Tuesday, May 31, 2016

Plans unveiled for 2m tonne GREENSTEEL plant at Newport

Gupta Family Group Alliance companies, Liberty House and SIMEC, have unveiled major plans to turn their adjacent Newport sites into a two million tonne a year steel super-plant, powered by renewable energy.

It would be the first GREENSTEEL facility in the UK and would play a major part in a renaissance of the struggling sector by meeting up to 20% of current steel needs.

Newport’s key role at the forefront of a green revolution in UK steel was outlined to the city’s elected representatives during a fact-finding visit to Liberty’s 1.2m tonne a year rolling mill and SIMEC’s adjacent 396 megawatt Uskmouth Power Station.

Both Newport MPs, Jessica Morden and Paul Flynn, and Assembly Members, John Griffiths and newly-elected Jayne Bryant, were briefed on how the plants will help realise the vision for a sustainable steel sector, powered by renewable energy.

They met top management of SIMEC and who explained how the UK’s changing energy policies will help achieve the dual objective of reducing carbon emissions while making the UK steel sector competitive again.

Liberty executive chairman Sanjeev Gupta explained how the firm intends to install 2m tonnes of liquid steel-making capacity at Newport and almost double the existing rolling capacity at the site.

At the same time, as part of its GREENSTEEL strategy, SIMEC aims to power the steel plant by converting its existing coal-fired power-station to eco-friendly biomass generation. Longer term it will develop a centre of excellence for renewable energy that includes various forms of green power, including waste-to-energy and tidal lagoon power in the adjacent estuary.

All of this can provide low-cost, low-carbon fuel sources to power a steel industry which in turn can be made more competitive and sustainable through recycling and upcycling of Britain’s growing mountain of scrap. 

A recent University of Cambridge report predicted that the UK’s supply of scrap will rise from 10m to 20m tonnes a year within a decade. At present 70% of Britain’s scrap steel is melted abroad, because of high power prices, but melting at home instead would generate thousands of new jobs.

Following significant investments SIMEC reopened Uskmouth Power Station and Liberty restarted the adjacent steel rolling mill in 2015, both of which had been mothballed by previous owners.

At present the two sites employ over 200 people with plans for many hundreds more when SIMEC rolls out its energy park plan and Liberty recommences the melting of scrap steel at Newport. The Newport sites are part of the Liberty’s nationwide network employing a total of over 1,500 people, which also includes steel making and engineering facilities in Tredegar, the West Midlands and Scotland

Mr Gupta who co-hosted the visit with SIMEC’s Head of Energy, Industrials and Mining, Jay Hambro, said: “This was a very valuable opportunity to brief Newport’s elected representatives about our GREENSTEEL vision, which we believe will generate many new skilled jobs in the city and ultimately make a major difference to the whole UK steel and wider manufacturing sectors.

“Historically Newport has been one of the country’s most important steel-making locations so it’s very appropriate that this is the springboard for our GREENSTEEL plans. If we can make steel competitively in the UK, we can generate potentially hundreds of thousands of jobs in the manufacturing sector nationwide,” he added.

He explained that he and his colleagues wanted to create a major fully-integrated ‘end-to-end’ business which encompassed everything from green power, through liquid steel production, to steel processing and the manufacture and distribution of high-value steel products.

Mr Gupta added that Government support in removing carbon tax on power stations feeding steel plants, their backing for conversion of coal-fired stations to biomass and the green light for tidal lagoon power would give the steel industry and manufacturing a huge boost and a bright future.   
Jessica Morden, MP for Newport East which includes both Llanwern Steelworks and the SIMEC and Liberty plants said: “It was fantastic to visit SIMEC and Liberty Steel today to learn first-hand from Sanjeev about the GREENSTEEL programme which has huge potential for Newport, linking the steel plant with a biomass power station and tidal lagoon. This is very exciting for our area and for the steel industry.”

Further information from Eoghan Mortell 07977 555116

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Monday, May 16, 2016

Liberty House re-opens Tredegar steelworks in the UK

Liberty House will re-open yet another steelworks next month (June 2016) as it steps up its drive to transform the UK steel industry.

As part of its GREENSTEEL strategy, Liberty is set to re-start steel pipe and tube manufacturing at Tredegar in the South Wales Valleys, closed by administrators in 2015. This is the 7th British steelworks Liberty House has re-opened in as many months. Tredegar was inaugurated by Prince Charles in 1977.  A second production line was inaugurated there by Indian Prime Minister Indira Gandhi in 1978 and the heyday of this high-profile facility was in the 1980s and 1990s.

The re-opened plant will form the latest link in a British steel supply value chain Liberty is developing, that will encompass all stages of the process, using green energy to "upcycle" scrap steel from its melting through to the engineering of advanced products. Hot rolled coil for the plant will come from the rolling mill at nearby Liberty Steel Newport, itself re-started in October 2015, over two years after being mothballed.

Tredegar's output will replace some of the almost one million tonnes of steel tube currently imported into the UK each year for construction and manufacturing. The UK currently has one of the highest import dependency levels of this core product in the developed world. In preparation for the re-opening in June, the company has been re-contacting former workers from the plant. Tredegar will be expanding its range of products and is planning multiple training opportunities for young apprentices. The facility was part of the Caparo Industries group of steel and engineering companies rescued from administration by Liberty in November and December last year.

Several companies from the group are now thriving in the West Midlands, supplying a range of core and advanced products to automotive, aerospace and other‎ manufacturers. For example, last week Liberty Vehicle Technology's 920Engineering unit unveiled an industry-first fully-integrated parkbrake system, marketed to automotive OEMs (Original Equipment Manufacturers) for high-spec vehicles.

Executive chairman of Liberty House, Sanjeev Gupta said: "Tredegar will once again supply steel tube domestically. This is great news for the UK steel industry and for skilled workers in South Wales. It is also another step in turning the tide for the UK's steel industry. Steel tube is a vital link in the supply chain and adds to the integration which is essential for the sector. 

"The steel ecosystem is at the heart of manufacturing, and the global oversupply of steel increases the need for the UK to refocus our industrial strategy around both reducing costs and adding value to steel. Without significant change we will lose the remaining cornerstone of manufacturing. Our plan is to restructure the sector around production efficiency, engineering integration, and innovation. Britain's outstanding skills, engineering and production knowledge and resources can re-invigorate the supply chain and bring about a new industrial renaissance."

Based on 25 years' experience in global steel markets, Liberty has developed its "GREENSTEEL"‎ vision for a clean, integrated and competitive UK steel industry, based on melting and upcycling the growing mountain of scrap in the UK.

According to a recent report from the University of Cambridge, the volume of recoverable steel emerging in the UK from sources ranging from scrap vehicles and household appliances to ageing Victorian infrastructure, is set to rise from 10m to 20m tonnes a year in the next decade. Around 70% of UK scrap generated is already exported for melting abroad, a far higher proportion than competitor countries. This is expected to increase substantially unless the UK builds high-tech recycling facilities to recover this resource.

Mr Gupta called for the development of a national strategy for the creation of a sustainable manufacturing base in the UK. "This is much bigger than steel. Resolving the steel crisis opens the door to the rejuvenation of manufacturing and making a host of high-value goods in this country. Government and industry need to agree a road map that contains a consistent approach to all the vital ingredients: competitive energy, competitive raw materials, innovation, skills, and an investment-friendly environment. The only way to stand up to the forces of globalization is with a value-adding game plan."

Andrzej M Kotas, MBA
Managing Director
Metals Consulting International Limited

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Wednesday, May 11, 2016

Tata Steel Port Talbot - the road to viability

We have previously discussed in this blog some of the issues surrounding the future of Port Talbot in south Wales. Below, I outline our own views of the way ahead for steelmaking in south Wales – as seen by the experts at Metals Consulting International Ltd.

The problem
The biggest problem at present is that Port Talbot is reportedly losing somewhere between GBP £0.5 million - £1 million per day. With production of finished steel products at Port Talbot of the order of 3 million tonnes / year, this translates (assuming losses of just £0.5m per day) into a loss of ~£60/tonne. With weak balance sheets across the steel industry pretty much worldwide, few steel companies today are able to sustain loss-making at this level for very long.

Suggestions for business turnaround
In recent weeks, a number of apparent solutions for the turnaround of Port Talbot have been mentioned in the international press. These include business rate reductions, employment cost reductions and even reductions in energy costs. Let us examine these ideas in turn.

(i) Business rate reductions
Many industry commentators note the cripplingly high business rates that sometimes apply in the UK. Port Talbot currently pays ~£10m/year in business rates. On a sales volume of ~3 million tonnes, this cost amounts to roughly £3 / tonne. If the objective is to improve profitability by £60/tonne, it is clear that substantial reductions of business rates will do little to restore viability at Port Talbot.

(ii) Employment cost reductions
Port Talbot employs a labour force of ~4000. If we assume an average wage of £25,000/year per employee, this gives a total wage bill of £100 million per annum or roughly £33/tonne. Trimming this by 10% could therefore reduce Port Talbot’s production costs by ~£3/tonne. If the objective is to improve Port Talbot profitability by £60/tonne, trimming the wage bill by a few percentage points will also do very little to restore viability to the business.

(iii) Energy cost reductions
There is much discussion concerning the relative cost of electricity prices in the UK as compared to the continent; many observers consider that electricity costs in the UK are double those in other parts of Europe. Depending a little on the exact steel product, our own assessment is that Port Talbot’s electricity costs are currently in the £12.50-£17.50 / tonne range.  If we ignore the fact that much of this electricity can be generated from hot gas that is generated from carbon-based inputs such as coal and coke, and further assume an average electricity cost of £15/tonne of finished steel, it is clear that whilst halving of these costs might save ~£7.50 per tonne, this level of cost saving is also very far from the profit improvement target of £60/t discussed above.

The solution
What then is the solution for Port Talbot if the objective is a profit improvement of £60/tonne, when measures such as business rate reductions, employment cost reductions and reductions in electricity costs can at most generate savings of £3, £3.50 and £7.50/tonne respectively (or just £14/tonne in total)?

MCI’s view is that the only solution is to stop production of liquid steel in south Wales, and to ship in steel slab (for further downstream processing into hot and cold rolled and coated steel at Port Talbot) from one of the lowest-cost producers of these steels.

The chart below illustrates Port Talbot’s slab production costs on the world cost curve, as at Q1 2016.


Readers of this blog post will notice that the difference in slab production cost between the world’s lowest cost producer and the Port Talbot works is ~$110/tonne. If we assume a transport cost via sea freight of ~$35/tonne, the total cost saving at Port Talbot of purchasing rather than making slab works out at $75/tonne or ~£52 / tonne. With some small reduction in business rates or employment costs or energy prices, Port Talbot should therefore be able to achieve a profit improvement of £60/tonne and thus attain viability, if it can source low cost slab.

Next steps  
Do we have any other evidence that such a strategy would be viable for Port Talbot? Who would be the best foreign partners for sourcing the low-cost slab (and do they have the capability for immediate slab supply)? How do we calculate the production cost savings and freight costs?

For further information, please contact us.

Andrzej M Kotas
Managing Director
Metals Consulting International Limited

Mobile: +44 775 149 0885


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Monday, May 09, 2016

Centro-Metalcut gears up for production on a large Conditioning Grinder

Rockford, IL, May 2, 2016 – Centro-Metalcut, a world-class manufacturer of Abrasive Cutoff Saws and Conditioning Grinders for the steel industry is gearing up for production on a large Conditioning Grinder with some impressive features.

The grinder, a 400HP stationary grinding machine features a 90/45 degree grinding head, electric car drive system.  The machine will have dual grinding cars; a rounds grind car and a slab grind car that allows onboard slab turning more than 20tons (over 40,000lbs), which will allow for increased production capabilities through a reduction in material handling time.  Material load and unload tables will be supplied with the machine as well.

Like all Centro-Metalcut machines, the grinder is a custom-engineered design.  It will include constant load monitoring technology which offers benefits such as constant surface speed while grinding, increased quality of the end product, increased grinding wheel life, fast and compact design, the highest degree of safety, and improved surface finish. 

The grinder, whose final home will stay in the United States, is set to be complete in late 2016.  Centro-Metalcut plans to have an open house at their facility in Rockford, IL in Fall 2016 for current and potential customers, vendors and employees to see the final machine in action. 

For more information about Stationary Grinders from Centro-Metalcut, visit Centro-Metalcut at AISTech 2016 May 16-18th, booth #2659, or visit www.centrometalcut.com.

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