Energy as a key factor for an energy intensive company … · Energy as a key factor for an energy intensive company ... Lakshmi Mittal ... growth in China

Energy as a key factor

for an energy intensive company

Lutz Bandusch,

CEO of ArcelorMittal Hamburg GmbH

15. June 2012

15.06.2012 Confidential 1

Agenda

• ArcelorMittal Hamburg

• Resources as a key factor

• Energy efficiency

• Efficient production route

• Optimized process

• Impact for energy-intensive industry

• Conclusions and outlook


ArcelorMittal

• ArcelorMittal:

• World‘s biggest steel producer

• 61 plants worldwide

• 110 Mio. t/a production capacity

• approx. 263.000 employees

• Future: focus on mining activities

• Main shareholder: Lakshmi Mittal

• Production figures of steel:

• China: 600 Mio t/a

• Germany: 43 Mio t/a

• Europe: 145 Mio t/a


ArcelorMittal Hamburg

• 573 Employees

• Founded in 1970 for production of Mesh and Rebar

simple steel grades

• Today: Production of High Added Value steel grades

• Continuous Optimization concerning Quality and Energy

• Unique Feature in Europe: MIDREX plant

Iron ore pelltes

Scrap

DRI

MIDREX-

Plant

600.000 t/a

Electric Arc

Furnace

Ladle Furnace Continuous

Casting Machine

1.100.000 t/a

Billets Wire Rod

Rolling Mill

900.000 t/a


ArcelorMittal Hamburg

[So

urc

e: w

ww

.bin

g.c

om

]

Resources as a key factor


Required Resources

• For the annual production of approx. 1 Mio tons of steel

the following resources are needed:

• 800.000 t iron ore pellets

• 600.000 t scrap

• 1.000.000.000 kWhel = 1 TWhel (incl. Luftzerleger) (equal to electricity consumption of 250.000 households)

• 2.000.000.000 kWhth = 2 TWhth (equal to natural gas consumption of 150.000 households)

• Additioanal resource: Climate effected by CO2-release…


Cost Structure

• Approx. 79% of production costs for resources like

iron ore, scrap & alloys as well as energy

• Strong focus on efficiency since foundation of this plant


Resources as key factors • Resources are key factors for

economic situation of a

company / of an industrial sector.

• Access to resources like iron ore,

scrap and energy at world-market

prices is essentiell

Prices for iron ore and scrap are

dominated by demand from China

Energy prices are influenced by

local government and EU

Strong local influence on an essential resource with

prices way above world-market level!

Resource-Efficiency


Resource-Efficiency

• Resource-Efficiency can be optained by two methods

(Optimum: combination of both methods)

resource-efficiency

production route with

low resource demand optimized process

Example:

Patrol comsumtion of a 100 kW car engine

2000: 10 l / 100 km

2011: 7 l / 100 km

Example:

Car engine running with patrol or gas

Mitsubishi Colt 1.1: 135 g/km

Mitsubishi Colt 1.1 LPG: 116 g/km

1 2


Example: production of welding wire • Standard production via blast furnace route:

• Coke as the reduction agent

• Iron ore as the main raw material

• Due to process restriction only limited

usage of scrap possible

Little utilisation of recyclability of steel / scrap

• approx 1.800 kg CO2 per ton of steel (mainly due to coke)

• Demand of 1.780 kg iron ore per ton of steel


Example: production of welding wire

• Production route at ArcelorMittal Hamburg

• Usage of natural gas a reduction

agent instead of coke

much lower CO2-emissions

• Iron ore and scrap as raw materials

utilization of recyclability of steel

• approx. 840 kg CO2 per ton of steel

(mainly due to electricity and gas)

• Demand of 400 kg scrap and

1.140 kg iron ore per ton of steel


Comparison of CO2-Emissions

• Production route with high rescoure-efficiency due to usage

of natural gas as reduction agent and scrap as recycled

raw material Advantage compared to blast furnace process

• Highest flexibility on charging material possible

100% iron ore based or 100% scrap based possible

Production route with

low resource demand

1


Projects 2012 at ArcelorMittal Hamburg • Example for current energy-efficiency projects

• New de-dusting systems

• Optimization of coal injection

• Variable speed drives

• Control system for reheating furnace

• Temperatur control for cooling water

> 5.500 t CO2/a

Optimized process

2


Resource-efficiency

• Significantly reduced CO2-emissions and low iron ore share

compared to production route via blast furnace due to

production route (1) and optimized process (2).

• Steady optimization and improvement of efficiency

Effect decreases continuously

Investments in other plants are more reasonable for

ArcelorMittal

• Further enhencement projects in concept phase:

• Usage of regenerative energy

• Usage of Hydrogen in the MIDREX plant possible

Economically not feasible today!


Impact for the energy-intensive industry


Impact for the industry

• Strong increase in prices for iron ore and scrap due to

growth in China

• Scrap is nowadays a globally traded raw material and is

sold for world-market prices

No distortion of competition since goods are traded

worldwide

Additional costs can be transferred to customer

• Energy and CO2-emssions are becoming a significant threat

Distortion of competion by artifical increase of prices

Additional costs cannot be transferred to customer

Energy is the major drawback for energy-intensive

industry in Germany


Impact for the industry • Example: Price increase of 1 Ct/kWhel

• Household with 4.000 kWhel/a

Additional costs of: 40 €/a

• ArcelorMittal Hamburg with 1.000.000.000 kWhel/a

Additional costs of: 10.000.000 €/a

EBITDA pre-crisis years: 20.000.000 €/a

• Costs of „Energiewende“ are hard to predict

Calculation from the „Deutsche Energie Agentur (dena)“

in the range of 5 Ct/kWhel...

Significant threat for company (2.5 times the EBITDA!)

Very high uncertainty for investments

Politics to decide, whether steel stays in Germany or not…


Impact for the industry

• Since many years, increase of resource-efficiency is

major topic for energy-intensive industries

huge results achieved in the past years

most efficient plants in Germany

• Already excellent values compared to plants in foreign

countries due to high cost pressure

• Additional costs due to energy cannot be compensated

by efficiency projects

• Further increase of efficiency (e.g. -20%), like demanded

by politics, are not reasonable

see ThyssenKrupp:

Shifting of production capacity to Brasil and USA


Conclusion and Outlook


Conclusions and Outlook

• ArcelorMittal Hamburg is a good example for energy

efficiency and a strong will to improve the processes

KnowHow from Germany

• Results of increased energy-efficiency cannot be transferred

into economic advantanges

Costs are increasing faster than efficiency

Efficiency can only deflate the cost increase

• „Energiewende“ and European Trading System can mark

a significant decision point for German industry

• Goal: Level Playing Field

Documents

Energy as a key factor for an energy intensive company … · Energy as a key factor for an energy intensive company ... Lakshmi Mittal ... growth in China