Overview of DRI/HBI market developments Yuri Mishin Metalloinvest

Transcription

1 World DRI & Pellet Congress Overview of DRI/HBI market developments Yuri Mishin Metalloinvest April, 2013, Abu Dhabi 1

2 Disclaimer These materials contains certain forward-looking statements, particularly those relating to anticipated demand and consumption, global economic recovery, commodity prices, management aims and objectives, strategy, production, anticipated investment and the anticipated completion of previously announced transactions. Metalloinvest will not update these statements to reflect events and circumstances occurring after the date hereof. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that will or may occur in the future. Actual results may differ from those expressed in such statements depending on a variety of factors, including future levels of industry product supply, demand and pricing, operational problems, general economic conditions, political stability and economic growth in relevant areas of the world, changes in laws and governmental regulations, exchange rate fluctuations, development and use of new technology, changes in public expectations and other changes in business conditions, the actions of competitors, natural disasters and adverse weather conditions, wars and acts of terrorism or sabotage, other factors discussed elsewhere in this document, as well as many other risks affecting Metalloinvest and its operations. These materials does not constitute or form part of any advertisement of securities, any offer or invitation to sell or issue or any solicitation of any offer to purchase or subscribe for, any securities of Metalloinvest in any jurisdiction, nor shall they or any part of them nor the fact of their presentation, communication or distribution form the basis of, or be relied on in connection with, any contract or investment decision. No representation or warranty, express or implied, is given by Metalloinvest, its affiliates or any of their respective advisers, officers, employees or agents, as to the accuracy of the information or opinions or for any loss howsoever arising, directly or indirectly, from any use of these materials or their contents. 2

3 Metalloinvest Group Mining operations Steel operations Lebedinsky GOK Mikhailovsky GOK Main products Crude ore Concentrate Pellets HBI Million. Mt (2012) Russia Oskol Electro-Metallugical Co. OEMK Integrated I&S works, based on DR technology DRI 2.8 mln. mt Steel 3.3 mln. Mt Long products, SBQ Ural Steel Integrated I&S works Pig Iron 2.1 mln. Mt Steel 2.3 mln. Mt Flat and long products 3

4 Metalloinvest iron ore reserves Metalloinvest 14.6 bn t c. 150 years Cliffs Natural Resources 3.2 bn t Ferrexpo 1.5 bn t ENRC 1.3 bn t Vale 15.1 bn t c. 40 years Kumba 0.8 bn t FMG 2.2 bn t c. 30 years Rio Tinto 2.8 bn t c. 15 years BHP Billiton 3.0 bn t c. 20 years - estimated reserve life based on 2012 iron ore mined production, CRU 4 Note: Proven and probable reserves on a JORC equivalent basis (according to companies and CRU data for )

5 Mikhailovsky GOK Key asset holding structure changes Reserves JORC 10.6 bn.t. ferruginous quartzite Beneficiation: WMS, concentrate Fe 65.1%; after flotation - high-grade concentrate Fe 69.7% 2 Pellet plants New Pellet plant #3 of 5 mln tpy capacity is under construction; planned start up in Key production figures in 2012: Crude Iron ore 50.3 mt Concentrate 17.0 mt Pellets 10.2 mt Access to CIS and Europe by railroad Access to Far East markets Asset location Russia Ukraine Black Sea Moscow Supplies to intragroup and 3d parties Russian customers Railroad Samara route to China Volgograd Company Foundation Start of iron ore concentrate production Development history 1 Bt of Ore Extracted Planned start up Of Pellet Plant MGOK I stage Start-Up Pellet Plant Commissioning Floatation technology established 5

6 Lebedinsky GOK Key asset holding structure changes The largest integrated iron ore mining and processing company in Russia Reserves JORC 4.0 bn.t. ferruginous quartzite. Beneficiation: WMS, concentrate Fe 68.4% ; after additional grinding and WMS - high-grade concentrate Fe 70% Pellet plant, 2 HBI plants: HYL and Midrax Key production figures in 2012: Crude Iron ore 51.2 mt Concentrate 21.2 mt Pellets 8.8 mt HBI 2.5 mt Baltic Sea Access to CIS and Europe by railroad Access to Europe, Middle East and Far East markets Development history Asset location Access to Europe Russia Ukraine Black Sea Moscow Supplies to intragroup and 3d parties Russian customers Railroad Samara route to China Volgograd Company Foundation Pellet Plant Commissioning HBI-1 achieved Design Capacity HBI Plant-2 Start-up LGOK I stage Start-Up Secondary Beneficiation Plant Constructed 1 Bt of Ore Extracted Start of HBI-3 Construction 6

7 Lebedinsky GOK Development of HBI production HBI#1 HBI #2 HBI screening HBI-2 HBI-3: Start of HBI-1 commissioning negotiations with commissioning Contract for HBI-3 Technology : equipment suppliers, Technology: HYL III was signed MIDREX infrastructure Capacity: 1.0 mtpa Capacity : 1.4 mtpa preparation General Information Characteristics HBI-1 HBI-2 HBI-3 Technology HYL Midrex Midrex Start of production (exp.) Productivity, tph Capacity, mtpa (exp.) Consumption of natural gas, m 3 /t Metallization, % 93.8% 94.4% - Carbon content, % 1.2% 1.4% Modernization of HBI-2 Planned start up of HBI-3 Capacity : 1.8 mtpa View on HBI facilities 7

8 Production capacities: Pellets and HBI Production volumes Shipments by product Pellets 22,6 43% 34% 27,6 +22% 51% 5,2 49% 57% 66% HBI/DRI 7,2 +39% 8% 15% E E HBI/DRI Pellets Iron ore 8 Note: 2016E production capacity following implementation of the first phase of the strategic programme

9 The use of DRI and HBI in the Iron & Steel Industry Primary Feed Material for EAF Supplemental Feed Material for EAF Dilutes residuals in scrap to achieve specifications for flat products, wire rod, and SBQ Allows use of lower scrap grades for basic long products to achieve lowest cost/ton of liquid steel Cold Charge for BOF Areas where hot metal, scrap are limited Trim Coolant for BOF Adds Fe units, reduces slag volume (vs. flux materials) Precise temperature control, predictable mass & heat balances Supplemental Charge for BF Adds Fe units, increases productivity (vs. limestone) Reduces coke rate, lowers CO 2 emissions 9

10 HBI/DRI Value in Use in EAF - Metallics VIU study by the International Iron Metallics Association (IIMA) together with US steel industry expert Jeremy Jones. - The first stage: estimation of harmful impurities influence. - The calculation was based on typical content of copper and historical price evaluations for various scrap grades, HBI and pig iron on the US market for the last 10 years. - Value-in-use was determined by calculating the cost of a ton of premium scrap compared to the cost of a blended ton of OBM and lower grade scrap to achieve the same Fe input and copper level as that contained in the higher grade scrap. - The analysis has shown that considerable savings can be accumulated through this replacement. The range of savings for HBI was 43$ to 331$ per ton of metallics blend over the 10 year period. - The work on metallics VIU model continues; other factors will be taken into account. For more information contact IIMA: 10

11 Merchant DRI/HBI producers capacity (Mt) Russia LGOK 2,5 HBI Libya Trinidad and Tobago AlcelorMittal 2,7 HBI/DRI Nucor 2 HBI LISCO 0,65 HBI/DRI India Welspun Maxsteel 0,9 HBI/DRI Venezuela Oman Comsigua 1,3 HBI Matesi 1,5 HBI Venprecar 0,9 HBI CVG FMO 1 HBI Orinoco Iron 2,2 HBI Shadeed 1,5 HBI/DRI Malaysia Antara Steel 0,9 HBI Lion DRI 1,54 HBI/DRI 11

12 World DRI/HBI trade 2012 Export Import 0,81 0,47 2,14 Russia 1,39 2,47 United States 0,99 Trinidad and Tobago EU Venezuela Middle East 1,72 China Other Asia Malaysia Other 1,72 2,41 Other 1,07 1,88 In 2012 the international HBI market totaled 8,5 mln. t Source: IIMA 12

13 DRI/HBI production developments During the last 10 years in the World outside China DRI production was growing faster than pig iron production. Availability of natural gas and DR grade iron ore Capital and operational costs advantage of DRI projects. Carbon footprint of DRI is 1/3 of pig iron production in BF. DRI boom in the USA due to shale gas developments. Sustainability of shale gas production in the USA and in other countries. DR grade pellets / lumps availability. 13

14 Factors influencing HBI market developments Further increase of EAF steel production. Development of EAF technology. Plant operators attitude. Optimization of EAF production costs by adjusting metallics mix. Availability of prime scrap grades. Expected increase of scrap collection in China How would it effect HBI market? 14

15 Thank you! 15