Atlantis, The Palm, Dubai, U.A.E December 10, 2014

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Lester Garrett
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1 8A th Successful Middle East Model Iron and of Steel Cost Conference Reduction in the Melt Shop A successful model of cost reduction in the Middle East Iron and Steel Conference Atlantis, The Palm, Dubai, U.A.E December 10, 2014

makers will experience an increased level of competition from China

2 Steel Demand World & China slower but still growing China Domestic demand softens Extra China capacity will be exported Domestic steel makers will experience an increased level of competition from China Source: worldsteel, May 2014; First River estimates

3 China Steel Export Growth Back

Cost reduction a must for survival Profitability Tipping Point Although the collapse of 2008 and

4 US Steelmakers still Feeling the Heat The US steel market is at a key capacity juncture known as the Profitability Tipping Point. Steel imports gaining share as market demand improves. Cost reduction a must for survival Profitability Tipping Point Although the collapse of 2008 and 2009 is behind us, on average the industry is still limping along at capacity utilization levels of percent.

5 Pressure Weighs on Melt Shop Managers 84% of melt shop management professionals said they feel high or very high pressure to generate profits. 75% percent said they think about profits daily. Source: Magnesita Survey Source: Magnesita Survey Audience: 120 technical and operations management professionals in EAF melt shops across North America.

Market-controlled are those costs associated with raw materials and energy that account for the

6 Controlled Costs The Untapped Value Center There are two broad categories of costs in steel production: Market-Controlled and Mill-Controlled. Market-controlled are those costs associated with raw materials and energy that account for the vast bulk of steel production costs, an estimated 70-80%. Mill-controlled costs are made up of the consumables, labor and overhead involved in steel production.

$the variable costs driven by two aspects of steelmaking conversion efficiencies and refractory$ $By continually monitoring and modifying slag processes and refractory applications, mill management$

7 Controlling Your Cost Destiny Of those mill-controlled costs, a surprising percent is made up of the variable costs driven by two aspects of steelmaking conversion efficiencies and refractory applications. By continually monitoring and modifying slag processes and refractory applications, mill management can wield the greatest influence in controlling their costs destiny and profits in steel production.

8 Refractory and Conversion Efficiency Seen as Key Profit Drivers 80% of melt shop management professionals view conversion efficiency as an important driver of profits 74% see refractory as an important profit driver. Source: Magnesita Survey Audience: 120 technical and operations management professionals in EAF melt shops across North America.

$These include slag engineering, energy consumption, yield improvement, refractory consumption, and equipment utilization.$

9 25 Points of Controllable Costs Today s most competitive mills are discovering that they can positively control and influence more than 25 points of value across the entire mill process. These include slag engineering, energy consumption, yield improvement, refractory consumption, and equipment utilization. These profit points live at the center of refractory applications and radiate throughout the broader production process.

$Conversion Efficiency Untapped Value The chemical behavior and reactions between steel, slag and refractory materials have a$ During the last 30 years, there has been considerable progress on steelmaking metallurgy relating to controlling inclusion

During the last 30 years, there has been considerable progress on steelmaking metallurgy relating to controlling inclusion

10 Conversion Efficiency Untapped Value The chemical behavior and reactions between steel, slag and refractory materials have a profound influence on the quality and profitability of each ton of finished steel. During the last 30 years, there has been considerable progress on steelmaking metallurgy relating to controlling inclusion morphology and minimizing inclusion formation, slag engineering to improve metallic yield and alloy recovery, and energy balances to improve the efficiency of energy usage in the EAF.

Energy Consumption EAF operations use heat balances which are based on total energy inputs and outputs to the furnace over the whole tap-to-tap cycle.

11 Energy Consumption EAF operations use heat balances which are based on total energy inputs and outputs to the furnace over the whole tap-to-tap cycle. EAF refining simulation is used to simulate the changes in the slag and metal composition during the refining stage of the EAF process, due to decarburization, as well as Mn and Fe oxidation or reduction. The simulation quantifies the change in %C, %Mn, %FeO and %MnO with time, for specified oxygen and carbon injection parameters.

12 Yield Improvement Metallic yield from the EAF can be improved when slag foaming is optimized. By employing a mass balance approach, and graphically displaying the slag composition results on an Isothermal Stability Diagram, steelmakers can not only monitor their existing slag practice, but also design foamy slags to better suit their operations. Controlling the FeO and MgO content of the slag is key to predictable foaming behavior. The optimization of slag foaming in the EAF can result in yield improvements ranging from 1 to 3%, delivering tremendous savings for the steelmaker.

$Refractory Applications Untapped Value The essential goal in refractory management is to optimize the service life of high-heat operating equipment,$ $Refractory bricks are produced in all shapes and grades by a highly specialized industry.$

13 Refractory Applications Untapped Value The essential goal in refractory management is to optimize the service life of high-heat operating equipment, maximize furnace uptime and generate the lowest possible cost per ton of steel produced. Refractory bricks are produced in all shapes and grades by a highly specialized industry. They are designed with a combination of critical physical properties to withstand the high temperatures and rapidly changing conditions. The manufacture of refractories is a sophisticated industrial process requiring substantial capital and specialized technical skills.

14 Capacity Utilization

15 Total Refractories Consumption

16 Consumables Example for a 330,000 tons per year 50 ton AC EAF

17 Questions Loom More than 1/3 of melt shop management professionals expressed concerns about their team s capability to achieve optimal results from refractory and conversion efficiency Source: Magnesita Survey April 2011 Audience: 120 technical and operations management professionals in EAF melt shops across North America.

18 CPP - Collaborative Value Creation Methodology - Increased business process performance -Improved focus on core capabilities - Improved visibility and transparency -Enhanced reporting and decision making Cash Cost - Refractory consumption reduction -Improved conversion efficiency -Reduced downtime -Reduced consumption of other consumables Safety, Quality, Environment - Increased asset availability -Refractory inventory reduction -Improved use of working capital - Improved quality -Enhanced safety of operations and personnel -Risk mitigation

19 Magnesita Performance Based Models Worldwide Sweden 1 Canada 3 UK 3 Germany 2 Belgium 1 Romania 1 USA 9 Spain 1 Italy 1 China 3 Mexico 4 Colombia 3 Ecuador 1 Peru 1 Brazil 26 Argentina 3 Uruguay 1 Chile 1 Steel Production: more than 70 million tons / year

$Shared Core-Process Magnesita Goals Steelmaker Actions Improve Refractory$

20 Shared Core-Process Magnesita Goals Steelmaker Actions Improve Refractory Performance Improve Steelmaking Process Improve Equipment Availability 24

21 EAF Improvements Influence in refractories consumption 1. Replacement of EAF bottom shell ( new diameter ) 2. Slag conditioning ( good practice of foaming slag ) 3. Use of premium MgO-C brick ( 100% large crystal fused grain ) in the working lining 4. New system for temperature bottom shell monitoring 5. Daily hot repair practice of banks using the spreader machine 6. Lining design of banks : slag / steel level working in contact with banks ( not bricks ) 7. Use of MgO-C bricks with high oxidation resistance in the injectors region 8. Use of pre shaped block in the slag door zone 9. Use of metallic ring in the shell ( increasing the working lining wall stability ) 10. Reduction of loses and accidents by hydration (Permanent lining with Basimag-HR) 11. Development of small size brick shape for upper layer assembly

22 Ladle Improvements Influence in refractories consumption 1. Ladle shell replacement/ refurbishment 2. Lip rings maintenance plan 3. Slag line bricks and well blocks refractory practice repair 4. Monolithic back fill Stampmag-BFP 5. MgO-C bricks in the SL safety lining 6. Flexibility to specify correct refractory lining according to operational conditions 7. Efficient ladles thermo cycle and pre heating curve lining 8. Slag coating formation 9. Mechanical cleaning - Lip rings / bottom 10. Gas stirring panel and SIG V 11. Plug puller and Nozzle puller

$CPP The Way Forward The CPP model has emerged as new way of delivering greater productivity, efficiency and cost-savings in the refractory process at a time when steel manufacturers$

23 CPP The Way Forward The CPP model has emerged as new way of delivering greater productivity, efficiency and cost-savings in the refractory process at a time when steel manufacturers need every edge they can get. It is quickly establishing itself as a new competitive advantage for savvy steel makers. It is commonly being referred to as the way forward for the industry.

Magnesita Dubai 33 Magnesita Phone: + 971 04 205-2999 Dubai Airport Free

24 Magnesita Dubai 33 Magnesita Phone: Dubai Airport Free Zone, Building 5B West, 438 Dubai, UAE Please Visit Us at Booth Number 8

Lecture 14 Modern trends in BOF steelmaking

Lecture 14 Modern trends in BOF steelmaking Contents: Post combustion Technology of post combustion Potential post combustion issues Slag splashing What is required for slag splashing Liquidus temperature