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1
SALE OF 0.5 MTPA MINI BLAST FURNACE COMPLEX
(Southeast Asia)
2
Executive Summary
valuejunction, a business unit of mjunction (A SAIL – Tata Steel joint venture) is appointed by a leading
steel manufacturer in Southeast Asia to sell their idle assets. mjunction services limited is a 50:50
venture promoted by Steel Authority Of India Limited and TATA Steel. Founded in February 2001, it is
today not only India's largest eCommerce company (having eTransacted worth over Rs.2,00,000 crores
till date) but also runs the world's largest eMarketplace for steel. For more information please check
our website (http://www.mjunction.in/ ).
Asset Overview: A 0.5 MTPA blast furnace complex which was installed in 2009 - 10 period but
was decommissioned in the year 2012. Working volume of the mini blast furnace is 400 m 3 and its
maker is Huatian Engineering & Cooperation. In addition to this there is a sinter plant having annual
production capacity of 635,500 tonnes along with a pig casting machine. A BF fired captive power plant
having capacity in the range of 12-15 MW is also there. The machinery are as good as new and the
output at the time of decommissioning the BF was approximately 1300 t/day.
Figure 1: Plant Map
Power Plant
Raw Material Yard
Sintering Plant
Mini Blast Furnace Area
3
Global Outlook for steel Global demand is forecasted to grow at about 3.3%. However, more demand growth is expected to
come from outside of China as the Chinese Government pushes through economic restructuring with
a focus on private consumption.
Outlook for steel & economic growth in 2014 mapped against the location of major steel markets
Source: HIS Global-insight
Future Demand Projection 1. As demand continues to shift to developing nations, the steel sector is directed towards China,
with some focus on Brazil, Russia and India
2. With Africa moving towards urbanization, it may happen that future demand from Africa will
completely shift the landscape
3. Growing middle class is driving steel demand in construction and real estate. Increasing
investment in construction and infrastructure led to an 8% y-o-y increase in global demand
for long products in 2013. Asian market captures around 40% of total construction spending
4. There will be an increasing demand from the automotive sector of both developing and the
developed countries. The US, Brazil, Japan and China are the hotspots in the automotive
sector with calculated annual growth of between 5% to 11% forecast to 2016
5. Looking upstream, increased capital investment in oil & gas sector will also drive steel demand
Raw Material – Finding Opportunity in Volatility Iron Ore - Global iron ore prices were in the range of $68-70 in December 2014. Since then it has
been declining from $66-67 per ton in January 2015 to $62-64 (February), $56-58 (March), $51-53
(April). In May, the prices inched up to $61-63 but, June rates again declined to the $52 range. While
4
the global demand is going down, particularly in China, iron ore production is not slowing. Because of
this phenomenon there is lot of inventory in the market and it is impacting the prices of iron ore.
Indian Market- Iron ore miners have slashed prices of lumps or high grade iron ore owing to
subdued demand in the domestic market. State-owned NMDC has slashed the prices of lumps by as
much as 30% since January. The country's largest miner for the metal, used in the production of steel,
has slashed iron ore fines prices steeper, by 46% during the period. Odisha miners like Rungta Mines
also reduced lumps offers by 48% in the last one year because of higher inventory levels. Now that
the government has allowed iron ore mining in Karnataka and Goa and increased cap for mining in
Odisha, inventory levels would further rise putting pressure on price levels.
Source: India Steel Market Watch (ISMW)
40
47
54
61
68
75
82
89
96
103
110
02
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4
16
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4
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4
14
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4
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11
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g-1
4
25
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4
08
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p-1
4
22
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p-1
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06
-Oct
-14
20
-Oct
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03
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4
17
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4
15
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29
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12
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n-1
5
26
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n-1
5
09
-Fe
b-1
5
23
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b-1
5
09
-Ma
r-1
5
23
-Ma
r-1
5
06
-Ap
r-1
5
20
-Ap
r-1
5
04
-Ma
y-1
5
18
-Ma
y-1
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01
-Ju
n-1
5
15
-Ju
n-1
5
29
-Ju
n-1
5
13
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l-1
5
$/T
ON
Iron ore fines price trend
Fines
1500
1750
2000
2250
2500
2750
3000
3250
3500
3750
4000
5-J
un
-14
26
-Ju
n-1
4
17
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l-1
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7-A
ug-
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-Au
g-1
4
18
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p-1
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9-O
ct-1
4
30
-Oct
-14
20
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v-1
4
11
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1-J
an
-15
22
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n-1
5
12
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b-1
5
5-M
ar-
15
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r-1
5
16
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r-1
5
7-M
ay-
15
28
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y-1
5
18
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n-1
5
9-J
ul-
15
RS.
/TO
N
Iron ore fines price trend in India
NMDC Fines Rungta Blue Dust
5
Coal - Coal prices across the category are down significantly during the past one/two year primarily on account of reduced demand from China, which led to a kind of oversupply position. Other factors such as less than expected growth in steel production throughout the world also impacted coal prices.
Source: India Coal Market Watch (ICMW)
So with the help of correct sourcing strategy and by using instruments such as derivatives an investor can take advantage of this downward trend in raw material prices.
-
20.00
40.00
60.00
80.00
100.00
120.00
140.00
SouthAfrican
Steam Coal(6000 Kcal)
SouthAfrican
Steam Coal(5500 Kcal)
AustralianSteam Coal(6300 Kcal)
IndonesianSteam Coal(5900 Kcal)
IndonesianSteam Coal(5000 Kcal)
IndonesianSteam Coal(4200 Kcal
IndonesianSteam Coal(3800 Kcal)
HardCoking Coal(Australian)
Coal Price Trend
Price/ton (in $ and FOB) As on, July 18, 2013 Price/ton (in $ and FOB) As on, July 22, 2014
Price/ton (in $ and FOB) As on, July 14, 2015 Price/ton (in $ and FOB) As on, July 20, 2015
Price/ton (in $ and FOB) As on, July 21, 2015
6
Metals and Mining – Advantage India
Source: DataMonitor, Aranca Research
It has been evidenced that India is one of the major demand centre with an attractive investment
opportunity.
Advantages of Buying This Plant 1. The equipment are well maintained and are as good as new
2. Setting up a new greenfield project of similar capacity will cost around 65 Mln USD so less
capital investment is required in this case
3. Lead time reduction compared to setting up a new project
4. The products from mini blast furnaces are of the same quality as that of normal Blast Furnaces
and are free of tramp elements - this is of particular advantage in steel making in mini steel
plants
5. Reduced power consumption when compared to classical blast furnace
6. Higher plant availability compared to classical blast furnace
7. The technology used is environment friendly and hence there is a possibility to earn carbon
credits and make money from it
Demand growth
• Rise in infrastructure development and automotive production driving growth in the sector
• Power and cement industries also aiding growth in the metals and mining sector
•Demand for iron and steel is set to continue, given the strong growth expectations for the residential and
commercial building industry
Attractive opportunities
• There is significant scope for new mining capacities in iron ore, bauxite, and coal
• Untapped metal reserves in India are to the tune of 82 billion tonnes
• Considerable opportunities for future discoveries of sub-surface deposits
Competitive Advantage
•India holds a fair advantage in cost of production and conversion costs in steel and alumina
•Its strategic location enables convenient exports to developed as well as fast developing Asian markets
Policy support
• 100 per cent FDI allowed in the mining sector under the Automatic Route
• Mining lease granted for a long duration of minimum 20 years and up to 30 years
• Approval of MMDR Bill (2011) to provide better legislative environment for investment and technology
Advantage India
2011
Industry
value:
USD141.9
billion
2015F
Industry
value:
USD305.5
billion
7
Technical Details 1) Mini Blast Furnace
Configuration of Mini Blast Furnace
Annual Production of hot metal 504,000 t/year
Working volume of blast furnace 400 m3
Effective Volume 450 m3
Hot blast temperature 1100 oC
Utilization ratio 3.572 t / m3 / day
Raw material consumption 1,068,900 t / year
Furnace top pressure 0.03~0.15 Mpa
Furnace top temperature 120~300 oC
Tap hot metal 120 -130 t / tap
Fuel ratio
- Coke ratio
- Coal ratio
550 kg / t-HM
400 kg / t-HM
150 kg / t-HM
Sinter Ore : Iron Ore Lump 75 % : 25 %
Slag ratio 330 kg / t-HM
Output at the time of decommissioning
the BF
1200-1300 ton/day
Availability (excluding planned
shutdown)
350 day/year
8
2) Sinter Plant
Configuration of Sinter Plant
Annual Production of sinter 635,500 t/year
Effective Sintering area 75 m2
Mean Hourly 105 t/h
Maximum capacity 120 t/h
Fuel Consumption (BF Gas) 80 Nm3/t
Size Fraction 5-150 mm
Basicity (CaO/SiO2) 1.8
TFe >58%
3) Power Plant
Configuration of Power Plant
Power Generator 12 MW (Max 15 MW)
Blast Furnace Gas Boiler 60 t-steam / h
The entire complex is very well maintained and in extremely good condition.
9
4) Plant Site Pictures
The pictures shown below are indicative in nature. Customers are advised to inspect the plant for
better understanding.
Figure 2
10
Figure 3
Figure 4
11
Figure 6
Figure 5
12
Figure 7
13
Figure 8
Figure 9
14
Figure 10
Interested buyers are requested to contact the following personnel
1) Gaurav Das - Mobile: +918584008249,
E-mail: [email protected]
2) Satyavir -Mobile: +918336925974,
E-mail: [email protected]