, cost effectiveness and robust nature, the gas Nitriding process has established itself as one of the most cost effective solutions to increasing die life and performance. It is used extensively as an “in–house” process and there are now a number of suppliers of such

equipment.

The understanding of the physics and thermodynamics of the Nitriding process has increased tremendously since its original “discovery,” probably when steel blades were quenched in urine; the blade edge was found to have that something special compared to normal water quenching (possibly the aroma!) due to effect of dissolved Ammonia.

Nitriding Nitriding is initiated when gaseous Ammonia is cracked or “dissociated” using a steel surface as the catalyst at about 480°C. Active Nitrogen produced during this reaction moves into the surface of the steel and combines with Chromium and other alloy constituents to form their respective “Nitrides”. These Nitrides are extremely hard (1200Hv to 1500Hv) and increase the average hardness of the surface layers of the steel. As a general rule, the processes will double the hardness of the original steel.

It is important to understand the basic process before selecting a furnace, which will be a production tool and hopefully a friend for up to 20 years.

2NH3

N+ + N+ + 3H2

Enters steel surface Plasma Nitriding should also be mentioned. It has been around since the beginning of the twentieth century but only lately (last 30 years) with improvements in electronics has become a feasible commercial process. The process uses only small amounts of Nitrogen and Hydrogen gas in an approximate ratio of 1:3 and is environmentally

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FURNACES/HEAT TREATMENT 37

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friendly. It has had limited success in the aluminium extrusion business as it is a very geometrically sensitive process and can be difficult to control when used on complex shaped extrusion dies. It is also best suited to a very clean working environment.

However, some companies are producing very good results.

As shown above, the actual chemistry is quite simple and early furnaces were no more than basic stainless steel sealed tubs in which the work was placed and then heated in a suitable brick lined furnace.

Ammonia flow was not greatly controlled and temperature approximated at about 500°C. The process was not popular due to the long process times, the quality and reliability of the hard case produced and the smell (Ammonia this time not urine).

However, the low or zero distortion characteristics of the process made it ideal for certain applications.

Automatic Gas Analysis and Control,

by RGB may be using Infrared ammonia analysis or H2 analysis, via a special probe mounted inside the furnace.

In gas nitriding, the donor is a nitrogen rich gas, usually ammonia (NH3), which is why it is sometimes known as ammonia

or gas nitriding. When ammonia comes into contact with the heated work piece it dissociates into nitrogen and hydrogen.

The nitrogen then diffuses from the surface into the surface of the material and produces hard Nitrides with alloy constituents such as Chromium and aluminium.

This process has existed for nearly a century, though only in the last few decades has there been a concentrated effort to investigate the thermodynamics and kinetics involved.

Recent developments have led to a process that can be accurately tailored and controlled.

The thickness and phase constitution of the resulting nitriding layers can be selected and the process optimized for the particular properties required.

The advantages of gas nitriding over the other surface treatments are:  Uniform Nitriding on all surfaces (except those protected by special paints if required)  Large batch sizes possible - the limiting factor only being furnace size.  With modern computer control of the Nitriding atmosphere the nitriding results can be closely controlled to give desired case properties.

Gas nitrider under manufacture in Telford UK  Relatively low equipment cost - especially compared with other alternatives such as plasma or automated salt/fluid bed. 

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38 RESEARCH AND DEVELOPMENT

Shaping the future

Welding a prototype bumper (Constellium’s Gottmadingen facility)

Constellium is leading the way in product development for the automotive sector with a new University Technology Center in the UK. Nadine Firth* went to the launch of this and the Advanced Metal Casting Centre at Brunel University London to find out more.

The Constellium University Technology Center (UTC) is a joint project with Brunel University London, which aims to bridge the gap between fundamental research and series production.

Working closely with Constellium’s C-TEC technology centre and the company’s Automotive Structures engineers, the UTC will develop the products, processes and engineering talent of the future. A key feature of its work will be to rapid prototype extruded profiles and components, which will then be reproduced at Constellium’s manufacturing sites. Along with expert staff, the UTC will also have a powerful armory of hardware to deliver on its promise of advanced technology and shorter times to market.

“It’s totally unique in our industry,” says Paul Warton, President of the Automotive Structures & Industry business unit. “As well as being a centre of competence, it is also a development centre for life-size prototyping on real equipment. Developing

solutions on life-size equipment can be done in our plants, but you’re interfering with production flow and it’s always

Stirring molten aluminium for homogeneous composition before DC casting (Constellium University Technology Center)

rushed. This way, however, it becomes a ‘copy and paste’ for the production plant.

A prototype bumper system, for example, normally takes three months; with UTC, it can be six weeks. And that’s key for original equipment manufacturers (OEMs) who are often pressed for time and want to move quickly to series production.”

The UTC will be housed in two buildings: Advanced Metal Casting Centre (AMCC), which has received a £9.5m grant from the Engineering and Physical Sciences Research Council, and Advanced Metal Processing Center (AMPC), which was subsequently awarded £18m by the Higher Education Funding Council for England. The UTC will focus on three areas: New alloys that will far exceed industry benchmarks for strength and lightweighting; extrusion process and product development; and increasing the sustainability of products and processes through enhanced recycling. In terms of organisation, each development will be tied to a specified research project and

*Editor, Aluminium International Today May/June 2016

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RESEARCH AND DEVELOPMENT 39

Billet DC caster preparation before pouring liquid metal into the mould (Constellium University Technology Center)

where applicable driven to a customer project, with each customer project linked to a specific Constellium plant for series production.

AMCC This centre will feature a fully integrated Direct Chill casting and extrusion laboratory with a 1,600-ton extrusion press, along with specially designed equipment from Constellium, meaning full-sized profiles can be prototyped for testing.

What’s more, the UTC will be able to produce alloy material in small amounts of half a ton or less, thereby offering an inventory size more appropriate for testing new alloys. JLR will meanwhile provide shape-casting equipment to produce its own high-integrity cast components.

While Constellium and JLR are codirectors of the AMCC with Brunel University London, Constellium will carry out work for a number of important automotive OEMs through its University Technology Center.

Roll bending a prototype bumper beam (Constellium’s Gottmadingen facility)

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Encouraging new talent UTC is not just about technology and equipment; it is also about people.

Constellium will be funding Research Fellow programmes for the centre, with the clear intention of taking on doctoral students and research fellows for the advanced design programmes, while operational personnel will also work and visit the UTC as part of the research programs and industrial handover.

“What we are doing here is working hand-in-hand with academia and industry,” says Martin Jarrett, Constellium Technical Director for the UTC. “The aim is to bring solutions to our end customers and OEMs in an efficient way, but at the same time, develop our people to be able to support that technology.

“We have very experienced people involved with high levels of expertise who the students can work with and benefit from.”

Hardness measurement on an aluminium extrusion (Constellium’s Gottmadingen facility)

Keeping aluminium strong While the UK primary aluminium industry is facing uncertain times, innovation is key in developing new technologies and value-added products.

“I think what we will see is technologies such as bending, fabrication and joining spinning out into the use of aluminium products,” says Martin.

“The growth is in value-added production, which creates more jobs with the optimal solution being located close to the OEMs. We have to be close to the OEMs who are using these solutions,” adds Paul.

“I think it’s a great achievement and I am very proud to play a part,” says Martin. “The great thing is the centre is developing knowledge and solutions for local industry, which will impact the whole aluminium value chain.”

Contact www.constellium.com

Industrial extrusion tooling at the press line (Constellium’s Singen facility)

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When are road transporters really going to start shedding weight?

While the growing use of aluminium in buildings and automotive applications has generated a lot of buzz, the surge in usage in commercial transportation is equally exciting. Thanks to urbanisation, this is not likely to change. But the drivers behind the growth are not what one might expect.

The International Energy Association says that over the next four decades, global demand for transport is expected to double from 2010 levels.

“As the share of the world’s population living in cities grows to nearly 70% by 2050 and energy consumption for transport in cities is expected to double, the need for efficient, safe and highcapacity transport solutions will become more acute,” says Maria van der Hoeven, who recently concluded a four-year term as the Association’s executive director.

There is little question that the solutions needed in the area of road transport are going to include aluminium in the equation. The main questions are how, and when this is going to occur.

Fuel and freight Low-cost road freight transport and increased vehicle utilisation are the goals in commercial transportation, no matter the language or the land, and getting there includes input factors like fuel. It has to. The cost of fuel is always going to be a factor for commercial transporters and fleet owners and the manufacturers and suppliers of medium and heavy-duty trucks and trailers.

And today, even at relatively low levels, crude oil and automotive fuel prices are nearly twice as high as they were during the 1990s, writes Autelligence, a DenmarkAluminium International Today

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based provider of business analysis on automotive component technologies, in a report on truck fuel efficiency.

Moreover, the company points out that while fuel costs accounted for about 10% of freight costs at that time, truck operators today consider 30% as the benchmark. Lightening their vehicles can help reduce fuel costs, right? Of course.

But this is not the key issue for OEMs today.

“The issue is how much freight you can move for the same amount of fuel. The market is all about freight efficiency,” says JD Rutt, who leads Sapa’s business development work in the truck segment, and chairs the U.S. Aluminum Association’s Heavy Truck Working Group.

“Lightweighting is one of the ways the market can achieve better freight efficiency.”

CAFE for some In 1975, the United States Congress enacted its first set of corporate average fuel economy (CAFE) standards. These standards have improved the fuel efficiency of cars and light trucks and vastly changed the way OEMs are building their vehicles.

Lightweighting has helped carmakers achieve the continually heightened targets, and aluminium has been front and centre in supporting the OEMs. The medium and heavy-truck segment,

however, does not have to meet the same targets.

Consequently, Rutt says he believes the heavy truck market in the U.S. is at least 10 years behind the automotive segment in terms of lightweighting and aluminium use. “It is way behind,” he says. “But it is unfair to compare this segment to light vehicles, because cars have to deal with miles per gallon and CAFE requirements.

If CAFE standards come to the heavy truck segment, then this would change.”

But not yet. His commercial transport customers today are working to increase the amount of freight that their trucks can move, and to reduce the number of truck journeys required for their fleet’s operations.

“We can say that for every pound we take out of the truck, we can add a pound of freight. This is an important argument,” says Rutt. “Other ways, looking ahead, could be partnering fleets or holistic campaigns, anything to achieve the most efficient fleets possible.”

What are the figures today? European Aluminium Association statistics indicate that road transport vehicles use between 500 and 3,000 kilograms of aluminium, depending on the segment. The average Class 8 truck in North America uses around 1,100 pounds of aluminium.

This sounds like a lot of aluminium. But an average Class 8 truck, with a combined May/June 2016

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LIGHTWEIGHT VEHICLES 43

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tractor and trailer and no freight, normally weighs around 40,000 pounds – and that’s a lot of steel.

Extruded solutions The truck segment uses aluminium in virtually all forms. In Class 8 trucks, the light metal is used primarily in interior and exterior applications, trailer structure, cabs and other critical components.

Depending on the application and its requirements, the components might be cast, forged, rolled or extruded.

European OEMs are no further down the road either, with regard to aluminium lightweighting. Many are using increasing amounts of the light metal – Scania, Volvo, Daimler – but not to the same relative degree as their carmaking cousins.

The structural components of trucks, like the cabin-in-white, often use aluminium extrusions. Other potentially significant extruded applications include frame rails and so-called cattle catchers, which protect the undercarriage. Trailers already use extrusions in nearly all structural pieces.

Chassis applications account for nearly 70% of the amount of extruded aluminium volume in heavy trucks, with the remainder split fairly equally between the other three segments – powertrain, interior and exterior.

Lighter trailers, too Similarly, the trailer segment, like the automotive market not long ago, could benefit from further education about aluminium and about joining aluminium with other materials. This is a big challenge for the segment. Alloy development – stronger alloys and so-called crash alloys – is also an important factor going forward.

“We have implemented a crash alloy solution for one large volume trailer extrusion with great success, but more development in this area is needed,” says Jerrod Hoeft, who focuses on the trailer segment for Sapa.

He explains that stronger aluminium alloys would enable trailer manufacturers to replace their existing steel parts or help them achieve greater lightweighting with thinner-walled existing extrusions.

“The good news is that most trailer OEMs are big fans of aluminium,” says Hoeft. “They like the look of it and aluminium, by nature, cures one of their biggest headaches, which is corrosion.”

Competing materials with trucks and trailers are largely the same as in the automotive industry, primarily ultra highstrength steel.

Lightweighting as an enabler A report published late last year by Trucking Efficiency put facts into the arguments and showed that commercial truck fleets looking to increase fuel efficiency, haul more freight and retain more drivers, could turn directly to lightweighting.

The report also identified the amount of money that a company could save by investing in lightweighting, rather than in new equipment.

Trucking Efficiency is an initiative of the North American Council for Freight Efficiency and the Carbon War Room.

Its aim is to double the efficiency of the trucking fleet in North America.

“When lightweighting is looked at not only in terms of better fuel economy but also improved freight efficiency, it makes sense in a wide variety of applications,” says Trucking Efficiency’s Mike Roeth.

The North American Council for Freight Efficiency estimates that the number of refrigerated and dry vans requested to operate at maximum weight will double over the next 5-to-10 years, and that lightweighting can help move their freight more efficiently, while at the same time reducing fuel consumption and carbon dioxide emissions.

In addition to fuel savings, the study shows that every pound shaved off the vehicle’s weight could be recouped as freight.

“With the pending proposal from EPA to further tighten the emissions profile of the heavy-duty truck and trailer market, this report shows how lightweighting with aluminium can be part of the fuel and freight efficiency solution,” says Heidi Brock, who leads the U.S. Aluminum Association.

The Association’s Heavy Truck Working Group provided partial sponsorship of the report, with support from Alcoa, Kaiser Aluminum, Metal Exchange Corporation, Novelis, Rio Tinto and Sapa. Rutt, who chairs the working group, says the team is interested in freight and fuel efficiency improvements in the medium and heavyduty truck and trailer markets.

He points out that emissions regulations equipment, fuel economy features and driver amenities have added an average of 1,000 pounds to the average tractor since the turn of the century. Furthermore, with trailers being asked to carry more and denser freight, while fuel costs and weight restrictions rise, lightweighting becomes more attractive.

Theory vs. reality This isn’t the first time that an industrysponsored study has come to the same or similar conclusions. Nevertheless, lightweighting with aluminium in the heavy truck segment has still not gained traction. Part of the reason is that fleet owners, who may not dispute the benefits, have felt no pressing need to change.

Fuel efficiency can serve as an illustration: The European Aluminium Association estimates that trucks can save 0.6 liters of fuel per 100 kilometers for every ton saved in weight. But after reviewing the industry interviews and comments used in its latest report, Trucking Efficiency writes that OEMs have considered the cost of removing the tonnage required to reach an acceptable efficiency gain too high.

Another example of reality trumping theory is freight efficiency. The report shows that lightweighting benefits fleet owners by enabling their trucks to carry more freight, because weight saved in the truck could be replaced by revenuegenerating freight. This is clear.

The reality, however, is that the vast majority of the industry is not very efficient. The few transporters who “gross” most of their routes can and are benefiting from lightening their vehicles.

But most commercial transport vehicles, like refrigerated trucks, do not gross their weight on their routes, and the loads and the routes they drive often vary.

Will this change? Yes, probably, over time.

In its report, Trucking Efficiency shows that freight in North America is becoming denser, with shippers loading more pallets per trailer than before. Europe is seeing a similar trend. This means fleet owners will need to accommodate the heavier and May/June 2016

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44 LIGHTWEIGHT VEHICLES

denser freight – or add more trucks to the road.

Front of the line There are other arguments, too. OEMs who take the initiative and decrease the weight of their trucks will be better able to add technologies that might otherwise make them too heavy, and which can help fleet owners recruit and retain drivers, for example.

In addition, there are shipping customers and fleet owners who would like to decrease their carbon footprints – the sustainability issue. They can achieve this by raising the freight efficiency factor, by shipping denser and heavier loads per trailer. Customers would certainly try to give business to fleet owners who can haul more per trip, rather than putting more trucks on the road.

Changing through regulations In Europe, the movement toward lightweighting has partly been shaped by the Euro 6 Norm, which came into effect in January 2014. This brought lightweight solutions into the picture, together with alternative powertrain solutions and active safety systems.

Similarly, the Environmental Protection

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Agency (EPA) recognised the opportunity offered by lightweighting when they implemented Phase 1 of the greenhouse gas rule in 2014.

Many lightweighting features were included as options, and by helping fleet owners select lightweight features on new production, truck OEMs were able to comply with the regulation.

Last June, the EPA followed up by issuing notice of rulemaking for regulations in the next phase, which will take effect in 2018 for trailers and 2021 for tractors, and for new standards in 2024 and 2027. The approach taken in Phase 1 for lightweighting will continue under these rules.

Ironically, government regulations over the years in the United States have led to added weight to these trucks.

Still the same The gross weight limit on interstate highways in the United States is 80,000 pounds. Steel-intensive Class 8 trucks, with combined tractor and trailer, typically weigh 40,000 pounds, which leaves room for 40,000 pounds of freight.

U.S.-based Ricardo Consulting Engineers has conducted research showing that an aluminium-intensive Class 8 commercial tractor trailer can reduce the weight

of the vehicle by 3,300 pounds. In theory, substituting an entire fleet with aluminium-intensive models would also generate substantial reductions in carbon dioxide emissions.

Approximately three million trucks were produced globally last year, slightly more than in 2014. Asia accounted for more than half of production.

It is highly likely that heavy trucks and trailers will follow the passenger vehicle segment and grow lighter with aluminium.

The difficulty is in predicting when this will occur.

As a leading extrusion company with strong R&D and technical competence, Sapa is involved in new creative developments in the transport market, primarily in the chassis segment. Efforts in exterior segments also are being stepped up.

The development of new extruded aluminium solutions is helping drive lightweighting, and the most desirable solutions are those that both reduce weight and reduce costs, for instance, parts that can combine the functions of multiple components into simpler, combined parts.  Contact www.sapagroup.com

REALCAR reaps rewards Jaguar XE celebrates its first year with major recycling milestone As the Jaguar XE celebrates its first fullyear of sales, ‘REALCAR’, the pioneering recycled aluminium project that contributes to the awarding winning saloon’s aluminium-intensive body has reached a significant milestone.

Jaguar Land Rover (JLR) has reclaimed more than 50,000 tonnes of aluminium scrap, the weight of 200,000 XE body shells, back into the production process during 2015/16, preventing more than 500,000 tonnes of CO2 equivalent from entering the atmosphere by not using primary aluminium material.

The figures are a result of project ‘REALCAR’ which involves 11 UK press shops implementing a closed-loop, segregating waste aluminium scrap so that it can be sent back into production to be re-melted into recycled aluminium sheet for use in JLR vehicles.

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The JLR-led research project, part funded

by Innovate UK, also saw the development of a recycled aluminium-based alloy which can accept a higher percentage of the recovered scrap. In 2014, the Jaguar XE became the first car in the world to use this innovative high-strength aluminium alloy, developed by project partner Novelis.

More than £7m has been invested across JLR’s own Halewood, Castle Bromwich and Solihull press shops to install intricate segregation systems to capture and distribute the aluminium scrap for remelting, reducing waste, retaining higher quality and value in the material.

Recovering aluminium in this way offers huge sustainability benefits, with aluminium recycling requiring up to 95% less energy than primary aluminium production.

The structural grade of recycled

aluminium has since been tested and introduced in the lightweight aluminium bodies of the All-New Jaguar XF and F-PACE models.  Aluminium International Today

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PROJECTS & PRODUCTS 45

Dry recycling system

The aluminium industry is constantly embarking on new projects and developing new products. In this new regular feature, Aluminium International Today will present the latest announcements in these areas. If you’d like the opportunity to be considered for publication, please contact nadinefirth@quartzltd.com

A simplified dry recycling process to recover the 5-10% of aluminium, which remains in the aluminium salt cake produced in the smelting process of secondary aluminium, has been developed

by German recycling equipment manufacturer, BHS-Sonthofen.

Alba appoints Bechtel for Line 6 Aluminium Bahrain B.S.C. (Alba) has announced International Bechtel Co. Ltd. (Bechtel) as the Engineering, Procurement, and Construction Management (EPCM) contractor for its landmark Line 6 Expansion Project.

Under the terms of the contract, Bechtel will be responsible to design and construct the sixth potline as well as support industrial services.

Alba will be the world’s largest single-site alu-

Stub protection High bath levels can result in ring erosion of anode stubs. The same effect also occurs when anode life is extended by lowering the rod further into the pot that would normally be the case.

Smelters which buy their anodes from third par-

Assan investment Since its establishment in 1988, Assan Alüminyum, the largest flat-rolled aluminium producer in Turkey has continued to invest in the aluminium industry, as a part of the investment-based growth strategy of its parent company Kibar Holding.

minium smelter upon completion of the Line 6 Expansion Project, which will boost its production by 540,000 metric tonnes per annum (mtpa) bringing Alba’s total production capacity to 1,500,000 mtpa.

Line 6 will have 424 pots that will use the proprietary EGA DX+ Ultra technology thus significantly increasing operating efficiencies.

ties have a good economic reason to extend anode life, minimising the quantity of butt to be returned or otherwise disposed.

Placing carbon collars around each stub is an accepted method to prevent ring erosion.

The VHE collar forming machine is fully automatic. The machine has a fast throughput and may be easily accommodated in existing rodding plants. The machine is able to handle card and aluminium, loaded as a coil and automatically fed, cut to length, then formed into a collar around the rod stub and securely closed.

VHE’s collar filling machine accurately measures and dispenses carbon paste into the preformed collars. The filling system ensures even distribution of the carbon paste and provides a virtually dust-free operation to produce uniformly shaped and centered carbon collars.

VHE’s Collar Forming Machine and Collar Filling Machine together comprise an integrated Stub Protection System facilitating maximum anode life without unwanted anode stub erosion.

ELSEAL® Type G Traditional ramming paste products have coal tar pitch based binders. Coal tar pitch contains polycyclic aromatic hydrocarbons (PAH). Several of the PAH compounds are carcinogenic, and thus classified as a hazard. They can also be emitted into the workplace atmosphere, and complicate the handling of waste material.

The product developed by Elkem Carbon is an alternative to coal tar pitch based ramming paste.

ELSEAL® Type G contains no PAH nor other hazardous substances. There are no emissions of PAH during use, and workers will not be exposed to these potentially harmful compounds.

ELSEAL® Type G has a proven performance under challenging electrolysis conditions where the combination of high temperature and corrosive bath is a tough environment. It is classified as non-hazardous according to present regulations.

Norway based producer of aluminium, Hydro, is among those that has introduced the ELSEAL® Type G product in several of their smelters and continue to line new pots with this green alternative.

Haluk Kayabasi, the general manager, has announced the company’s new investment plans to increase the casting and foil rolling capacity.

With these new investments, the company plans to strengthen its position as one of the pioneers in the continuous casting technology, as well as to increase its ability to produce high value added foil products. The total established production capacity of Assan Alüminyum is projected to reach 300,000 tons in the short-term.

Another large project for Assan Alüminyum is currently in advanced planning phase, and if the conditions are favourable for an investment, a greenfield DC casthouse and hot rolling mill will be built to serve strategic sectors such as aerospace, defence, transportation and specialty packaging industries.

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JOINT VENTURES 47 5

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Joint Ventures: Old risks and new challenges

By Anthony Kjar*

There are many joint ventures (JVs), in the construction, automotive, manufacturing, resource and energy industries. Those in resources and energy involve capital-intensive long life plants and infrastructure. Some have lasted for 50 years and represent approximately half of the aluminium and iron ore industries.

However, the risk profile is changing.

Many newer JV’s are trying to establish large operations in less stable countries where they will dominate the economy.

All have to weather many changes in product pricing, supply contracts and changes in competitive market positions.

They will also have to address changes in infrastructure (power, rail and ports), in the resource base, the entry of state owned companies and governments as well as weather a trend of increased social sovereign risk and resource nationalisation. Many of the parties to the JV’s market their own products, while the remainder contract to others in the JV’s, with prices set on international terminal markets. The aluminium industry and iron mines have relatively simple products and market arrangements, making it easier to learn as to the operation of the JV. A Joint Venture (JV) is usually established when the parties have a common objective, but each party does not have the resources or ability or appetite to develop, finance and manage the business and associated business risks by itself.

In the current environment of commodity price volatility, increased

capital costs for projects restrictions on capital raising and debt finance, enhanced sovereign risk especially in respect of large scale projects and the drive amongst developers to reduce costs generally; derisking projects through JV structures is necessary for developers to consider.

The JV is usually structured to carry out a business in a way that leverages the inputs and minimises the risks to the parties, or at least allocate the risks accordingly to that party best able to manage them.

The allocation of capital thus allows each organisation to focus on that which it does best and address those risks that it is best equipped to manage. It also seeks to build on the competitive advantage of the parties. It is generally accepted that JV’s, on average, create value for parent firms and that value creation is increased mainly due to synergies and common beliefs of individual participants, but decreased by the inherent tension between co-operative and non-cooperative behaviour in JVs[1].

The JV can be incorporated and governed by country company law or unincorporated and governed by specific agreements.

As a collaborative commercial undertaking between parties, JVs resemble partnerships in many respects, but the law of partnership does not necessarily hold all the answers to the host of difficulties that may arise where the express terms of a JV agreement are in adequate[2].

Some[14], separate out two forms of joint arrangements, namely:

(a) A joint venture arrangement in which the parties that share joint control have right to the net assets of the arrangements, and (b) Joint arrangements in which the parties that share joint control have rights to the assets, and obligations for the liabilities, relating to the arrangement.

This includes situations where the parties benefit from the joint activity through a share of the output, rather than by receiving a share of the trading.

The differences give rise to different ways of treating the assets and liabilities in the consolidated balance sheet. The generic term JV is used in this paper.

There is an increasing body of literature that covers long term and strategic management issues associated with general JVs[3,5,6,7,8,9,12].

Using a risk management approach, this paper provides a framework based on observations of a number of similar JVs within the aluminium and iron ore industries. Some business types of JV are outlined in Table 1.

While the location of the bauxite is determined by the country, the alumina plant is often determined by logistics and infrastructure and for aluminium by source of low cost power[3].

Bauxite mine JVs were established initially in Australia, then spread to Africa and South America. Alumina plant JVs were established initially in Australia, then spread to South America. Alumina smelter JVs were established in Australia then

*Managing Director, Gibson Crest Pty Ltd Aluminium International Today

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48 JOINT VENTURES

Identifier

A

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Type of JV

Examples in bauxite

Examples

and alumina

in aluminium

in iron ore

Companies where a major industry producer organises

Queensland Alumina Ltd,

Boyne Smelters Ltd,

a development and provides the resource and other

Eurallumina Spa.,

New Zealand Aluminium Smelter Ltd.

industry producers or consumers take a shareholding

so as to get an economy of scale and access to output.

This includes mine developments where the other companies buy

into the resource, as well as operating where they buy the raw material

and the plant tolls that into output.

B

Companies where a major industry producer provides technology,

Channar Hope Downs

Sohar Aluminium Ltd

Robe River Iron Ore.

and Ma’aden Aluminium

Associates

are new to the industry and want to facilitate a major development in country, supply energy and be involved in marketing.

C

Companies where a major industry producer provides technology,

management and takes a major shareholding,

while the other shareholder(s) are new to the industry,

but can provide resources and capital.

D1

Companies where several industry producers take a shareholding

and output in a new promising development in a new country,

while minimising their individual exposures. There may also be some government,

international finance company or indigenous group participants

in an attempt to minimise social and sovereign risk.

Samarco

supply and takes a minor shareholding while the major shareholder(s)

Ma’aden Alumina

management and marketing services and sometimes raw material

Examples

D2

participate in an attempt to minimise social and sovereign risk.

Companies where a major industry producer and a trading company

or companies combine. The trading company provides equity

and takes an agreed output. The trading company may also arrange

Simandou (proposed)

Varius proposals

take a shareholding to gain access to the output.

E

Alumar

in Australian and Africa

There may also be some government, internal finance company or indigenous group

Halco and Fria.

and provides the resource and other industry consumers or traders

Tomago and Qatalum.

Companies where an exploration company organises a development

Alcoa World Alumina,

Albras, Portland

BHP Billiton JV’s in WA

construction services and finance.

Table 1. Type of Longer Term Business JVs within Alumina and Aluminium Industries and Iron Ore

spread to USA, Canada, South America and Europe.

In terms of global production, apart from China, my analysis of JVs account for 68% of production of bauxite, 46% of production of alumina, and 40% of production for aluminium. They account for 63% of the number of bauxite mines, 47% of the number of alumina plants and 47% of the number of aluminium smelters.

The types of JVs have been analysed and are shown in Fig 1.

Approximately 60% of the aluminium industry JVs involves two or more industry producers. This has often led to conflict of opinion and conflict of interest between competing producers with other interests in the industry.

Apart from a few exceptions that there has generally been only modest increase in capacity (called ‘creep’) after the initial 20 years and few JV plants have been expanded significantly after the first 10 years.

As cost reduction is more readily achieved through growth, this generally has been reflected in a rise up the cost curve and a gradual technological ageing of the asset.

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The extent of each type of JV varies by sector. In bauxite the types and timing are split between Type C in the 1960’s and 1980’s and Type D in the 1970’s. In alumina, the types and timing are split mainly between Type A in the 1960’s and 1980’s, Type C in the 1960’s. In aluminium, the types and timing are split between Type A in the 1970’s and 1980’s, Type B in the 2010’s, Type D1 in the 1980’s to 2000’s, and Type E in the 1970’s and 1980’s.

With the very high capital cost of Western plants (approx. US$7,500 to US$10,000/annual tonne, compared with plants in China at US$2,000-2,500/at), Chinese output has grown dramatically and only selected plants will be built in the future based on unique power supply arrangements, eg. in the Middle East. The trend is now to leverage on a Type B, where a major producer provides technology and take a minor shareholding.

However, in the longer term, plants in the Middle East will be 100% owned as they continue to develop their own technology successfully[4,14].

Risk Framework When David Cameron, the incoming

Prime Minister of UK, formed a coalition in May 2010, he asked Angela Merkel, the Chancellor of Germany for advice.

Her advice was based on considerable experiences within Europe, and was that “the secret of success was an agreed agenda, known to all key players.”

This is an excellent over riding principle but alone is not sufficient to base a JV over the life of capital-intensive assets, which must survive many changes of political coalitions and business circumstances, particularly with the changing nature of international prices.

One of the main challenges and decision making of JVs is that two or more boards are involved, often with different company cultures. These boards have to agree on fundamental matters such as capital calls, development plans, major budgets and capital spend. It is important for JV parties to agree up front on a clear and coherent strategy for the business and to prioritise in the JV Agreement an effective project governance process, a workable co-operation framework identifying the matters on which each party will have final say, and to embed a binding and uncomplicated dispute resolution process Aluminium International Today

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D C

E

DI (8) 35%

A (13) 56%

D

E (4) D 15%

E (2) 11%

A

E

A (4) 22%

C

C D1 (4) 15%

D1 (8) 44%

B (1) 6%

C (3) 18%

A (11) 42%

B

B A

C (3) 12%A B (4) 16%

C (2) 9%

Alumina plants

Bauxite mines Note 1. ( ) number of JVs by production 2. Bauxite mines >2mtpy, alumina plants >0.5mtpy, smelting >0.2mtpy

A Major producer and other producers or consumers B Major producer provides technology and takes minor interest C Major industry producer provides technology and takes major interest with other non-industry players

Aluminium smelting D1 Several producers with other stakeholders so as to minimise sovereign risk.

D2 Exploration company organises the development with other consumers, traders and others E Major producer with traders.

Fig 1. Types of Aluminium Industry JVs by Production Globally (except for China)

for any matters where party decision making is jointly weighed.

It is vital to establish the clarity of purpose and short-term strategy at the outset, as are the basic characteristics of medium and long-term strategy.

This simplifies the task of the CEO and mitigates risks associated with differences in strategy, culture and expectations of the JVs constituent parties. It is also vital to measure and spend sufficient effort on strategy[10].

Annual reporting by CEO against short/ medium/long term strategy will discipline JV management and identify practical adjustments that need to be made in ensuring a realistic/workable strategy in future.

The difficulty of gaining consensus on the strategic direction increases in proportion to a power of the number of parties, as well as the different languages, the cultures and the different interest groups involved. As initial establishment risks are reduced and the objective of the JV becomes production and cost minimisation, it may be appropriate to minimise the number of cultures and complexities through a reduction in the number of parties so as to obtain a greater clarity of purpose.

The interests of the parties change over time and unless a win-win outlook of each of the parties (and the JV) is maintained, tensions and conflicts can dominate strategic decision making. This is particularly important when one or more of the parties also operates within the same business sector.

As with all successful Boards, the JV Board Members must be able to contribute Aluminium International Today

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in their own way at a level greater than the Chief Executive Officer (CEO), so as to be able to add value. They need to be able to gain and maintain the respect of the CEO, without compromising the right to guide, hire and fire the CEO. Their capacity to act in the best interests of the JV, rather than the parent company who nominates them, is also an issue that relates to dot points above.

As a JV develops beyond the first generation of principals who established and guided the formation, the new representatives of the parties come from subordinates of the originators, or new staff within their respective organisations.

Often there is a diminishment of the strategic intent and guiding vision and more focus is on governance and setting end point measure for the CEO. It is often useful for the JV parties to meet periodically by themselves, without the involvement of the CEO and management, usually with an independent facilitator, to align and agree overall strategic objectives. This is particularly useful when CEO’s change. Input from independent consultants can often be of value in breaking down tension and existing group think, as well as broadening the JV. In the formation of a business JV involving raw material supply by one party, eg Type A, it is necessary to establish pricing and quality mechanisms.

If in time these become distorted from the market, the difference can result in considerable friction within the JV often resulting in suboptimal performance and a deterioration of the asset condition and potential. It is important to layout the intent of the JV at the onset, or if needed

endeavour to agree an updated intent at a later point in time. With this intent major review mechanisms, with independent input and or arbitration can be undertaken to recalibrate pricing of inputs.

Governance It has been observed that there is little practical difference reaching agreement when one party has 10%, 49% or 51% or 90% interest in a JV as in general most JVs operate by consensus management.

A structure for meetings is necessary but not sufficient. Within the JV it is easy for misunderstandings to occur as a result of companies with different cultures and values, sometimes different language, different authority regimes, different financial capacity, saving face etc.

It is good practice to: (a) Endeavour to have all decision makers together at the key meetings. (b) Record the minutes at all meetings, during the meeting and for all to sign prior to calling the meetings closed.

The attitude borne of the consensus approach and/or competitive tensions often leads to inappropriately restrictive authority levels for the CEO, especially with respect to capital expenditure. This inhibits the entrepreneurial drive and professional challenge and satisfaction of operating personnel.

Often the JV is only as strong as the weakest party, particularly if capital expenditure is involved. This can lead to slower growth and less optimal performance with a starving of capital input to keep the business modern.

Staff development within the JV can be May/June 2016

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%

Operating in rising and falling markets Most JVs are established in a rising market. Increasingly the time to develop

D2 (1) 3%

Design to minimise risks Ernst & Young[11], identified the top 10 Mining Business risks for 2014-2015.

Some were generic such as price and currency fluctuations, balancing talent requirements and productivity but the other seven are impacted by the JV formation design. They include social licence to operate - engaging powerful communities, sharing the benefits, resource nationalism - both retreating and advancing, capital projects - a conservative approach, capital dilemmas, infrastructure access and access to water and energy.

In remote locations, as with bauxite and iron ore deposits, a substantial development can have a major impact.

Many proposed mine developments are often far from the coast and require extensive rail systems in hilly terrain, and the ports are located in shallow water needing major approaches and dredging.

This adds complexity and a high capital cost. This high cost drives the need to increase throughput so as to minimise unit costs. However the size of the development in comparison to the size of the host country economy introduces considerable social risk and increased expectations. Maintaining control requires starting small and building up slowly.

Also, in developing the JV, there is often pressure to include many interest groups in a Type D1 with several industry players and other government, international finance company, and indigenous group participants in an attempt to minimise social and sovereign risk. This increases the number of participants, adding to the complexity of management.

There are high risks in JVs which involve many complexities involved in new partners, new country, new deposit, new infrastructure, new language and culture and new market entry.

2) 7 D1 (

a limiting constraint. A healthy JV often has strong two way interactions and staff development arrangements with one or more of the JV parties, based on a Technical and Management Services Agreement.

All significant agreements within the JV need to be made with all stakeholders, at the one time, otherwise misunderstandings arise.

In recent years there have been some modest attempts to balance local cultural, social and indigenous interests by insisting on participation in JVs for particular purposes, eg. construction.

A (4) 29%

E (8) 61%

Note 1. ( ) number of JVs by production 2. Iron ore mines >10mtpy

Fig 2. Globally Traded Iron Ore JV’s

the mine is increasing and often occurs as the market is falling.

There are risks and challenges in industries where half of the production is controlled by JVs, as there is reduced ability to reduce production to meet and limit excess global capacity and a declining market. This needs to be done on a global basis, and is in conflict with optimising the profit for each JV. Exit strategies A number of JVs have survived in the aluminium and iron ore industry for 50 years. This is remarkable in itself but may not be optima.

There are a variety of reasons why a party exits a JV. These include a change of strategy, a change of economic circumstance, for example, in liquidation, or a change of control and or consolidation, or consolidation into a larger, broader entity.

In many longer term JVs there is not a sufficiently robust valuation and or exit mechanism, so parties tend to hang on longer than is sensible.

It is important that a clear purpose, strategy and exit strategy is formulated up front for both the JV and individual parties of the JV when drafting and on commencement of the JV agreement.

The author has contended[12] that when governance takes over from strategy, that it is time to exit the JV. In a falling market and excess capacity, it now becomes apparent that simplification and strengthening of some JVs is required to address debt and market access arrangements.

This might include selling infrastructure to specialist third parties, consolidation of different plants and region, with a more streamlined management system etc. In addition, market access may need to be

addressed D2 by a rearrangement where traders and consumers take a bigger share in return for stronger off take agreements.

D1 appropriate to consider the It is also closing down of smaller, inefficient or costly plants. For example, many Western A aluminium smelters would have been closed a number of years ago if they had been located in China.

E Conclusion JVs make up approximately 50% of production from aluminium and iron ore production. There are significant common features and lessons to be learned on strategy, governance and balance of interests. In time, new JV’s are becoming more complex and have a larger production and may not be optimal in addressing risk. They also have inherent features that make it difficult for the JV to operate within the global industry in a falling market.

Few JV’s have timely exit strategies or changes in interests that take into account changes in market circumstances.  References 1. Kumar, S. Are Joint Ventures Positive Sum Games? The Relative Effects of Cooperative and Non-Cooperative Behaviour, Strategic Management Journal, John Wilson & Sons Ltd, 2010.

2. Triggs, G. Selected Annotated Bibliography of Joint Venture Articles and Books, Australian Resources and Energy Law Journal, 2003.

3. Kjar, A.R. Do Joint Ventures Work? ICSOBA, Zhengzhou, China, Nov 2010.

4. Al-Jallaf, A. et al, Evolution of CD20 Reduction Cell Technology towards Higher Amperage Plant at Dubal, Light Metals 2009.

5. May, J. AMIRA International – Celebrating 50 Successful Years, AusIMM Journal, April 2010.

6. Chain, L. & Ahuja, V. Longer Term Supply Contracts – Time for Review, Australian Resources and Energy Law Journal, 2006.

7. Kjar, A. R. 1997. Engineering in a Tolling Consortium, Institute of Engineers, Australia, General Engineering Transactions, 1977.

8. Das, T. (editor). Management Dynamics in Strategic Alliances, City University of New York, Information Age Publishing, Inc. 2012.

9. Kjar, A. R. Options for Joint Ventures, Light Metals, 2011.

10. Rio Tinto, Annual Report, 2010.

11. Ernst & Young, Business Risks in Mining and Metals 2014-2015, www.ey.com.

12. Kjar, A. R. Joint Ventures – Their Utility Overtime – Some Observations from the Aluminium Industry. Journal AusIMM No. 4, August 2013.

13. Rio Tinto, Annual Report, 2014.

14. Zarouni, Ali Al, et al, 2012. The Successful Implementation of Dubal DX Technology at EMAL, Light Metals, 2012.

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52 EUROPEAN ALUMINIUM AWARD 2016

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And the winner is...

Applications are now being accepted for the EUROPEAN ALUMINIUM AWARD 2016 Are there any noteworthy new developments in your company? Are you proud of your efficient production processes? Have any fresh, leading-edge designs? Then you’re a candidate for the EUROPEAN ALUMINIUM AWARD 2016. Presented for the 10th time, the most important prize of the aluminium industry honours the sector’s innovations.

The Award Ceremony will take place at ALUMINIUM 2016 in Düsseldorf on 29 November. The application deadline is 15 July 2016.

Awards will be presented in the categories Automotive, Transportation (air, rail, road, water), Architecture & Construction, Production Techniques, Tools & Machinery and Design & Lifestyle (lighting & interior, sports & leisure,

computers & electronics, art & fashion).

In addition, the Young Talents Award for young designers and engineers aged 30 or under will be presented again, as well.

An international jury of experts will select the nominees and winners. In the Design & Lifestyle segment, which is aimed primarily at attracting consumer lifestyle products, the winner will be selected by the visitors of the ALUMINIUM trade fair.

Several changes will be introduced this year, including the further internationalisation of the award. From now on, it will no longer be limited to the European market but recognise products from around the world. Throughout the

trade fair, all submitted products will be presented at the Award Pavilion in Hall 10, where ALUMINIUM visitors also will be able to examine the nominated products.

The EUROPEAN ALUMINIUM AWARD is an initiative by the Dutch Aluminium Centrum in cooperation with the industry associations European Aluminium and GDA (German Confederation of the Aluminium Industry) as well as ALUMINIUM 2016.

Aluminium International Today is proud to be the International Media Partner for these awards. 

2016

BE INNOVATIVE. BE PROUD. ENTER AND WIN! READ ABOUT THE CATEGORIES ON THE WEBSITE AND POST YOUR ENTRY

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Aluminium International Today

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PERSPECTIVES 53

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Primetals Technologies answers Mark Chatterton, Director of Aluminium, talks to Aluminium International Today about how the company is working to be at the forefront of metals processing technology.

1. How are things going at Primetals Technologies?

Primetals Technologies have now fully integrated our global operations and organised our business to support both our existing and new customers. Our new branding is becoming well known in the metals industry and our recent successes in ferrous and non-ferrous markets indicate the loyalty of our existing customer base and the faith in our expertise from our new customers.

2. What are your views on the current state of the global aluminium industry?

The aluminium industry as most metals industries has seen a global stagnation in demand over recent years. The fall in the LME price has made it difficult for those relying on primary aluminium for income to remain profitable and resulted in curtailing of demand.

There are highlights however in the gradual change from steel strip to aluminium in the automotive sector, giving opportunities for new equipment and processing routes.

This gives innovative organisations such as Primetals Technologies the opportunity to support our customers with cost effective solutions giving increased yields, better quality and lower costs from their existing installed base.

3. In your opinion, what are the big issues affecting the primary aluminium industry today? Is this having an impact on Primetals Technologies projects?

There are several contributing factors affecting the primary aluminium business competitiveness. The low demand and high warehouse stocks have forced down LME prices to below that sustainable in many of the industries relying on fossil fuel for power.

We are all aware of the benefits of reducing our carbon footprint. Many Aluminium International Today

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the primary sector and its associated environmental issues.

Mark Chatterton, Director of Aluminium Primetals Technologies Limited

governments have signed up to the application of carbon taxes on businesses producing large quantities of CO2. The application of such taxes has resulted in a number of primary smelters curtailing production or worse closing down.

We have seen the gradual demise of the UK smelting industry over the past thirty years. The last coal fired smelter was closed but its power plant kept open to feed electricity into the national grid apparently more profitable than making aluminium?

As to the effects of the industry slowdown in the primary sector, most of the Primetals Technologies business is downstream so it is difficult to determine the direct effects of this other than the general slowdown.

It is however significant that one of the world’s major players has decided to divide its primary business from what it considers it’s downstream higher value business.

Primetals Technologies has continued to focus its activities on the downstream processing business and away from

4. Where in the world are you busiest at present?

There is demand in the US where investment has been limited in the past do to the large installed base. Equipment tends to be narrow and less advanced giving opportunities for new equipment and revamping of existing plant to meet the demands of the future.

Heavy costly capital plant like rolling mills has a lifetime beyond fifty years. The key is to keep this equipment as competitive as that supplied new to China over the past fifteen years that is wide, fast and has the latest control technology.

Primetals Technologies provide the process knowhow, technology and novel ideas to bring these fifty year old mills into the 21st century.

5. How quickly has Primetals Technologies responded to ‘green politics’ in terms of helping to make the production process more environmentally friendly?

Our business has always put focus into developing technology with green credentials.

By simply getting more yield from the plant for the same work input through process control and quality improvement most plants can be made greener. Even a 2% improvement on a mill making 120,000 tonnes per year is worth having.

Our leading edge process control systems developed through many years of operation and adaption are capable of learning from their own historical data to optimise the rolling process giving maximum quality and yield thus minimum waste. They are also capable of adapting to new products as the customer demands.

Products such as “Vapour Shield” and “Green Button” have a direct impact on the environment.

“Vapour Shield” recovers kerosene May/June 2016

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54 PERSPECTIVES

from the cold rolling process and returns recovered fluid back to the rolling process limiting VOC emissions to the atmosphere.

The payback for such a product is relatively short and the environmental impact significantly reduced.

“Green Button” allows the mill operator to shut down selected mill systems during stoppages dependant on the expected duration of the stoppage in order to minimise energy consumption.

6. What are the big trends in aluminium technology and where is Primetals Technologies leading the way?

The big trends in aluminium technology are process compression and optimisation.

Primetals Technologies have a number of on-going confidential projects in hand that address the current demands from the market.

7. Where do you see the most innovation in terms of production technologies – primary, secondary, or further downstream?

There are many innovations across the board from potential long life anode technology for primary smelting, automatic segregation and identification of scrap for recycling through to one stop processes to generate finished blanks from liquid aluminium.

Engineers and scientists continue to push the envelope of our world in an effort to reduce the impact of the environmental effects of the industrial revolution.

The recent agreements during the COP21 summit to keep the global temperature increase “well below” 2oC and to pursue efforts to limit it to 1.5oC reinforce the challenge to our engineers and scientists in the future. One particular facet of the aluminium industry is the significant energy reduction through recycled product rather than primary production. This will lead to a greater focus in collection and recycling of used aluminium products in the future.

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climate change control for the aluminium industry over the past five years has been the significant increase in the substitution of steel in the automotive and transport industry. Since the introduction of the CAFÉ regulations in the US, more and more manufacturers are making strides to light-weighting of vehicles to meet these regulations.

At Primetals Technologies, we have focussed on increasing quality, yields and reducing energy consumption.

A significant development has been the introduction of taper plate rolling which can be used to provide nearer net shape rolled plates for the aircraft industry to increase the buy to fly ratio of wing skins for example. Primetals Technologies recently equipped a mill with such a process control system with the strain path theory backed up by research with a Primetals Technologies sponsored PHD at Manchester University.

Our on-going collaboration with such academic institutions keeps us at the forefront on metals processing technology.

8.

Do you see Primetals Technologies as an innovator within the aluminium industry?

Primetals Technologies has held many names and has had many owners over the past 150 years. During that time it has been an innovator of at great deal of technology in the metals industry.

The Primetals Technologies legacy extends back to 1830 (Davy Brothers) almost the time when aluminium was discovered (1808) and certainly before it was commercially exploited with the discovery of the cost-efficient electrolytic production method Hall-Heroult process in 1886.

Over the years, Primetals Technologies has developed innovative solutions in the aluminium industry including; novel four high twin roll casting processes, one of the forerunners in modern flatness control with the development of the air bearing shapemeter roll and the father of hydraulic automatic gap control.

9. Are there any research and development projects in place?

If so, in which area is Primetals Technologies focusing?

Primetals Technologies focus on increasing quality, yields and reducing energy consumption has resulted in a number of initiatives to ensure our customers can meet the ever changing demands of the market whilst reducing CapEx and OpEx costs.

Our focus on becoming a Through Process Specialist and Lifecycle Partner has allowed us to provide specialist process support and on-going service, maintenance and training to our customers old and new.

10. Are there any projects planned for manufacturers/processors that Primetals Technologies is looking forward to?

Primetals Technologies have projects ongoing that are covered by non-disclosure agreements preventing publication.

11.

How do you view Primetals Technologies’ development over the short-to-mid term in relation to the global aluminium industry?

Primetals Technologies have significant development plans to support the needs of the aluminium industry in the medium term. Our portfolio in aluminium rolling is second to none.

In the short term our focus is to grow our service business to support the immediate needs of our customers and to supply reconditioning and rebuilding services covering our own legacy equipment and that of other OEM’s.

12.

What does Primetals Technologies have in store for 2016/2017?

Primetals Technologies have a continuous programme of innovation across our global centres focusing on satisfying our clients future requirements and the changing market conditions. 

Aluminium International Today

5/19/16 4:02 PM

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56 BUYERS’ DIRECTORY

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Aluminium International Today Buyers’ Directory As a leading resource for the aluminium production and processing industries, the Buyers’ Directory reaches the most senior buyers and suppliers in the business.

HANDLING & STORAGE

CLAUDIUS PETERS PROJECTS GMBH Schanzenstraße 40 DE-21614 Buxtehude, Germany T: +49 4161 706-0 F: +49 4161 706-270 E: info@claudiuspeters.com W: www.claudiuspeters.com Claudius Peters stockyards, pneumatic conveyors, silos, clinker coolers, grinding mills, and packing systems can be found in Cement, Coal, Alumina, and Gypsum plants across the globe. The group’s other principal Division, Aerospace, manufactures aircraft parts for Airbus.

PRIMARY REDUCTION/SMELTER PRIMARY

ALUMINIUM BAHRAIN B.S.C. (ALBA) Building 150, King Hamad Highway Askar 951, Bahrain T: +973 1783 0000 F: +973 1783 0083 E: alba@alba.com.bh W: www.albasmelter.com Aluminium Bahrain has been consistently ranked as one of the largest aluminium smelters in the world and is known for its technological strength and high quality aluminium.

FURNACE

HERTWICH ENGINEERING GMBH Weinbergerstr. 6, Braunau, Upper Austria, 5280, Austria T: +43 7722 806-0 F: +43 7722 806-122 E: info@hertwich.com W: www.hertwich.com Hertwich Engineering, a company of the SMS group, is active worldwide with design, supply, construction and commissioning of speciality equipment for the aluminium industry, in particular for aluminium casthouses.

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Distributed to more than 50 countries and read by thousands of industry contacts, it contains a comprehensive alphabetical listing of company and contact details.

ROLLING

DANIELI FRÖHLING Scherl 12, D-58540, Meinerzhagen, Germany T: +49 2354 7082 0 F: +49 2354 7082 200 E: info@danieli-froehling.de W: www.danieli-froehling.de Danieli Fröhling is synonymous for innovative tailor-made solutions for the aluminium industry.

Fröhling customers trust in more than 65 years’ experience in manufacturing of rolling mills and finishing lines.

EXTRUSION

CASTOOL TOOLING SYSTEMS 2 Parratt Road, Uxbridge, Ontario, L9P 1R1, Canada T: +1 905 852 0121 F: +1 905 852 2300 E: info@castool.com W: www.castool.com CASTOOL Tooling Systems is globally acclaimed as a provider of today’s most technologically advanced production tooling and equipment for the light metal extrusion industry PUBLISHING

ALUMINIUM INTERNATIONAL TODAY Quartz House, 20 Clarendon Road, Redhill, Surrey, RH1 1QX UK T: +44 (0)1737 855000 F: +44 (0)1737 85034 E: aluminium@quartzltd.com W: www.aluminiumtoday.com Aluminium International Today is published bimonthly and circulated worldwide alongside foreign languague issues in Chinese and Russian, published twice a year. A weekly newsletter is sent to over 25,000 contacts worldwide.

Here is a sneak peak at some of the listings that will appear in the 2017 Buyers’ Directory.

QUALITY TESTING & MEASUREMENT

POLYTEC GMBH Polytec Platz 1-7, D-76337, Waldbronn, Germany T: +49 7243 6042 36 F: +49 7243 6041 50 E: f.fughe@polytec.de W: www.polytec.de Polytec is the market leader for non-contact, laser based vibration and velocity measurement instrumentation. Our innovative solutions allow our customers to maintain their own technical leadership across many fields.

SMELTER PRODUCTION/EQUIPMENT

ROSS CONTROLS 1250 Stephenson Hwy, Troy, Michigan, 48083, USA T: +1 800 GET ROSS F: +1 706 356 3700 E: bob.winsand @rosscontrols.com W: www.rosscontrols.com With more than 90 years of proven design experience, Ross Controls is a global manufacturer of rugged and robust pneumatic solutions for the aluminium industry. Proven potroom performance and safety (LOTO).

It is free to list your company, get in touch today to find out more: Esme Horn, Directory Co-ordinator Tel: +44(0)1737855136 Email: esmehorn@quartzltd.com Anne Considine Sales Manager Tel: +44(0)1737855139 Email: anneconsidine@quartzltd.com

5/20/16 9:38 AM

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Flip on a light switch, and that electricity is gone in just one spending spree. Recycle an aluminium can, and that electricity comes back into the loop.

Aluminium is infinitely recyclable, yielding endless returns.

Now that is something you can take to the bank!

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