Designing, Manning & Operating a World-Class Downstream Business

Designing ManninDesigning, Mannin

World-Class Down

ng and Operating ang and Operating a

nstream Business

Dr Tom Farleyy

Managing DirectorInnoval Technology LtdInnoval Technology Ltd

Summary of Presentation

Innoval TechnologyBackgroundg

Designing an Efficient and Viable DownstrDesigning an Efficient and Viable DownstrMarket AnalysisEquipment SpecificationPlant DesignCost Modelling

Developing the Right Skills

Achieving World-Class Standards

ream Plantream Plant

Commercial-in-Confidence, © Innoval Technology LtdIP08-006, Slide 2

InnovalInnovall Technology Ltdl Technology Ltd

Innoval Technology – Our Credentials

Innoval Technology is an independent comexpertise to the downstream aluminium in

Formed in 2003 as a result of closure o

We are a group of 26 aluminium experts –aluminium knowledge

Rolling and extrusion process expertisRolling and extrusion process expertisMetallurgy product expertiseSurfaces expertisep

Our engineers have an abundance of prodMost have been supporting the industrpp gMany have held Senior Management p

mpany providing a unique resource of dustryof one of Alcan’s Global R&D centres

– our strength is the breadth of our

ee

duct and process experiencery for over 20 yearsy ypositions in global aluminium companies.


Innoval Technology – Strategic Support

Innoval has undertaken the following typesinvestors in downstream fabrication busine

Technical Due Diligence on existing pl

Pre-Feasibility Studies and Greenfield

Plant investment and upgrade support

s of strategic support work for potential esses:

ants

plant design

t


Designing anDesigning an

Viable DownViable Down

Efficient and Efficient and

stream Plantstream Plant

Methodical Approach

Market Analysis

Equipment SpecificationTechnical ConfigurationTechnical ConfigurationTechnology Choices

Plant Design

Cost Modelling


Market Analysis

Review all potential products for the plantHome marketExport market

Gather data on product sales prices

Important to have understanding of markeSome products cost more to produceHigh sales price does not necessarily mHigh sales price does not necessarily m

Analyse competition in home and export my p pQuality required to compete in chosen

Decide on which products to manufacture

et price vs. production costs

mean high profitmean high profit

marketsmarket


Methodical Approach

Market Analysis


Plant Design

Cost Modelling


Assess Technical Challenges for Chosen

Products vary in their complexity and in th

The products determine what equipment is

Type of rolling or extrusion equipmentType of finishing operations

Example – Can Body Stock (CBS)

A single can line manufactures 2,000 cans perA single can line manufactures 2,000 cans perminute (1 billion per year)

10,000 tonnes of aluminium per year (2 x 14 tonne coils per day)

Some may think this is a simple product

… BUT actually it is technically demanding

Products

eir difficulty of manufacture

s required in the plant

rr


Can Body Stock - Thickness Reduction an

Coca-Cola’s First All Aluminium Can, 1967,(weight 21g)

nd Tighter Control

Coca-Cola Aluminium Can, 2009,(weight 12g)


Can Body Stock - Thickness Reduction an

Extremely tight specification for aluminiumsheet thickness

Correct thickness tolerance can only bCorrect thickness tolerance can only bachieved with state of the art thicknesscontrol systems ...

AND the know how to get the most… AND the know-how to get the most these systemsUnlikely to be achieved at start-up

Failure to meet specification will lead to caplant jams and can strength issues

Profile(crown)( )

Al strip~0.5%

Strip wid

nd Tighter Control

m

bebe s

fromfrom

il l than coil length

~10,000 m

250 +/- 5 microns

dth ~ 1.8 m


Can Body Stock – The Challenge of “Earin

“Earing”Anisotropic mechanical properties cauAnisotropic mechanical properties cauby crystallographic texture

Sheet with “earing” that is out of specificatwill

Risk jamming and stoppage of the canplant lineResult in volume of can being too smaResult in volume of can being too sma

ng”

sed

Ears

sed

tion

n

allall

can after re-draw and wall ironingwith severe earing


Can Body Stock – The Challenge of “Earin

World-class earing can only be achieved wthat includes a Hot Tandem Mill.

ng”

when rolling DC ingot through a Hot Line

Source: SMS


Summary of Sheet Rolling Process

DC Caster Pre-heatin

Furnaces FilterScalper

Furnaces

Cold finishmill

Final anneal

Coating

Doubling m(foil)

ng

Hot reversing mill

Hot tandem mill

Hot coil

FilterContinuous caster H t llContinuous caster Hot roller

(Self-anneal)

Cold millhing Cold coil

Cold roughing millInter-anneal

Cold millmill


Rolling Technology Configurations for Var

HRM + 4-stand HTM

Typical Capacity (tonnes pa) 700kC S (C S)Can Body Stock (CBS)

Can End Stock (CES) & Tab

Foilstock

Standards - Low Mg

Standards - High Mg

S f S iti P d tProd

ucts

Surface Sensitive Products

Thick Products

Clad Products

P

Others

meets world

can be made

cannot be ma

rious Products

Hot Band Option

coil-to-coil HRM Belt Caster Roll Caster

150k 120k 20k

class quality requirements

e but does not meet all quality requirements

ade or fails to meet most quality standards.


Making the Appropriate Technology Choic

Need to identify correct technology optionsstandards

E.g. on-line measurement technologie

There are significant variations in performa

Consider future proofing the equipment toTightening of specificationsI i il i ht ( idth d lIncreasing coil weights (width and leng

ces

s to achieve current customer quality

s

ance and price of equipment

meet evolving customer needs

th)gth)


Methodical Approach

Market Analysis


Plant Design

Cost Modelling


Plant Design – Capacity Calculations

Correct sizing and multiples of equipment E.g. What size of furnace and how mag

Assessment of spare capacity within key aWhat other products could the plant m

Awareness of the magnitude of process loTo sell 1000 tonnes of final product the

Example – Rolling Mill

The capacity of a rolling mill depends on tThe capacity of a rolling mill depends on t

A rolling mill represents a significant compvery carefully

typeny?y

assetsake to fill any spare capacity?

osses at every stage (recoveries)e rolling mill may need to roll 1200 tonnes

the products being rolledthe products being rolled

ponent of Capex so must be specified


Example – Rolling Mill Capacity Calculatio

Product One Two Thre

Final gauge [mm] 0.1 0.22 0.5

Percent of production 33% 23% 22%

Rolling time [min] 54 18 10

Handling time [min] 30 20 20

Overall capacity [ktonne/yr]Overall capacity [ktonne/yr]

Product One

Final gauge [mm] 0 1R l Final gauge [mm] 0.1

Percent of production 39%

Rolling time [min] 54

Handling time [min] 30

Removal of heavy gauge product g [ ]

Overall capacity [ktonne/yr]

Product

Final gauge [mm]

Percent of production

Rolling time [min]

10% increase in pass speeds

Handling time [min]

Overall capacity [ktonne/yr]

p

ons

ee Four Five

5 0.8 2

% 9% 13%

6 3

15 10

110110

Two Three Four Five

0 22 0 5 0 80.22 0.5 0.8

28% 26% 7%

18 10 6

20 20 15

83

One Two Three Four Five

0.1 0.22 0.5 0.8

39% 28% 26% 7%

49 17 9 6

30 20 20 15

87


Plant Design – Optimising Layout of Equip

Based on knowledge of world-class opera

Need to account for potential expansionNeed to account for potential expansion

Ensure efficient process flow

Important safety considerationsImportant safety considerations

WIP Calculations (buffer sizes, WIP storag“Discrete Event Simulation” if necessaDiscrete Event Simulation , if necessa

pment

ations

ge around plant)aryary


Methodical Approach

Market Analysis


Plant Design

Cost Modelling


Cost Modelling

It is easy to build a simple Excel-based co

Need realistic model inputs based on expeProduct recovery vs year from startupEfficient staff levelsR&D costs (~0.5% of turnover typical)

C l l ti f C it l C t (CAPEX)Calculation of Capital Costs (CAPEX)Inclusion of all key and ancilliary equipment

Calculation of Operating Costs (OPEX)Requires a good understanding of the processComputer models can be used to predict utilitp p

Useful to attribute costs correctly to differe

More complex tools can be used to analys

ost model ... BUT …

erience and expert calculation

sy usage (electricity, gas, etc.)y g ( y, g , )

ent products

se the model (e.g. Monte Carlo)


Example of Cost Model Output

350,000

400,000

182,50212%

NPV [US$'000]

IRR

250,000

300,000

US$

'000

]

100,000

150,000

200,000

CA

PEX

[U

0

50,000

2009 2014 2019 2024 2029 2034YEAR

5,000,000

6,000,000

3,000,000

4,000,000

Flow

[US$

'000

]

0

1,000,000

2,000,000

Cum

ulat

ive

Cas

h

-2,000,000

-1,000,000

C


Pre-Feasibility Study – Flow Diagram

Market Equipmed tMarket

Analysis

Equipme

Specifica

products

volumes

extra capacity

Viabno

ent Planti tent

ation

Plant

Design

equipment

capex & opex

Cost SalesIRR, NPV, etc.Modelling prices

le?

Bankable

Study

yes


Study

DevelopingDevelopingg the Right Skillsg the Right Skills

Typical Staff Requirements for a Downstre

Typical 250,000 tonne rolled products plan

Per Shift 4 Shift S

Graduate

Skilled Labour 60 24

Unskilled Labour 15 6

eam Plant

nt operating in Western World

System Day Staff TOTAL

60 60

40 70 310

60 60

430


Typical Skills Requirements for a Downstr

Managerial PlanninScheduFinance

Sales

FinanceHRSales m

TechnicalTechnicMetalluEngine

Pl t d M i t

gChemisMateriaStatisticPlant and Maintenance StatisticEngineElectricMechan

OtherMechanCraftsmMedicaFire proDrivers

ream Plant

ngulingee

manager for each major product groupcal Representatives at customer plantsurgistsersstsals scientistsciancianers

calnicalnical

menalotections


Recruitment Issues

GraduatesNeed a good supply of the correct discg pp yThey will need further development an

Experienced StaffInternal transfer from other group operAccess to “early retirees” from world-cHead-hunt from competitors

Retention of StaffRisk of competitors headhunting your gRisk of competitors headhunting your gThreat to both existing and new compaMay come from a related industry, eg Sy y, gskillsPotential loss of knowledge

ciplinespnd training

rations (if they exist)lass operations

good peoplegood peopleaniesSteel and aluminium rolling need similar g


Approaches to Graduate Development

University-based “Centres of Excellence”Specialised focus (e.g. Aluminium, Rop ( g ,Sponsor students, projects and depart

In-house R&D CentreDevelop specific skills within R&D projTransfer R&D people to plants in opera

Ongoing Development of StaffUse specialist training coursesM t i f i d f iMentoring from experienced professionCan be provided by independent exter

lling or Extrusion, Surface Science)g , )tments

ectsational roles

lnalsrnal organisations


Training Example – Aluminium Rolling Tec

MONDAY 10 TUESDAY 11 WEDNES

Intro K Smith / T Farley

ALUMINIUM ROLLING TECHNOLOGY COURSE -

y

Outline of Sheet Rolling Thermal Aspects LubricProcess of

RollngThe Business of Rolling Mark F

Tom Farley COFCOFFEE Chris Davenport

COFFEEMechanics Thermal Aspects Surface Gof Rolling Workshop

Chris Davenport Chris Davenport Mark F

Mechanics of Rolling Mechanics of LUNMechanics of Rolling Mechanics of LUNWorkshop Profile & Flatness enroute

Chris Davenport Kyle Smith

LUNCH LUNCH

Machinery of Rolling Control SystemsCOURS

(JAGTom Farley Dan MillerCOFFEE COFFEE

Process MetallurgyControl Systems

Gary MahonDan Miller

Process MetallurgyWorkshop Rolling Process ModelsWorkshop Rolling Process ModelsGary Mahon

Wrap up Session Chris Davenport

Free Social Event Fr

chnology Course

SDAY 12 THURSDAY 13 FRIDAY 14

- Innoval Technology, Banbury 11-15th May 2009

cation Vibration FlatnessControl

Tom FarleyFoster Flatness Control

FFEE Condition monitoring WorkshopTom Farley Dan MillerCOFFEE COFFEE

GenerationFlatness

Gauge Control ControlFoster

NCH Dan MillerNCH Dan Millere Jaguar Wrap up Session

Dan MillerLUNCH

LUNCHTOUR OF INNOVAL

Profile MeasurementSE VISIT and ControlUAR)

Kyle SmithCOFFEE

Profile Measurementand Control

Kyle SmithWrap up SessionWrap up Session

ree Social Event


Managing Knowledge Assets

Important to maximise the knowledge that

Staff with valuable knowledge which isStaff with valuable knowledge which is

Share knowledge of manufacturing to

D t i i th k l d bDetermine gaps in the knowledge base

Loss of long-serving, knowledgeable e

Standardise operations and develop “B

Knowledge Management using K-MapsTeam-based Workshop approach invo

– Manufacturing– Technology– Sales

t exists in employees

s not being exploiteds not being exploited

improve product quality

(R&D )e (R&D programme)

employees

Best Practice”

olving


K-Map of Aluminium Extrusion Operation

How to Build a K-Map

Assemble those withAssemble those with knowledge

Define ProductDefine Product Attributes

Define the ProcessDefine the Process Stages

Define the strength ofDefine the strength of relationship

Develop content viaDevelop content via Intranet


K-Map Summary Level


Achieving WorldAchieving Worldd Class Standardsd-Class Standards

State-of-the-Art Equipment is Not Sufficien

Realisation that investment in world class class products.

Many examples in aluminium rolling mills aReturn on investments taking longer thCannot match quality of world-class prNeed expertise that equipment supplie

Equipment manufacturers looking tdeliver a com

nt

equipment does not on its own give world

and extrusion plants.han plannedroductsers do not usually possess

o partner with product specialists to mplete package


Benchmarking & Technical Audits

World-class companies frequently use theoperations against their own “Best Practic

fTeam assembled for several days to re– Experienced operators– Technical experts– Host plant– Experienced facilitator

Output is a “gap analysis” of areas to be imAction plan establishedProgress then reviewed at regular inteRepeat visits to provide additional sup

For single-site companies the same functiconsultants

Can also be of benefit to large multi-na

eir internal resources to benchmark their e”.eview and observe operations

mproved.

rvalsport, as required

on can be carried out by external

ationals to get a “fresh view”


Typical Check-list for Technical Auditing &

Environment, Health & SafetyAccident recording and rates

Equipment OperationStandard Operating PracticesU f St ti ti P C t lUse of Statistic Process ControlMaintenance schedules and strategiesInvestment plans

Operational EfficiencyMachine utilisationRecoveriesRecoveries

Product QualityTest proceduresest p ocedu esReject Rates

Technology SystemApproach to problem solvingProduct and Process improvement methods

& Due Diligence


Summary

An efficient and viable downstream plant capproach based on >20 years working in t

Market AnalysisEquipment SpecificationPlant DesigngCost Modelling

A key stage is matching equipment specifimaximise the financial returns from the pla

We have emphasised the need for a broaddevelop this important resource locallydevelop this important resource locally

Achieving the anticipated financial returnsAchieving the anticipated financial returnsequipment and technology – but also inpu

can be designed using Innoval’s methodical the industry

ication to the optimum product mix in order to ant

d range of technical skills and routes to

requires more than just state of the art requires more than just state of the art t from world-class expertise and know-how


Thank you for yThank you for yyour attentionyour attention …

Innoval Te

An independent cAn independent cexpertise to the a

www.innov

echnology

company providingcompany providing luminium industry

valtec.com