Metals conversion workshop. Saudi Aramco: Public

Transcription

1 2017 Metals conversion workshop

2 Metals conversion agenda Session Title Presenter Opening Saudi Aramco (ID&SSD), Nasser Alrushoud Value Propositions 1 and 2: Open-die and Closed-die forgings Cameron, Sim Tze Wei Value Propositions 3 and 4: Investment and Sand castings Saudi Aramco (ID&SSD), Nasser Alrushoud

3 Disclaimer The next slides contain forward-looking statements regarding future events based on current expectations, estimates, forecasts, and projections. The data is subject to updating, revision, further verification and amendment without notice. No reliance may be placed for any purpose on the information or opinions contained in this presentation or any other document or statement, or on the completeness, accuracy or fairness of such information or opinions therein. No representation or warranty, express or implied, is made or given by or on behalf of Saudi Aramco or its employees, or any other person as to the accuracy or completeness or fairness of the information or opinions contained in this presentation and no responsibility or liability is accepted by any of them for such information or opinions or for any errors, omissions, misstatements, negligent or otherwise, or for any communication written or otherwise, contained or referred to in this presentation.

4 Metals conversion agenda Session Title Presenter Opening Saudi Aramco (ID&SSD), Nasser Alrushoud Value Propositions 1 and 2: Open-die and Closed-die forgings Cameron, Sim Tze Wei Value Propositions 3 and 4: Investment and Sand castings Saudi Aramco (ID&SSD), Nasser Alrushoud

5 Metals conversion agenda Session Title Presenter Opening Saudi Aramco (ID&SSD), Nasser Alrushoud Value Propositions 1 and 2: Open-die and Closed-die forgings Cameron, Sim Tze Wei Value Propositions 3 and 4: Investment and Sand castings Saudi Aramco (ID&SSD), Nasser Alrushoud

6 Saudi Aramco is seeking to localize metals manufacturing, with focus on methods to manufacture energy products Metals techniques used to manufacture energy products Method CASTING Technique Investment Casting Sand Casting Market size Ktpa 1 US$ Mn Metals Manufacturing Focus of this section Open-Die FORGING Closed-Die Kilo Ton per Annum Rolled-ring

7 We followed a bottom-up approach for estimating casting & forging demand and market volume in the Kingdom Bottom-up market estimation methodology Components Inputs Outputs Turbines Valves Wellhead equipment Compressors Blowout preventers Market reports (Technavio, Ihs, etc.) Saudi Aramco Supplier survey responses KSA Market size Casting & forging as % of value Production method distribution Total casting & forging demand Demand by production method Flanges Gears Material price Volume by production method

8 Open-die forging represents an attractive opportunity given the current supply gap and expected demand growth in the Kingdom The opportunity Establish a forge and fabrication shop to provide open-die forging components used in the energy sector The business case 1. Current KSA demand of opendie forgings is estimated at 47k tons/annum for energy products 2. Forecasted 3% annual growth for both KSA and GCC 3. Attractive cost base including one of the lowest logistics, land and utilities costs amongst EU & NA production hubs

9 The total market size for categories that drive demand for open-die forging is estimated to be US$ 2.7 billion in KSA Open-die forging - key demand drivers Types and sub-types 2016 Market size of the category (US$ Million) Turbines Pelton, Turgo and Crossflow 1,151 Electric motors Single Phase and Three Phase AC 441 Wellhead equipment Casing head, spools 320 Pumps Positive displacement, impulse, velocity, gravity, steam and valve-less pumps 275 Ball valves Single, three-piece, split, top entry, and welded 204 Gas compressors Positive displacement - Reciprocating, Rotary Dynamic Centrifugal and Axial 190 Blowout preventers Annular, Ram 120 Source: Technavio, IHS, Saudi Aramco analysis

10 Open-die forging historic demand in KSA was estimated at ~47 Ktpa or ~US$ 304 million in 2016 KSA market size evolution (Ktpa, US$ Million) % Volume (Ktpa) Open-die forging represents 47 Ktpa or approximately half of the total forging market Market size (US$ Million) $896 $xxx $965 $1,0 $1, There exist small-sized fabrication shops in the KSA however there are no large-scale and advanced open-die forging players Source: Saudi Aramco Data, Saudi Aramco analysis

11 The total demand for open-die forging in the Kingdom is estimated at ~47 KTPA, driven by Valves and Wellhead demand Estimated open-die forging demand per category (2016) Open-die forging categories Market demand (Ktpa) Ball Valves 13.0 Wellhead Equipment 11.2 Electric motors 7.4 Turbines 6.4 Pumps 3.8 Blowout Preventers (ram) 2.7 Blowout Preventers (annular) 1.6 Compressors (Gas) 1.3 Total 47.4

12 The open-die forging GCC market is expected to reach 118 Ktpa by 2030 GCC open-die forging market expected size evolution (Ktpa) Rest of GCC KSA 3% 118 The KSA open-die forging market is forecasted to grow at 3% annually until Saudi Arabia account for 53% of the open-die forging market in GCC, Technavio, Icon group, Saudi Arabia General Authority of Statistics

13 Closed-die forging represents an attractive opportunity given the current supply gap and expected demand growth in the Kingdom The opportunity Establish a forging and fabrication shop to provide closed die forging for components of energy products The business case 1. Current KSA demand for closed-die forging is estimated at 48k tons/annum for energy products 2. Forecasted 3% annual growth for both KSA and GCC 3. Attractive cost base including one of the lowest logistics, land and utilities costs amongst EU & NA production hubs

14 The total market size for categories that drive demand for closeddie forging is estimated at US$ ~2.3 billion in KSA Closed-die forging - key demand drivers Types and sub-types 2016 Market size of the category (US$ Million) Turbines Pelton, Turgo and Crossflow 1,151 Valves Ball, check, gate 367 Wellhead equipment Casing head, spools 320 Gas compressors Positive displacement - Reciprocating, Rotary Dynamic Centrifugal and Axial 190 Blowout preventers Ram, annular 120 Flanges Carbons steel and stainless steel flanges 104 Gears Spur, helical, bevel, worm, Herringbone and Rack and pinion 94 Source: Technavio, IHS, Saudi Aramco analysis

15 Closed-die forging historic demand in KSA was estimated at ~48 Ktpa or ~US$ 179 million in 2016 KSA market size evolution (Ktpa, US$ Million) % Volume (Ktpa) Closed-die forging represents approximately half of the total forging market in the Kingdom Market size (US$ Million) $896 $xxx $965 $1,0 $1, There exist small-sized fabrication shops in the KSA however there are no large-scale and advanced closed-die forging players

16 The total demand for closed-die forging is estimated at ~48 Ktpa, mainly driven by Flanges and Valves demand Estimated closed-die forging demand per category (2016) Closed-die forging categories Market demand (Ktpa) Flanges 20.9 Ball valves 6.0 Gate valves 5.4 Turbines 6.4 Wellhead Equipment 3.2 Gears 2.7 Check valves 1.6 Gas compressors 0.8 Blowout Preventers (ram) 0.7 Blowout Preventers (annular) 0.4 Total 48.0

17 The closed-die forging GCC market is expected to reach 119 Ktpa by 2030 GCC closed-die forging market expected size evolution (Ktpa) Rest of GCC KSA 3% 119 The KSA closed die forging market is forecasted to grow at 3% annually until Saudi Arabia account for 53% of the closed-die forging market in GCC, Technavio, Saudi Arabia General Authority of Statistics

18 There is potential for localization across all the stages of the open-die and closed-die forging value chain Open-die and closed-die value chain Tier-1/2 Tier-3 Tier-2/3 Tier-2 Design Input materials Forging Finishing Operations and maintenance Gaps Limited capability of tool design, which is currently taking place outside KSA Plans to localize production of steel billets and ingots at high scale Efforts to localize forging lubricants such as graphite and coating based Limited forging capabilities in the Kingdom, limited to Flanges manufacturing Lack of investments in technological advancements such as nextgeneration forging technologies (NFG) Lack of advanced forging finishing operations in the Kingdom including machining and heat treatment Limited maintenance, repair, and operations by third-party service providers to serve the forging industry in the Kingdom

19 There are three sets of input materials used in the forging process: Billets/ ingots, die materials, and lubricants Input materials Forgings input materials Metals Lubricants Die materials Metals typically used for investment casting include Iron Steel Aluminum There are different types of lubricants employed in forging: Water-based lubricants Glass coating Graphite oils and greases Die materials commonly used include: Chromium Tungsten Steel Plans to stablish steel billets and ingots manufacturing facilities Currently made available by vendors Ingots and Billets to be available in the Kingdom by 2018/ 2019 Ongoing plans to localize lubricants in the Kingdom

20 Saudi Aramco will support localization efforts of state-of-the-art forging facilities, including NGF Forging Next Generation Forging (NGF) Automated forging Rapid Prototyping NGF Computer simulation Advantages: Lower material consumption Increased flexibility Reduction in environmental impact Increased efficiency in forging processes Reduction in overall production costs Improved materials and/or material properties Next generation forging technologies are developed to help companies reduce their energy dependency, improve their environmental footprint, and gain a competitive edge in the forging industry KSA based companies can acquire and sustain competitive advantages by incorporating advanced forging technologies European commission.

21 In addition to performing rough machining, the forging company can also extend value-add machining services to the KSA market Finishing Equipment used in machining operations Horizontal Surface Grinding Machine Machining modules for turning & drilling operations Marking Machine Lathe Machine Preparation Equipment Milling Machine Band Saw Grinding Machine CNC Machining Centers Precision Machining CNC Turning Center CNC Horizontal Lather Advanced rough machining is conducted in-house by forging companies.

22 There is need to set-up high scale heat treatment facilities to support local forging operations Finishing Heat treatment techniques Heat treatment processes: Normalizing Annealing Quenching Induction hardening Heat treatment objectives: Relieve of internal stresses (produced by machining) Refinement of grain structure Attainment of improved mechanical and physical properties Equipment: Case hardening Wash-rinse Gas fired furnaces Electrically heated furnaces Solution treatment Quench or cooling equipment Material handling systems Testing equipment Heat treatment is usually integrated as an in-house capability by open-die and closed-die forging companies.

23 The forging company can either perform testing inhouse or outsource to third-party providers in the Kingdom Operations & maintenance Forging required testing capabilities Mechanical testing methods Tensile Dynamic tear Hardness Crack Tip Opening displacement Fracture toughness Fatigue, crack growth Charpy impact Nil-Ductility Transition Temperature (NDT) Metallurgical testing methods Metallography Grain size Microcleanliness Macrostructure Corrosion Optical emission spectroscopy Phase identification and phase count NDT testing methods Ultrasonic Inspection (UT): Contact A-Scan Testing, Phase Array Magnetic Particle (MT): Wet Fluorescent, Dry Powder Liquid Penetrant (PT): Water Washable Fluorescent, Visible Dye Elemental Analysis using Optical Emission and X-ray Fluorescence Spectrometry Source: Scot Forge, Saudi Aramco analysis.

24 Next step is to connect with OEMs across categories. Saudi Aramco is willing to facilitate and support forging localization Potential consumers of forgings in the Kingdom

25 Metals conversion agenda Session Title Presenter Opening Saudi Aramco (ID&SSD), Nasser Alrushoud Value Propositions 1 and 2: Open-die and Closed-die forgings Cameron, Sim Tze Wei Value Propositions 3 and 4: Investment and Sand castings Saudi Aramco (ID&SSD), Nasser Alrushoud

26 Saudi Aramco is seeking to localize metals manufacturing, with focus on methods to manufacture energy products Metals techniques used to manufacture energy products Method Technique Market size Ktpa 1 US$ Mn CASTING Investment Casting Sand Casting Metals Manufacturing Focus of this section Open-Die FORGING Closed-Die Kilo Ton per Annum Rolled-ring

27 Investment casting represents an attractive opportunity given the large supply gap and multiple possible value chain plays The opportunity Establish local manufacturing of investment casting plant to serve demand of energy products in the Kingdom and the GCC The business case 1. Current KSA demand of investment casting is estimated at 79 ktpa for energy products 2. Forecasted 3% annual growth for both KSA and GCC 3. Attractive cost base including one of the lowest logistics, land and utilities costs amongst EU & NA production hubs

28 The total market size for products that drive demand for investment casting is estimated to be US$ ~2.4 billion in KSA Investment casting - key demand drivers Types Market size Turbines Motors Pumps Gas compressors Valves Gears Turbines Electric motors casing Casing, impellers, stuffing box, discharge head, bowl, suction pipes Stainless steel and Nickel-based alloy number 214 Gate valves Butterfly valves Globe valves Check valves Gears US$ 1,151 million US$ 411 million US$ 275 million US$ 190 million US$ 123 million US$ 73 million US$ 43 million US$ 40 million US$ 94 million Source: Technavio, IHS, Saudi Aramco analysis

29 Investment casting historic demand in KSA has been growing at 3% annually, reaching ~79 ktpa in 2016 KSA market size evolution (Ktpa, US$ Million) +3% Volume (Ktpa) Investment casting represents ~79 Ktpa or 58% of the total casting market Market size (US$ Million) $896 $xxx $965 $1,0 $1, There exist small-sized fabrication shops in the KSA however there are no large-scale and advanced investment casting players

30 The largest consumers of investment casting in KSA are pumps, electrical motors, gate valves and turbines Estimated investment casting demand per category (2016) Categories Market demand (KTPA) Pumps 32.6 Electric motors 22.1 Gate valve 7.2 Turbines 6.4 Butterfly valve 2.8 Gears 2.7 Check valve 2.5 Globe valve 1.6 Compressors (Gas) 1.1 Total 78.8

31 Going forward, the investment casting market in KSA and GCC is expected to grow at 3% CAGR, reaching 226 ktpa by 2030 GCC investment casting market expected size evolution (Ktpa) Rest of GCC KSA 226 3% 195 KSA is expected to grow in line with rest of GCC maintaining a constant market share of ~53%

32 Sand casting represents an attractive opportunity given the current supply gap and expected demand growth The opportunity Establish local manufacturing of sand casting plant to serve demand of energy products in the Kingdom and the GCC The business case 1. KSA demand for sand casting is estimated at ~58 ktpa in 2016 for energy products 2. Forecasted 3% annual growth for both KSA and GCC 3. Attractive cost base including one of the lowest logistics, land and utilities costs amongst EU & NA production hubs

33 The total market size for products that drive demand for sand casting is estimated to be US$ ~757 million in KSA Sand casting - key demand drivers Types Market size Pumps Bearing brackets US$ 275 million Ball valves US$ 204 million Gate valves US$ 123 million Valves Butterfly valves US$ 73 million Globe valves US$ 43 million Check valves US$ 40 million Source: Technavio, IHS, Saudi Aramco analysis

34 Sand casting historic demand in KSA was growing at a CAGR of 3% annually and reached ~58 Ktpa in 2016 KSA market size evolution (Ktpa, $ MM) % Volume (Ktpa) Sand casting represents 58 Ktpa or ~50% of the total casting market in KSA Market size (US$ Million) $896 $xxx $965 $1,0 $1, There exist small-sized fabrication shops in the KSA however there are no large-scale and advanced sand casting players

35 The main drivers for sand casting demand are gate, butterfly and ball valves Estimated sand casting demand per category (2016) Categories Market demand (Ktpa) Gate valves 20.1 Butterfly valves 12.4 Ball valves 8.7 Globe vales 7.3 Check valves 6.6 Pumps 2.8 Total 57.7

36 The GCC sand casting market is expected to grow at a CAGR of 3% to reach 166 ktpa by 2030 GCC sand casting market expected size evolution (Ktpa) Rest of GCC KSA 3% The KSA sand casting market is forecasted to grow at 3% annually until Saudi Arabia account for ~50% of the sand casting market in GCC

37 There is potential for localization across all the steps of the casting value chain Casting value chain analysis Tier-1/2/3 Mold and pattern manufacturing Input materials Casting Value-add services Investment Casting Sand Casting Molds are precision engineered to specs and could be designed and printed in- Kingdom Sufficient availability of ceramics in KSA Limited availability of custom wax blends High potential to manufacture molding sands as KSA has a high volume of silica and binders Steel billets and ingots to be manufactured locally by 2018/2019 Aluminum is available in sufficient volumes Future plans to produce copper in the Kingdom Absence of large scale casting equipment in KSA Limited process automation capabilities for precision casting Potential local manufacturing of key equipment e.g. metal melting furnace Limited presence of metal testing facilities Limited heat treatment facilities (autoclaves etc.) in KSA Limited availability of CNC lathes and other precision machining equipment for finishing Limited presence of competent technical advisors in the casting field

38 Ceramics and binders are available in-kingdom and thus the investment casting molds can be manufactured locally Mold and pattern manufacturing Investment casting mold manufacturing Wax Ceramic core and binder Molten Metal Wax Injection and precast Ceramic shell making Wax melting furnace Metal casting Post casting Wax Ceramics and binders Waxes are usually paraffin waxes and are of three kinds Filled Non filled Soluble waxes Paraffin waxes are further compounded to make investment casting waxes Ceramic core consists of materials consist of alumina, zircon, zirconia and fused silica Binders include colloidal silica, colloidal zirconia and colloidal yttria

39 Saudi Arabia is a net exporter of Silica sand and thus there exist an opportunity to manufacture sand molds in-kingdom Mold and pattern manufacturing Sand casting mold manufacturing Mold materials Materials Available in-kingdom Molding sands Binders Silica Olivine Chromite Zircon Chamotte Clay Oil Resin (i.e., urea formaldehyde) Sodium silicate Saudi Arabia is an exporter of Silica Sand Additives Iron oxide

40 Steel scrap is available, while other steel forms, aluminum, and copper will be produced locally by 2018/2019 Input materials Casting input materials Steel Aluminum Copper / Brass Availability of local steel scrap. The government has imposed a ban on ferrous scrap exports to support industry Access to Middle East market, a net exporter of metal scrap Plans to make ingots and billets available in the Kingdom in 2018/2019 Ma aden Aluminum is the largest and most efficiently integrated Aluminum complex in the world JV partnership between Ma aden and Alcoa ensures long-term stability and world class technological support as well as globally accepted standards Ma aden has become one of the lowest cost supplier of aluminum raw material products in the world Maaden Barrick Copper Company (MBCC) set-up to mine and process copper ore from Jabal Sayid copper mine Estimated average annual production will be over 45,000 tonnes of copper concentrate per year Maaden Barrick Copper Company is a joint venture between Maaden and Barrick Gold Corporation (one of the largest gold mining companies in the world)

41 Equipment for mold manufacturing and casting process can be localized in the Kingdom Casting equipment to be potentially localized Wax Injection and precast Moving table Wax work bench Wax trees Casting Metal melting furnace Ceramic shell making Post casting Sanders Slurry tanks Stiffening machine Grinding station CNC Heat treating Wax melting and sand molding Furnace Thermocouple probes Inspection and testing Universal testing machine Micrometer

42 Value-add services such as cleaning, inspection, testing, and heat treatment can be either conducted inhouse or outsourced Value-add services Investment and sand casting value-add services Cleaning Cleaning involves removal of sand, scale, and excess metal from the casting Burned-on sand and scale are removed to improved the surface appearance of the casting Excess metal, in the form of fins, wires, parting line fins, and gates, is through precision cleaning for both sand and investment casting Inspection and maintenance Testing Inspection of the casting for defects and general quality is performed Defects include: mold shifts, core shifts, mold cracks, gas cavities, shrinkage cavity Maintenance includes maintaining the electrical equipment required for scaling investment and sand casting operations Accreditations including: ISO / TS Thermal analysis Sand and wax testing Metallographic examination Physical properties analysis Heat treatment Normalizing Annealing Induction hardening Case hardening Quenching Solution treatment

43 Next step is to connect with OEMs across categories. Saudi Aramco is willing to facilitate and support casting localization Potential consumers of castings in the Kingdom

44 Please direct all inquiries to: Nasser K Alrushoud Local Industrial Development Saudi Aramco nasser.alrushoud@aramco.com Office number: We invite you to engage with the iktva program and grow your business in Saudi Arabia