SALE OF 0.5 MTPA MINI BLAST FURNACE COMPLEX (Southeast Asia) 1
Executive Summary valuejunction, a business unit of mjunction (A SAIL Tata Steel joint venture) is appointed by a leading steel manufacturer in Southeast Asia to sell their idle assets. mjunction services limited is a 50:50 venture promoted by Steel Authority Of India Limited and TATA Steel. Founded in February 2001, it is today not only India's largest ecommerce company (having etransacted worth over Rs.2,00,000 crores till date) but also runs the world's largest emarketplace for steel. For more information please check our website (http://www.mjunction.in/ ). Asset Overview: A 0.5 MTPA blast furnace complex which was installed in 2009-10 period but was decommissioned in the year 2012. Working volume of the mini blast furnace is 400 m 3 and its maker is Huatian Engineering & Cooperation. In addition to this there is a sinter plant having annual production capacity of 635,500 tonnes along with a pig casting machine. A BF fired captive power plant having capacity in the range of 12-15 MW is also there. The machinery are as good as new and the output at the time of decommissioning the BF was approximately 1300 t/day. Raw Material Yard Sintering Plant Mini Blast Furnace Area Power Plant Figure 1: Plant Map 2
Global Outlook for steel Global demand is forecasted to grow at about 3.3%. However, more demand growth is expected to come from outside of China as the Chinese Government pushes through economic restructuring with a focus on private consumption. Outlook for steel & economic growth in 2014 mapped against the location of major steel markets Source: HIS Global-insight Future Demand Projection 1. As demand continues to shift to developing nations, the steel sector is directed towards China, with some focus on Brazil, Russia and India 2. With Africa moving towards urbanization, it may happen that future demand from Africa will completely shift the landscape 3. Growing middle class is driving steel demand in construction and real estate. Increasing investment in construction and infrastructure led to an 8% y-o-y increase in global demand for long products in 2013. Asian market captures around 40% of total construction spending 4. There will be an increasing demand from the automotive sector of both developing and the developed countries. The US, Brazil, Japan and China are the hotspots in the automotive sector with calculated annual growth of between 5% to 11% forecast to 2016 5. Looking upstream, increased capital investment in oil & gas sector will also drive steel demand Raw Material Finding Opportunity in Volatility Iron Ore - Global iron ore prices were in the range of $68-70 in December 2014. Since then it has been declining from $66-67 per ton in January 2015 to $62-64 (February), $56-58 (March), $51-53 (April). In May, the prices inched up to $61-63 but, June rates again declined to the $52 range. While 3
5-Jun-14 26-Jun-14 17-Jul-14 7-Aug-14 28-Aug-14 18-Sep-14 9-Oct-14 30-Oct-14 20-Nov-14 11-Dec-14 1-Jan-15 22-Jan-15 12-Feb-15 5-Mar-15 26-Mar-15 16-Apr-15 7-May-15 28-May-15 18-Jun-15 9-Jul-15 RS./TON 02-Jun-14 16-Jun-14 30-Jun-14 14-Jul-14 28-Jul-14 11-Aug-14 25-Aug-14 08-Sep-14 22-Sep-14 06-Oct-14 20-Oct-14 03-Nov-14 17-Nov-14 01-Dec-14 15-Dec-14 29-Dec-14 12-Jan-15 26-Jan-15 09-Feb-15 23-Feb-15 09-Mar-15 23-Mar-15 06-Apr-15 20-Apr-15 04-May-15 18-May-15 01-Jun-15 15-Jun-15 29-Jun-15 13-Jul-15 $/TON the global demand is going down, particularly in China, iron ore production is not slowing. Because of this phenomenon there is lot of inventory in the market and it is impacting the prices of iron ore. 110 103 96 89 82 75 68 61 54 47 40 Iron ore fines price trend Fines Indian Market- Iron ore miners have slashed prices of lumps or high grade iron ore owing to subdued demand in the domestic market. State-owned NMDC has slashed the prices of lumps by as much as 30% since January. The country's largest miner for the metal, used in the production of steel, has slashed iron ore fines prices steeper, by 46% during the period. Odisha miners like Rungta Mines also reduced lumps offers by 48% in the last one year because of higher inventory levels. Now that the government has allowed iron ore mining in Karnataka and Goa and increased cap for mining in Odisha, inventory levels would further rise putting pressure on price levels. Iron ore fines price trend in India 4000 3750 3500 3250 3000 2750 2500 2250 2000 1750 1500 NMDC Fines Rungta Blue Dust Source: India Steel Market Watch (ISMW) 4
Coal - Coal prices across the category are down significantly during the past one/two year primarily on account of reduced demand from China, which led to a kind of oversupply position. Other factors such as less than expected growth in steel production throughout the world also impacted coal prices. Coal Price Trend 140.00 120.00 100.00 80.00 60.00 40.00 20.00 - South African Steam Coal (6000 Kcal) South African Steam Coal (5500 Kcal) Australian Steam Coal (6300 Kcal) Indonesian Steam Coal (5900 Kcal) Indonesian Steam Coal (5000 Kcal) Indonesian Steam Coal (4200 Kcal Indonesian Steam Coal (3800 Kcal) Hard Coking Coal (Australian) Price/ton (in $ and FOB) As on, July 18, 2013 Price/ton (in $ and FOB) As on, July 22, 2014 Price/ton (in $ and FOB) As on, July 14, 2015 Price/ton (in $ and FOB) As on, July 20, 2015 Price/ton (in $ and FOB) As on, July 21, 2015 Source: India Coal Market Watch (ICMW) So with the help of correct sourcing strategy and by using instruments such as derivatives an investor can take advantage of this downward trend in raw material prices. 5
Metals and Mining Advantage India Demand growth Rise in infrastructure development and automotive production driving growth in the sector Power and cement industries also aiding growth in the metals and mining sector Demand for iron and steel is set to continue, given the strong growth expectations for the residential and commercial building industry Attractive opportunities There is significant scope for new mining capacities in iron ore, bauxite, and coal Untapped metal reserves in India are to the tune of 82 billion tonnes Considerable opportunities for future discoveries of sub-surface deposits Advantage India Competitive Advantage India holds a fair advantage in cost of production and conversion costs in steel and alumina Its strategic location enables convenient exports to developed as well as fast developing Asian markets Policy support 100 per cent FDI allowed in the mining sector under the Automatic Route Mining lease granted for a long duration of minimum 20 years and up to 30 years Approval of MMDR Bill (2011) to provide better legislative environment for investment and technology 2011 Industry value: USD141.9 billion 2015F Industry value: USD305.5 billion Source: DataMonitor, Aranca Research It has been evidenced that India is one of the major demand centre with an attractive investment opportunity. Advantages of Buying This Plant 1. The equipment are well maintained and are as good as new 2. Setting up a new greenfield project of similar capacity will cost around 65 Mln USD so less capital investment is required in this case 3. Lead time reduction compared to setting up a new project 4. The products from mini blast furnaces are of the same quality as that of normal Blast Furnaces and are free of tramp elements - this is of particular advantage in steel making in mini steel plants 5. Reduced power consumption when compared to classical blast furnace 6. Higher plant availability compared to classical blast furnace 7. The technology used is environment friendly and hence there is a possibility to earn carbon credits and make money from it 6
Technical Details 1) Mini Blast Furnace Configuration of Mini Blast Furnace Annual Production of hot metal 504,000 t/year Working volume of blast furnace 400 m 3 Effective Volume 450 m 3 Hot blast temperature Utilization ratio Raw material consumption Furnace top pressure Furnace top temperature Tap hot metal 1100 o C 3.572 t / m 3 / day 1,068,900 t / year 0.03~0.15 Mpa 120~300 o C 120-130 t / tap Fuel ratio - Coke ratio - Coal ratio 550 kg / t-hm 400 kg / t-hm 150 kg / t-hm Sinter Ore : Iron Ore Lump 75 % : 25 % Slag ratio Output at the time of decommissioning the BF Availability (excluding planned shutdown) 330 kg / t-hm 1200-1300 ton/day 350 day/year 7
2) Sinter Plant Configuration of Sinter Plant Annual Production of sinter 635,500 t/year Effective Sintering area 75 m 2 Mean Hourly 105 t/h Maximum capacity 120 t/h Fuel Consumption (BF Gas) 80 Nm 3 /t Size Fraction 5-150 mm Basicity (CaO/SiO2) 1.8 TFe >58% 3) Power Plant Configuration of Power Plant Power Generator 12 MW (Max 15 MW) Blast Furnace Gas Boiler 60 t-steam / h The entire complex is very well maintained and in extremely good condition. 8
4) Plant Site Pictures The pictures shown below are indicative in nature. Customers are advised to inspect the plant for better understanding. Figure 2 9
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Figure 10 Interested buyers are requested to contact the following personnel 1) Gaurav Das - Mobile: +918584008249, E-mail: gaurav.das@mjunction.in 2) Satyavir -Mobile: +918336925974, E-mail: satyavir1@mjunction.in 14