Transcript Slide 1

ABM-63rd Annual Conference
Challenges for Steel Industry
Pierre Gugliermina,
Chief Technology Officer, ArcelorMittal
28
th
July – Santos, Brasil
The steel world is moving ….
• For about 25 years, steel
industry suffered from chronic
overcapacity and real steel
prices declined by about
3%/year
Global steel production Mt
2000
Growth phase
Vicious cycle
Booming
1800
1600
4.5%/year
1400
1200
8%/year
• Since 2000, the huge
demand from China and to a
lesser extent from other
emerging markets reduces
global overcapacity causing
prices to surge across the
major steel markets.
Source : IISI, ArcelorMittal Marketing
0.7%/year
1000
800
600
5.9%/year
400
200
0
1950
1960
1970
1980
1990
2000
2010
2
A new demand growth dynamic due to emerging countries
expansion…
China steel apparent demand from
1984 to 2007 – millions of tonnes
World steel apparent demand from
1950 to 2007 – millions of tonnes
1600
+7%/y
1400
+1%/y
1200
1000
800
+5%/y
600
400
200
0
00
20
90
19
80
19
70
19
60
19
50
19
Chinese new dynamic and growth in other emerging economies have led to an average
7% growth of the steel market in the last 7 years
Source IISI
3
…has been answered by capacity expansion and increase in
utilisation rate
Demand and production increase between
2000 and 2007
Developed
world*
28
175
Emerging
world
135
Gro wth
ex
China
World steel industry operational capacity utilisation rate estimates
Capacity
100%
Increase in
capacity
utilisation and
debottlenecking in 95%
the rest of the
world
constraint
The "30 years" of overcapacity
90%
China
294
Gro wth
in China
362
China
capacity
increase
85%

An increase in steel demand of
approximately 500mt over 7
years
06
20
03
20
00
20
97
19
94
19
91
19
88
19
85
19
82
19
79
19
73
76
19
Production grow th (mt)
19
Demand grow th (mt)
19
70
80%
World capacity utilisation (%)
The steel industry is operating globally at a high level of utilisation rate
*Developed world includes US, Canada, EU15, Japan and Korea
Sources: IISI and ArcelorMittal estimates
4
BRICs countries will represent almost 70 % of the steel
consumption growth (2006-2015)
Steel Consumption Growth 2006-2015
Total world about + 550 Mt
of which BRIC about + 372 Mt, 68% of
the total
650
370
153 150
171
105
124 132
99
117
79
83
15
1990 2006 2015
EU15
1990 2006 2015
USA
1990 2006 2015
Japan
1: Mature Economies steel
demand not expected to drop
85
77
19
30
1990 2006 2015
Brazil
47
17
1990 2006 2015
Russia/CIS
77
42
1990 2006 2015
India
1990 2006 2015
China
2: While Emerging countries remain a
major driver of steel demand
5
Opening new Challenges
• Growth, if continued at current conditions,
will put further strain on:
– Energy
– CO2 and on our environmental footprint in
general
– Raw material resources
6
High expected increase of energy demand
•
Energy demand will increase with about 60 % between 2002 and 2030!
More than 66% of the increase in world energy demand between 2002 and
2030 will come from developing countries, especially in Asia. China counts for
over 20% of the total increase.
Source: OECD Factbook 2005 (Organisation for Economic Co-operation and Development)
7
…Enhancing CO2 Challenge


•
ArcelorMittal reduced CO2 emissions by over 20% since 1990, through technological
developments and investments. This result exceeds the European Kyoto target by
about two and a half times.
But there is still much further progress to realize as steel making in countries like the CIS
or China has a much higher CO2 emission rate, up to 2 times the levels allowed in
Western Europe, Japan or North America.
ULCOS (Ultra Low CO2 Steelmaking)
Project:
–
–
–
Consortium of 48 European partners
Ambitious project, which aims to reduce steel
production emissions by 30% to 70%.
This 5 – year program, begun in 2005, will select
from a vast number of potential technologies a few
solutions for a pilot program.
8
Raw materials…huge price evolution
Nickel
9
There is no risk of scarcity, but many factors will lead to much
more lower quality materials
•
Iron Ores
Metallurgical Coals
Manganese Ores
•
•
0 % growth
3 % growth
Zinc Ores
0
50
100
150
200
250
300
350
400
450
Concentrated in a small number
of countries
Unevenly distributed in quality
Suppliers: Big-3 oligarchy has no
reasons to be reversed
Lifetime of "Economic" Reserves (as inventoried to-day)
•
•
Steel companies securing their
long-term supplies through
vertical integration
Asia becoming the major
producer of crude steel
(and thus the major importer
of raw materials)
Asia
2004 actual data
Europe
2015 forecasts (*)
0
10
20
30
40
50
60
70
80
90
100
Weight of Asia and Europe in the global crude steel production
(*) Based on Hatch Beddows Report, 2005
10
Iron Ores – Mapping of main Reserves (Volume expressed in
Ton Billions Iron)
leaders
challengers
EU15+3
2,5 / 3,0
CIS
25,8 / 22,7
China
6,9 / 3,2
NAFTA
3,8 / 7,9
SOUTH
AMERICA
15,8 / 11,4
Rest of ASIA
6,3 / 4,8
OCEANIA
11,3 / 9,6
AFRICA
6,3 / 3,6
TOTAL
79 / 66 Bt Iron
Sources : USGS–’05 / US Bureau of Mines-’85 – ALMOST CONSISTENT
11
Iron Ores – Quality of main Reserves
Reserves Share of Total
Reserves Share of Total
Reserves
Average iron Content
(Bt)
(%)
(Bt Fe)
Reserve
(Bt Fe)
Reserve
South America with
- Brazil
- Venezuela
- Other
Oceania with
- Australia
- Others
China
18,7
15,8
2,0
0,9
15,9
15,4
0,5
9,1
61,0
62,0
55,0
55,6
60,4
60,4
60,0
35,2
11,4
9,8
1,1
0,5
9,6
9,3
0,3
3,2
17,2%
15,8
20,1%
14,5%
11,30
14,4%
4,8%
6,90
8,8%
Other Asia with
- India
- Iran, ..
North America with
- USA
- Canada
- Mexico
CIS
8,1
7,2
0,9
29,4
16,6
12,4
0,4
60,0
59,2
61,1
44,4
26,9
20,7
34,7
50,0
37,8
4,8
4,4
0,4
7,9
3,4
4,3
0,2
22,7
7,2%
6,30
8,0%
11,9%
3,80
4,8%
34,3%
25,80
32,8%
Western Europe with
- Sweden
- Others
Africa with
- Mauritania
- Others
7,2
3,1
4,1
6,0
4,1
1,9
41,7
48,4
36,6
60,0
63,4
52,6
3,0
1,5
1,5
3,6
2,6
1,0
4,5%
2,50
3,2%
5,4%
6,30
8,0%
154,4
42,9
66,2
100%
78,7
100,0%
TOTAL
Table 1.II + Fig. 1.3 - "Les Minerais de Fer, Ressources mondiales et préparations" - Déc-2002
(Source : US Bureau of Mines (1985))
Slide 15 - "Assessing Fe
opportunities …" - April-05
(Source : USGS (2005 ?))
12
Demand / Supply – 2004 towards 2015 and more
• In the medium-term primary raw materials supply should be eased by
announced capacity expansions, BUT . . .
• Main suppliers will manage these programs to maintain a tight equilibrium
• Based on a “medium” growth rate scenario (3 %), various situations
2015
Required
2004
Major/ Influent players
Announced
new capacities
Exporters
Importers
Iron Ores
(seaborne)
1185
(600)
1640
(> 830)
End ’12: + 615
(+ 300)
Australia
Brazil
China 
Coking Coals
(seaborne)
420
(120)
580
(> 170)
End ’10: global ?
(+ 60)
Australia
India  (?)
300
(120)
415
(170)
Few visibility
End ’07: ~ (+ 20)
Brazil
BF / DRI plants
350
(30)
484
Exist / captive coke
50% China
Poland
( Expressed in Mt)
Pellets
(exports)
Coke
(trade)
?
?
13
Prices – Long-term trends
 The downtrend is broken, and prices will probably “swing” around a higher trend
line even if very difficult to make valuable forecasts over 15 years
1
Continuous decrease for commodity material 
unlikely to be recovered
Iron Ore Fines
80
3
High prices on a permanent basis
 should be possible when considering:
 unprecedented China boom, what about India ?
 big suppliers power to keep prices under control
 need to shift towards poorer, less accessible,
logistically constrained, …, raw materials
70
60
USc/mtu
FOB
2
Landing at [Price ’04 + 25 % of the Gap (’05 –
’04)]  considered as the most optimist
nominal prices
50
40
30
20
10
0
3
2
real prices
1
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
In all cases, transition between a RM pricing system dominated by Japan and Europe to one that
will be dominated by China
14
From Blast Furnaces to new routes
• Raw material scarcity at higher cost
• increasing amount of fine ores (from sinter feed to pellet feed)
• Quality issues of ores: high P ores , high Alumina ores, high Zn
ores; Fe content; Fe++ content
• Lack of coking coal and of coke
• Quality issues of scraps
• Lack, high cost of ferro alloys
• Requiring process adaptation
•
•
•
•
To use fine ores and non coking coal with wide range of properties
Offering flexibility towards iron sources and coals
Being an energy efficient process
Environmental friendly: Low emissions: NOx, SOx, dioxines,
particulate materials, HAP, …
15
Corex
A technologically proven alternate to BF route
Largest unit : Baosteel @ 1.2 – 1.5 Mtpy
16
COREX flow sheet
AM experience at Saldanha
17
Finex
Evolution of COREX tech. developed by to use fine ores
3 or 4 fluidized
bed reactors
Briquetting of coal
Compacting of DRI
18
MIDREX or HYL-III = shaft furnace
FUEL GAS
(to Reformer)
TOPGAS – CO CO2 H2 H2O
WASTE
GAS STACK
NATURAL GAS – CH4
REFORMED GAS – CO H2
DIRECT REDUCED
IRON
REFORMER
19
ArcelorMittal 2007 key figures
310,000 employees in more
than 60 different countries
Sales of US$105.216 billion
EBITDA of US$19.4 billion
EU15
Operating income of US$14.83 billion
Net income of US$10.368 billion
Shipment of 109.7 mt
6%
16%
7%
17%
13%
116 mt of steel produced
Net debt of US$22.5 billion
25%
16%
Rest EU (EU27)
Other European
Coutries
North America
South America
East Asia
Africa
An integrated leader of the Metals and Mining sector
20
ArcelorMittal not only leading the steel industry but the
Metals & Mining sector
Crude Steel production in 2006 (Mt)*
Turnover in 2006 (USD billion)
140
100
89
118
120
80
100
60
60
40
Ti
Ri
o
Bi
llit
on
nt
o
0
BH
P
An
be
n
PO
SC
O
po
n
Ni
p
JF
E
St
ee
l
**
21
20
co
a
0
22
Al
20
it t
al
32
31
23
Ar
ce
lo
rM
32
it t
al
40
32
Ar
ce
lo
rM
34
CV
RD
80
More than 3 times larger than next competitor
* Metal Bulletin
** Result from the merger between Ansteel and Bensteel.
21
ArcelorMittal Growth Plan 2012
Brownfield expansion projects
22
8 Greenfield projects focused in growing regions
ArcelorMittal Greenfield projects overview
600,000t long products mill
in Russia
50/50 JV of 4.8mt hot
strip mill in Turkey
1.4mt DRI/Billet plant
in Egypt
600,000t seamless
tube mill in Saudi
Arabia
300,000t pipe
mill in Nigeria
12mt integrated plant in Jharkhand,
India
12mt integrated plant in
Orissa, India
400,000t bar mill
in Mozambique
Projects ideally positioned to capture market growth expected in
India, Middle-East, CIS and Africa
23
Thanks for your
attention