2012 Digital Official magazine INTERNATIONAL MARKET CURRENT AFFAIRS INTERVIEW ENERGY SAVINGS

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1 Official magazine INTERNATIONAL MARKET INTERVIEW ENERGY SAVINGS ANNO mese numero Distorsions, duty and the downstream Omav s challenge for the future Abdulla Kalban, President and CEO Dubal Saving fixed costs: the IT METAL solution

2 MARKET INTERVIEW ENERGY SAVINGS year month number DISTORSIONS, DUTY AND THE DOWNSTREAM Mario Conserva - mario.conserva@edimet.com What in Europe is happening? Hard times for aluminum in Europe, recovery is above all hampered by a series of distortions slowing down competitiveness. Energy is in the spotlight, Europe has incredibly high energy costs if compared to other world regions, metal manufacturers are struggling even transformers aren t any better off; a good initiative in Italy is the claim by Assomet to fully include non-ferrous metals companies among those with high energy consumption, in addition to primary production. Another serious distortion is the increasing pressure on premiums for ingots, billets, slabs and foundry alloys, with the continuous widening of the gap between LME prices and premiums for formats; it began in North America but has become a global fact, discussions were about bold manipulations creating shortages of physical metal by blocking it in the warehouses, all of them on the cutting edge of very tolerant regulations. For some time, we have been asking for transparency on the financialization of commodity markets, in particular in defense of the small and medium sized user companies, we hope that other institutions representing the aluminum segment, much more powerful than us, stand for our cause. The EU duty on raw metal is another unreasonable obstacle to recover from the crisis, it is beneficial to a few but severely damages the whole system; we have debated so much about it, of course, to request its final abolition as soon as possible, backed up by Ecorys impartial assessments contained in last year s study carried out for the EU Industry Directorate, which has been covered up by the raw metal producers and the associations controlled by them. In this regard, we record with satisfaction the new compromise asked for by the Eaa executive which aims at reducing the duty on alloyed metal from 6% to 4%. It was about time, but everything has been postponed to 2014, with an engagement to hibernate the problem until It is a pity that unalloyed metal is not even slightly mentioned, it is not produced by any European manufacturer, and it supplies the entire downstream, rollers, extruders, foundry casters. The zeroing of the duty on this type of material, a major issue mainly neglected by those who defended the duty for the interest of secondary production, would help the whole system and would significantly help the recycling of remelters, who are now in deep crisis due to the abovementioned distortions. Together with remelting, downstream is the unfortunate victim of these critical circumstances, it is the silent majority who suffers distortions, it is penalized in the access to raw materials, and business and job losses at an impressive pace. What will happen before we can hope for some intervention from Brussels? 2 3

3 MARKET INTERVIEW ENERGY SAVINGS year month number Omav s challenge for the future Mario Conserva - mario.conserva@edimet.com 60 th anniversary and future goals Omav was founded in 1952 by Gaetano Bertoli and Stefano Marinelli, initially as a small factory focused on mechanic jobs for different applications; after a few years the company entered the field of the steel rolling mill. Ten years later, in 1972, Omav started to focus on the construction of equipments for aluminium extrusion, a sector which is realized in the modern plant in Rodengo Saiano, where 120 people are employed. The group structure is currently completed by other satellite units or production sectors; Omav Combustion is the division for facing situations where heat power holds the spotlight; thanks to a staff of 18 people, this division in the new 6000 square meter plant near the headquarters in Rodengo, designs and carries out complete furnaces and complete cast house plant, log furnaces, aging ovens, die cleaning equipments; therefore, Omav Foshan, established in 2009, with headquarter in the province of Guangdong, to satisfy the demand of the local and Far East market. It is a well organized structure of 58 people with an Italian Management supported by the Italian R&D team. This company can carried out complete aluminium extrusion plants starting from the engineering to the final assembly with a production department of 20 people. As for core business, the most significant recent development is represented by the partnership agreed with the German company SMS MEER GmbH, a cooperation boasting important results already in the pipeline, considering that, on the very occasion of the 60th anniversary of Omav, the first SMS press by Omav was very much debated: it is a MN 8 machine completely equipped both upstream and downstream with Omav equipment. SMS Meer will keep engineering the presses 100% including SMS Meer software according to its well-known technology, Omav will manufacture SMS light metal extrusion presses in its own fac- From the left: Hans-Uwe Rode, Heinz Zacharia, Jens Magenheimer, Massimo Marinelli, Giulia Bertoli, Burghard Wiluda. 4 5

4 MARKET tory in Rodengo Saiano, Italy, and thanks to the flexible structure of a medium size company, it will be possible to present a product with the same high quality standard of SMS Meer but with more competitive prices for the extrusion lines. This agreement refers to complete extrusion lines with extrusion presses up to 10 log diameter (32/35 MN) and allows package solutions with one overall-contract for the complete aluminium extrusion line. And now? We are working to enhance the post-sale service in all the main markets - says engineer Giulia Bertoli, in charge of the sales The celebration of the 6o th anniversary, 8 th october

5 MARKET department - We have already started in the USA where we have always been present and we are still supplying sophisticated systems for Sapa Cressona and Nanshan Usa. We have recently delivered in Canada a quite big system for our customer Extrudex. Our solutions - let me highlight this - are divided into three main categories: the standard ones for lines, which boast very high reliability accounting by 99%; the lines devoted to energy saving (in this regard, we are working on log furnaces and we have already manufactured several plants with these characteristics with improved general efficiency); 150 MN water spray and air colling. 8

6 MARKET and lines for big-sized systems. We have provided several lines in China with these peculiarities, cases for which we conceived solutions with sophisticated cooling characteristics, where the puller passes into the quench with watercooling being switched on. In addition, ironers up to 600 tons, with pullers up to 10,000kg capacity and cold saws with double blade. Omav s goal is to expand into new markets where it is not currently very present, such as Russia, South America, India, where it can offer reliable and efficient lines with high production rates and competitive prices. All with a single, essential must-do: maintain high quality standards, guaranteed by the fact that all systems are pre-assembled and tested within the company. Year 2012: the company Facility: Employees: urnover 2011: Products: sqm 120 people 45 mln euro - press feeding line - handling systems - aging oven - die cleaning equipments - aluminium foudries - heat treatment furnaces 10

7 MARKET DUBAL AIMS AT CONTINUOUS GROWTH Mario Conserva - mario.conserva@edimet.com Interview to president and ceo Abdulla Kalban DUBAL reached just over one million tonnes production per year. What is next? DUBAL has been in growth mode for several years. Our focus in 2012 is on consolidating this growth. By concentrating our efforts on improving our operations, we intend to gain better production returns on our expanded infrastructure. Our power generation facilities have expanded in parallel, to deliver adequate electricity to our smelter. Our ongoing commitment to growth through technological innovation, in a culture of continuous improvement, has resulted in numerous What have been the major achievements for DUBAL during the last 30 years? Since the commissioning of DUBAL s Jebel Ali smelter in 1979, our operations infrastructure has more than trebled, yet our hot metal production capacity has expanded more than seven-fold: in 2011, we produced 1,014,795 metric tonnes. 12

8 MARKET INTERVIEW ENERGY SAVINGS efficiency and per pot production, with lower impact on the environment than other technologies. Another key achievement is that DUBAL has consistently paid annual dividends to our shareholders, since inception; and our Return on Equity has been sustained between 18- and 25 per cent. significant achievements, including international and regional awards. For example, our dedicated nationalization efforts have resulted in the successful development of Emiratis into industry experts and leaders. This has rewarded with the Dubai Human Development Awards, and DUBAL being listed among the UAE s employers of choice. We are particularly proud of our in-house developed, proprietary DX and DX+ Reduction Technologies. The latter is a best-in-class innovation: DX+ operates at very high amperages, offering exceptional current What are the challenges in the near future for DUBAL? DUBAL faces the same challenges as the global aluminium industry. These include: A volatile marketplace and changing world economic landscape, which inevitably have an impact on the aluminium industry. The criticality of a continuous energy supply at competitive prices. Sustaining operational efficiencies while improving productivity. Recruiting and retaining the best talent in the market. Trade-related issues, where the continued imposition of trade levies by certain key markets has placed the Middle East at a competitive disadvantage. 14

9 MARKET INTERVIEW ENERGY SAVINGS year month number STIMULI FOR ENERGY SAVINGS Andrea Pasotti - a.pasotti@itmetal.it Turning fixed costs into variable costs: the ITMETAL solution pany s resources (equipment and production systems), production processes, products and company s organization. Furthermore, the cost of energy per unit of finished product can be divided into a variable component, if it is proportional to the volume of produced material, and a fixed component, if the contrary As everyone knows, fixed costs are those that start and feed a business and do not vary with the change in production; variable costs are strictly related to the product quantity. According to a principle, to achieve a less expensive product, it is necessary to turn fixed costs into variable costs. This principle also applies to energy efficiency. According to a principle, to achieve a less expensive product, it is necessary to turn fixed costs into variable costs. This principle also applies to energy efficiency. As a matter of fact, the annual cost of energy depends on two factors: annual energy consumption, expressed in MWh/year, and cost per unit of consumed energy, expressed in Ä/MWh. Picture 1 shows the comparison between interventions of operational and management energy efficiency. The optimization of the energy cost falls in management energy efficiency since it is a goal achievable through strategic choices and corporate management. The minimization of energy consumption, however, lies in operational energy efficiency, since it is obtained through management optimization and the use of com- Picture 1 - Comparison of operational and management energy efficiency measures

10 MARKET INTERVIEW ENERGY SAVINGS year month number Picture 2 Impact of demand on the single components of energy cost [Ferretti, Zanchi, Zavanella, Stimuli for the reduction of energy costs and environmental impact in steel sector, Eco-sustainable steel: an opportunity to be seized, Brescia (Italy), 24 March 2011]. causes an increase in the incidence of fixed energy costs per product unit. Consequently, the measures of operational energy efficiency should be aimed not only at conoccurs regardless of the produced material. As shown schematically in Picture 2, a decrease in market demand determines the reduction of the production volume and therefore taining energy costs, as well as at increasing the flexibility of the production plants, so as to convert the fixed costs in variables, whose incidence per product unit remains constant even in the presence of strong fluctuations in market demand. A simple example in support of this thesis is the installation of an inverter on an electric motor. In the absence of an inverter, the motor always works at full capacity, regardless of energy demand, which is directly related to market demand and therefore the cost of energy consumed by the motor is fixed cost. If an inverter is applied to the engine, the amount of consumed energy varies according to the amount of energy to be delivered: therefore, despite the installation of the inverter determines a slight increase in the system s fixed costs, this effect is largely offset by the zeroing of fixed energy costs consumed by the motor as a result of their transformation into variable costs. Contents as that described above and many other examples, narrated directly by the companies which have implemented them, will be presented at the ITMETAL conference scheduled in December 2012 (info:

11 metef web TV INTERNATIONAL ALUMINIUM EXHIBITION.com the aluminium portal INTERNATIONAL FOUNDRY EQUIPMENT EXHIBITION LIVE IMAGES, INTERVIEWS AND COMMENTS OF METEF-FOUNDEQ 2012 This year the communication of Metef-Foundeq has been enriched by the service Metef Web TV. What better way, than by live images, to communicate the opinions and comments of some of the protagonists of the aluminium and technological metals industry that took part in Metef-Foundeq and Metalriciclo-Recomat 2012! The new Web TV service has been included as a logical completion of communication options offered by Alfin-Edimet, publishers of technical literature and organizer of exhibitions dedicated to the world of metals: the magazines AL-Aluminium and its alloys and PTF Diecasting & Foundry Techniques, the digital editions A&L Digital and P&TF Digital, PTF digital 2012, the periodical online on aluplanet.com, the D.E.M Direct Marketing and the exhibitions. A pochi giorni dall edizione 2012 di Metef Foundeq con Metalriciclo-Recomat la macchina organizzativa della 10 edizione in programma a Verona dall 11 al 14 giugno 2014 è già in moto e molte sono le iniziative in preparazione, in collaborazione con Veronafiere, per raccogliere le sfide del futuro e offrire agli operatori dell industria dell alluminio e dei metalli tecnologici le migliori opportunità di successo. Have a look to the interview with Bodega, Vic, Rosler: Info: Alfin-Edimet - T commerciale@edimet.com

12 MAGAZINE DIGITAL EDITION A&L2012digital Technical communication has changed a lot and will change even more in the future: fast, direct and essential information is needed, so Edimet starts 2012 with AL2012digital, a new digital format of the magazine, a lean product and quick reference that will be published every three weeks in anticipation of the subsequent in-depth exploration of the issues in the hard-copy of the magazine. With this initiative, we are able to reach with absolute ease an audience of over 100,000 companies, even with personalized newsletters. The magazine which, since 1989, has appeared in hard-copy on your desk can now be accessed with one click on your computer. A&L Digital: 18 issues per year posted on aluplanet.com, the aluminium portal with more than 700,000 visits each year, it anticipates the contents of the paper version. It is also conveyed on the network to a database of 25,000 Italian and foreign users, visitors with a profile of Alfin-Edimet exhibitions. SUBSCRIBE FOR FREE it s simple, click here.