O Cenário Mundial da Indústria da Galvanização Geral

The World of Zinc and General Galvanizing

Frank E. Goodwin

Director, Technology & Market Dev’t International Zinc Association

• IZA Background • Zinc Statistical Review • General Galvanizing Market

Developments • Zinc: Solving World Problems

• Established – 1991 • 80% of WW zinc production • 60% of world production • Regional presence • 3 Categories:

• 43 Full Members • 110 Affiliate Members • 52 Associate Members

International Zinc Association

IZA Mission

Supporting and advancing zinc products and markets through research, development, technology transfer and communication of the unique attributes that make zinc sustainable and essential for life

Recent Statistics

Galv Sheet1 MT Zn MT HDG MT Zn MT

NAFTA 16,404 492 3,785 246 USA 13,258 398

Canada 1,816 54 Mexico 1,330 40

Latin America 3,448 103 695 45 Europe 29,461 884 7,500 478 CIS 3,882 116 500 33 Asia 55,609 1,668 12,000 780

China 27,139 814 7,000 455 Japan 14,260 428 1,350 88 Korea 8,728 262 1,400 91

India 5,000 264 2,896 125 Oceania, Africa, ME 4,979 149 2,050 133

Total 118,783 3,677 28,726 1,804

1. CRU SteelMonitor

Latin America Markets for Zinc

Source: Brook Hunt, Votorantim Analysis

Zinc Consumption

~ 7% a.a.

0

50

100

150

200

250

300

350

400

450

Brazil Mexico Argentina Venezuela Others Latin America

EU EUA

2006

2007

2008

2009

Apparent Steel Use per Capita – kg/inhabitant

Steel use has plenty of space to mature …

1,0

0,0 50.000

Argentina

20.000 15.000

Chile

Colombia

Peru

Venezuela

3,5

2,5

Latin America

4,5

10.000 0

USA

UK Turkey

Spain

Russia

Mexico

Japan

Italy

India

Germany

France China

Canada

5.000

0,5

4,0

1,5

5,0

3,0

Brazil

40.000 35.000 30.000 25.000

2,0

45.000

GDP per Capita (US$ PPP)

Zn c

onsu

mpt

ion

per c

apita

(kg)

Source: Brook Hunt, IMF

Zinc Consumption per Capita (2009)

… and so has Zn consumption …

One of zinc’s most important characteristics is its ability to protect steel against corrosion. The life and durability of steel are greatly improved when coated with zinc. No other material can provide such efficient and cost-effective protection for steel.

Source: Votorantim Metais analysis.

Die Casting

General Galvanizing

Continuous Galvanizing

Brass / ZnO / Others

Zinc demand per segment:

Focus for market development !

Galvanizing : key driver for Zn consumption

Source: AMIA , Bloomberg, CAVENEZ

Vehicles Production (units)

2005 2006 2007 2008 2009 20100

500

1,000

1,500

K Units of cars and light trucks

2,000

2,500

3,000

3,500

Brasil* Venezuela México Argentina

* Does not include buses and heavy trucks

The auto industry continues to grow

Chevy Volt

Ford Explorer Chrysler Jeep

Galvanized Autobody Partnership

23 automakers, steelmakers and suppliers working with the Zn industry

Source : Votorantim Analysis, ILAFA IABr, MDIC/SECEX.

990

638 kt

2008

97

(kt)

372

2015e

1.000

750

318

2010e

500

89

2009

343

250

91

352

0 2007

397

125

2006

431

76 Exportation

Importation

Galvanized Plate Trade Balance - Brazil

Galvanized Sheet will be back to balance ?

China Steel Exports

Player Additional capcity Galv steel (kt/yr)

Additional zinc consumption (kt/yr)

Zinc consumption at start up (kt)

Start up year

Arcelor Mittal Vega - Linha 2 350 8 0,3 2010

Arcelor Mittal Vega - Linha 3 500 10 0,3 2015

Usiminas Unigal - Linha 2 550 12 0,5 2011

Usiminas Nova Linha 300 6 0,3 2015

CSN Galvasud 350 7 0,4 2015

Vale Alpa 150 3 0,3 2014

Gerdau Cotia 30 0,9 0,2 2012

ArcelorMittal Longos-Nordeste 60 1,5 0,1 2014

Morlan 10 0,2 0,1 2014

TOTAL CGG 2300 49 2,5

Fonte: Análises - Comercial VMZ.

Planned Investments - CGG

Flat

Pro

duct

s Lo

ng

ME4%

Agro- Neg.12%

INDÚST.7%

C. CIVIL25%

AUTO38%

L. BRANCA14%

Demand Drivers

Segment Civil Constr. Cars White

Goods Agro Bus.

Flat products X X X

Long products X X

Zinc demand within CGG

Continuous Galvanizing

CSN 50%

USIMINAS 28%

ARMCO 1%

ARCELORMITTAL Vega

21%

ARCELORMITTAL Longos

56%

GERDAU 26%

MACCAFERRI 3%

MORLAN

15%

G

alva

nize

d st

eel p

rodu

ctio

n ca

paci

ty

Flat

pro

duct

s Lo

ng p

rodu

cts

Fonte: Análises - Comercial VMZ.

VALE (ALPA)

3%

CSN 36%

USIMINAS

31%

ARMCO 1%

ARCELORMITTAL Vega

30%

2010

2.720 kt/yr 4.770 kt/yr

ARCELORMITTAL Longos

57%

GERDAU 27%

MACCAFERRI 3%

MORLAN

13%

550 kt/yr 650 kt/yr

+75%

+18%

Expected growth within flat products is 75% in the next 5 years ...

2015

2006

1.854

1.778

(kt)

6.000

4.000

2.000

0

3.167

76

2015e

5.076

4.758

318

2010f

2.300

867

2009

2.182

1.830

352

2008

2.490

2.147

343

2007

2.084

1.959

125 +985

National Production

Imports

(kt)

750

500

250

1.000

0

867

2015e

372 318

2010f

87

2009

91

352

2008

97

343

2007

397

125

2006

431

76

+515 kt

Exports

Imports

Galvanized Strips Consumption - Brazil

Galvanized Strips Trade Balance - Brazil

Sources: VMZ analysis, IABr, MDIC/SECEX.

Galvanized Steel Strips

Installed capacity versus Brazilian demand for continuous galvanzied coil (CGG)

2010 2011 2012 2013 2014 2015

Estimated demand

Planned capacity

(kt) 6.000

5.500

5.000

4.500

4.000

3.500

3.000

2.500

Fonte: Análises - Comercial VMZ.

Planned additional capacity should meet increased demand

Location of the Main Hot-Dip Galvanizers

Source: Analysis Marketing VMZ.

* Players that galvanize over 3 kt of steel per year

Source: Analysis Marketing VMZ.

* Players that galvanize over 3 kt of steel per year

Location of the Main Hot-Dip Galvanizers

Rio Grande do Sul

Santa Catarina

Paraná

São Paulo RJ

Minas Gerais

Espírito Santo Mato Grosso do Sul

Mato Grosso

General Galvanizing- GG

3,3

2,4

3,1

set-09

ago-09

3,0

jul-09

2,9

jun-09

2,8 2,7

mar-09

mai-09

abr-09

3,4 4

3

3,6

out-09

1

2

0

3,3

2010e dez-09

3,1

nov-09

3,1

fev-09

2,3

jan-09

2,5

dez-08

2,6

nov-08

3,4

out-08

set-08

3,8 3,8 3,9

ago-08

5

(kt/m)

2007

5,0

jul-08

3,9

1H-08

+30%

-48%

+13%

+11%

7%Others

13%

Pipes

14%

19%

Electrical Hardwares 46%

Transmission Towers

Metallic Structures

5%

Electrical Hardwares 15%

Pipes 17%

Others

Transmission Towers

14%

Metallic Structures

49%

Brazilian Market Segmentation 2007 2010

Demand – Metallic Zn Monthly Brazilian Market

Source: Votorantim Metais analysis.

Occupation 89% 11%

2010 ~ 600 kt/y

200

400

600

800

1,000

1,200

2010 2011 2012 2013 2014 2015

(kt)

Estimated Demand

Announced Capacity 110 kt

Opportunity Gap

Installed Capacity versus Galvanized Steel Demand (GG)

Annouced Expansions (kt/y of galvanized steel)

Present Capacity 600

Announced Investments +88

Estimated Capacity in 2013 688 +15%

General Galvanizing- More Capacity Needed

Source: Votorantim Metais analysis.

HDG Steel Production Capacity

Eletroferragens

17% Tubos

Estruturas Metálicas

9%

Torres de Transmissão

29%

8%

Outros (Pequenos)

38%

2010 = 600 kt 2015 = 745 kt

+24%

Tubos

Estruturas Metálicas

31%

Torres de Transmissão

13% Eletroferragens

Outros (Pequenos)

42%

6% 7%

Source: Analysis Marketing VMZ.

Forecasted Expansions (kt/y of galvanized steel)

Present Capacity 600

Forecasted Investments +145

Estimated Capacity 2015 745 +24%

General Galvanizing

Brazilian Market Segmentation

• Global Programs – -Zn Nutrition – -Zn Corrosion Protection – -Diecastings – -Oxides – -Brass

“Grow and protect the world markets for zinc"

International Zinc Association Technology and Market

Development

•Regional Programs -China, India, Latin America, Europe, North America, Europe, Southeast Asia, Africa, Russia

IZA’s Global Development Priorities General Galvanizing

• Developed World: Sustainability, Life Cycle Cost, Life Cycle Assessment, LEED, Increased Use of High Strength Steels, Rebar

• Developing World: Raise awareness of designers and specifiers, develop codes and standards, raise quality and capacity of local HDG industry, Rebar

• Common Tools: Interactive Training Tool, LCI/LCA tools, Technical Information on Corrosion, Design, Painting of HDG

IZA’s Global Development Efforts

• Interactive Training Tool • Steel Foresight Program • Galvanized Rebar • Colored Zn

Interactive General Galvanizing Computer Based Training Tool

• Developed during $1.5M China HDG program with Common Fund for Commodities

• Available in Chinese, English, Spanish and French • Training Tool available to regional galvanizing

associations

• Operators’ course available at www.galvtrainingcourse.com

• Managers’ guidance document available at www.zinc-resource.org

Training Tool Content

The complete galvanizing process including:

• Goods receiving & materials handling • Jigging • Degreasing • Acid Pickling • Fluxing • Galvanizing • Passivation

Pre-work

ZC-31 IZA-EGGA “Steel Foresight” Program

• Objective: Determine trends for structural steel compositions and processing that are expected to influence how these steels will be processed during general galvanizing

ZC-31 Background

Preparation of Guidance Document on the Effect of General Galvanizing on Mechanical Properties of Structural Steels

•Tested a variety of steel grades before and after cold working, then subsequently galvanized

Grades sourced by AGA:

•A36 •A572 Grades 50 and 65

Grades Sourced by UKGA: •BS EN10025-2:2004 Grades S275 and S355 •BS EN10028-3:2003, Grade P460

Results of Testing UK Steels

ZC-31 Questions

• Are the process routes used for making new grades of “lean” high strength structural steels compatible with general galvanizing practice? If not, what needs to be done?

• One expected issue: • “Martensite start” (transformation)

temperature is typically near the galvanizing temperature in these steels – required cooling rates can be changed by manipulating steel compositions – how will this influence specifications?

Galvanized Rebar for Concrete

• Global resource at www.galvanizedrebar.com • Case studies from USA, Singapore, Australia,

Bermuda • “100-year bridge” program now concluding, shows

good results

World’s largest sundial Singleton NSW Australia 30 m3 concrete, 2.5 T HDG rebar

Longbird Bridge, Bermuda 58 years of protection by HDG rebar

New Continuous Processing Technology

Rebar and Profiles

Jet wiping of Zn-12%Al profile at Onesteel, Newcastle, Australia using new dry flux technology

Continuous rebar coating at Xiamen Newsteel, China with Zn-0.2%Al

Colored Zinc

• Research proposal being developed to secure EUR 1.5M from EU

• In-kind participation with European galvanizers

Colored bicycles at Kokkola Zn, Finland

Regional Development Priorities

• China • India • Russia • Asia/Pacific • South Africa • (Latin America, NAFTA and Europe to be covered by

other speakers)

• Convince galvanizing to designers, specifiers, decision-makers on advantages of HDG for corrosion protection via seminars, publications, internet tools, alliances with professional and industry associations

• Educate students: the decision-makers of the future • Assist in national standards development

China: Current key projects

Construction • Close partnership with

CSCS • Speaking at key

conferences • Joint Seminar – November

2011Market size > 0.5m tonnes zinc per year

• Over 75% of large bridge projects in China

• Standards development

Galvanized Rebar • Market potential > 200 000

tonnes zinc per year • New product under

development with Industrial partner

• Centres of excellence identified

China Railways

•Stimulus package of over $1 trillion in place •30% went to railway development •All catenary systems will now be HDG •Likely 16 million tons HDG, 1 million tons Zn •Greatest market potential in freight lines

Freight Lines High Speed Lines

11

12 32 5 6

30 68 87 13

15 25

12

214 32

95

9 8

23`

17

63 11

6 6

7 11

3 1

2

HDG jobbing- China 580kt Zn

32 5 6 30 68

236

449

85

HDG jobbing- China 580kt Zn

India Zinc & Steel Tonnage Growth

0.2

0.3

0.4

0.5

0.6

04-05 05-06 06-07 07-08 08-0940

50

60

04-05 05-06 06-07 07-08 08-09

Zinc Steel (million tons)

India Infrastructure Investments 11th Five Year Plan (2007 – 12)

Sector Rs (Crores)

USD $Billion

Power 666,525 136.3

Telecom 258,439 53

Highways 314,152 64.4

Ports 87,995 18

Aviation 30,968 6.3

1,358,079 278

Source: Planning Commission

Expanding Galvanizing Markets - India

High Mast Lighting Column

Number of Russian HDG plants increasing

05

1015202530354045

1996 1998 2000 2001 2004 2005 2006 2007 2008 2009

55 plants in 2011

Asia-Pacific (Indonesia, Singapore, Australia, Vietnam, Philippines,

Indonesia) Infrastructure seminars for government & private sectors Seminars at universities

85% of growth in Zn usage will be growth in HDG usage Resources developed: CFC Training Tool, www.galvanizingasia.com website, “World of Galvanizing” CD, “Galvanize” brochure 2/year, all with regional case studies

Asia-Pacific (continued)

Larger inside diameter saves 50% of pumping costs

South African Development “Lula” Pipe (“easy” in Zulu)

114 mm HDG 104 mm PVC

•Bell-shape instead of threaded couplings •Sized to PVC standards, interchangeable with PVC pipe and fittings •No cradles or expansion joints needed, only thrust blocks

Zinc Nutrient Initiative

• Demonstration crop trials • Communication activities • Country-based marketing

Approach

Sichuan, China (2 locations):

rice grain yield increase = 20%

Success in China

• IZA and China’s Ministry of Agriculture have launched joint zinc fertilizer program • End result: government recommendation for use of

zinc in fertilizers…a market-changing event

• Plus over 400,000 field agents to help “recommend”

• Zinc fertilizer represents huge market potential which is now in site:

- China… 300,000 tpy Zn - India… 200,000 tpy Zn - Brazil…. 60,000 tpy Zn

• ZNI activities already having an impact

• Benefits include increased food,

nutrition, health, economics and zinc consumption

• One third of world’s population is at risk of zinc

deficiency

• 800,000 people of all ages estimated to die annually – WHO

• 450,000 children under the age of five die annually - Lancet

Zinc Deficiency: Global Issue

Source: Bryce J. et al., Lancet 2005

Global Causes of Under 5 Child Deaths

18% of infant deaths are caused by Diarrhea, compared to 3% by AIDS!

Malaria8% Measles

4%

Diarrhea18%

HIV/AIDS3%

Neonatal36%

Other10%

Injuries3%

Pneumonia18%

Effective Interventions with Zinc

20mg Zinc and ORS during 10-14 days to treat diarrhea Costs: US$ 0.50 Zinc-containing MNPs for treatment and prevention of malnutrition (“hidden hunger”) Costs: US$ 2 per child per year

Zinc Deficiency is Curable

The World Health Organization (WHO), UNICEF, and the International Zinc Nutrition Consultative Group (IZiNCG) proved beyond doubt the link between zinc deficiency and child mortality.

• Partnership program launched with UNICEF

• Zinc Industry contributing $3 million over 3 years

• Programs started in Nepal & Peru

Zinc Saves Kids

www.ZincSavesKids.org

First Year Highlights Peru

• Ministry of Health agreed to include zinc supplementation for diarrhea treatment in national regulations

• Field study on effects of zinc

• Anaemia reduced by 18%

• Regions: Lima, Cusco, Ayacucho, Huancavelica, Apurimac

http://www.horsehead.net/�

• Good growth in galvanizing especially in Brazil

• Some high potential General Galvanizing Market Developments

• Zinc: It is Solving some World Problems

Summary