Roland Junck on a new dawn for British Steel€¦ · 02/03/2017 · Gungor, Edward Fox, Eva Cichon...

March 2017 | Leading for over 100 years

Copper supply uncertaintiesZinc demand picks up long-termMini-mill technology and strategy

Roland Junck ona new dawn forBritish Steel

Each year, the Montanwerke Brixlegg AG processes approx.150,000 tons of copper containing secondary materials.The recovered highly pure copper has a copper content of 99,99%. This excellent quality and a wide range of application possiblities have made the brand “BRX” well known worldwide.

More information about recycling and the production you can find under www.montanwerke-brixlegg.com

www.montanwerke-brixlegg.com

March 2017 | Metal Bulletin Magazine | 3

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18Cover storyRoland JunckBritish Steel executive chairman Roland Junck is steering the long-product business towards becoming a national steel champion

Copper

26Copper supply uncertaintiesWith copper supply uncertainties looming large, what is the market outlook like for the red metal in 2017?

30Copper beltsThe prospects for Africa’s two largest copper producing nations: the Democratic Republic of Congo and Zambia

New orders

46New plant orders The latest quarterly list and trends

Steel

52Mini-mills revisitedMini-mills are gaining in popularity as steelmakers turn to EAF-based technology for increased flexibility in iron unit input and steel output

Lead & zinc

36Zinc shinesA combination of tight supply and improving demand fundamentals has set the scene for rising zinc prices

42Lead & zinc in IndiaThe potential for demand growth in zinc and lead in India is large, but what is driving zinc consumption and lead recycling?

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58InnovationsNew developments in metals technology, processes and products

59End-userAdvances and market developments in applications

60EventsForthcoming conferences and exhibitions

Prices

61January averages

Regulars

7CommentNew realities

25People movesNew appointments around the global metals industry

57Supply chain servicesNews from service providers across the metals supply chain

MarchNews and analysis

8Non-ferrous news reviewA summary of key developments in the non-ferrous sector over the past month

10Steel news reviewA round-up of important developments in the iron and steel sectors over the past month

12Base metals and steel analysisMetal Bulletin Research analyses the drivers of the base metals, steel and steel raw materials markets

16Regional reviewsCorrespondents in Europe, North America, Latin America, Asia, Africa and the Middle East discuss topical issues in their regions

62ChartistCan Trump make US metals and steel great again?

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Comment

he world of steel and metals production and trading is coming to terms with new international political – and the associated economic – realities just like any other. Analysis of the possible ramifications of president Trump’s policies, as well as of the

UK government’s determination to take the country out of the EU, has become daily fare on news bulletins.

Speculation about the outcome of the forthcoming presidential election in France and further elections in the Netherlands and Germany later this year adds to a mood of uncertainty in the developed world. A recent joint declaration by more than 90 European industrial associations to demand that the European Commission places regional industrial strategy at the top of its agenda stressed the challenges facing manufacturers.

Meanwhile, major Asian powerhouses like China and India are supporting long-term campaigns to promote their own manufacturing prowess, while smaller nations in the developing world that have significant natural resources continue to wrestle with policies designed to get greater value from them through domestic consumption or by additional processing before export.

The response of any one company needing to turn a profit against this backdrop is strongly influenced by its size and circumstances. Our cover profile interviewee, British Steel executive chairman Roland Junck, explains the company’s strategy to supply high-value, high-quality products in well-defined markets in a steel world in which he says a race to become the largest steelmaker has become far less relevant.

As our copper market overview explains, supply-side disruptions loom large over sentiment at present. A complementary article about African copper mining reviews the importance of the DRC and Zambia in a global context.

Long-term zinc demand climbs ever higher with no let-up in the growing need to galvanize steel. Meanwhile, constraints in the metal’s supply add to perfect conditions for a buoyant price, as our zinc market overview explains. A separate look at zinc demand and lead recycling in India highlight the opportunities and constraints for both metals in a major developing market.

Our new orders section provides an ever-interesting indicator of where, and on what, capital expenditure is being made on metallurgical plant, while a ‘bonus’ feature revisits the history and resurgence of the mini-mill in a world in which scrap flows will inexorably rise and – if the current political trends continue – local steel production by smaller, flexible plants may come once more to the fore.

Published by Metal Bulletin.Metal Bulletin, 8 Bouverie Street,London EC4Y 8AX. UK registration number: 00142215.Tel: +44 20 7827 9977.Fax: +44 20 7928 6892 and+44 20 7827 6495.E-mail:[email protected]: www.metalbulletin.com

Metal Bulletin Magazine:Editor: Richard BarrettAssociate editor: Duncan MooreProduction designer: Paul Rackstraw

Metal Bulletin:Group editorial director: Alex HarrisonGlobal ores, alloys and minor metals editor: Fleur RitzemaGlobal base metals editor: Perrine Faye Global copper editor: Archie HunterGlobal aluminium editor: Jethro Wookey Futures editor: Kathleen RetournéEurope steel editor: Alona YundaCIS, Turkey, Mena steel editor: Nadia Popova Special correspondents: Andrea Hotter, Janie DaviesUK and Europe correspondents and reporters: James Heywood, Ewa Manthey, Maria Tanatar, Serife Durmus, Cem Turken, Charlotte Radford, Lorenzo Holt, Viral Shah, Lee Allen, Vlada Novokreshchenova, Ian Walker North America non-ferrous editor: Tom Jennemann North America steel editor: Thorsten Schier US reporters: Lisa Gordon, Millicent Dent, Kirk Maltais, Michael Cowden, Nat Rudarakanchana, James Lawrence, Mei Ling Toh, Chris Kavanagh, Dom Yanchunas, Brad MacAulay, Dalton BarkerLatin America steel editor: Ana Paula Camargo Latin America reporters: Danielle Assalve, Felipe PeroniAsia non-ferrous editor: Shivani Singh Asia steel editor: Juan WeikAsia steelmaking raw materials editor: Deepali SharmaSenior correspondents (Asia): Rena Gu, Vivian Teo China team leader: Kiki KangAnalysts (Asia): Ellie Wang, Anna Xu, July Zhang, Gladdy Chu, Jessica Zong, Sophie Zhao, Susan Zou Industry researcher (Asia): Echo MaPrices manager: Mary HigginsNewsdesk manager: Rod GeorgeSenior sub-editors: Jeff Porter, Tony Pettengell, Mark Shaw, Cecil FungSub-editor: Wei Jun Lau, Kyle Docherty

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New realities

‘Major Asian powerhouses like China and India are supporting long-term campaigns to promote their own manufacturing prowess’

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Mecklenburg resumes open-cast miningThe Afarak Group has restarted open-cast mining operations at its Mecklenburg chrome mine in South Africa in response to improved chrome market conditions. Afarak has indicated that work is currently underway on increasing the high wall from 40 metres to 65 metres. The company says the work will also allow better access to underground mining at Mecklenburg, which has the potential to produce 4.5 million tonnes of chrome ore. The mine is expected to reach full production capacity of 30,000 tonnes of chrome ore per month by April, and it will continue for a period of six months. The total open-cast is expected to yield just over 200,000 tonnes of chrome ore.

Xiamen Tungsten returns to profit Xiamen Tungsten Co, China’s largest tungsten smelting and processing company, returned to profit in 2016 on the recovery of tungsten prices and improved sales of battery materials. The company posted a net profit of 144 million yuan ($20.9 million) for the full year in 2016, from a

net loss of 662.5 million yuan ($96.25 million) in 2015. The company’s sales revenue in 2016 reached 8.51 billion yuan ($1.24 billion), up 9.7% from 7.76 billion yuan ($1.13 billion) in 2015.

Boyne Smelters cuts outputBoyne Smelters, an Australian aluminium smelter owned by Rio Tinto, has said it is cutting production and shedding jobs due to ongoing higher power prices. In response to elevated electricity prices in Queensland over a sustained period, the company is in the process of reducing production by

approximately 8% by progressively dropping up to 80MW of power from its production circuit. The decision could result in a potential loss of around 45,000 tonnes of aluminium production for 2017.

Codelco seeks partner to develop lithium projects Codelco has opened the process to select partners to jointly develop two lithium projects in Chile’s northern region of Atacama. Potential partners will be evaluated according to their previous experience in the lithium industry and relevant capabilities to develop such

projects, the company said in a statement. The move by Codelco comes a year after Chile, which has over 50% of the world’s lithium reserves, announced the creation of a new lithium and salt flat governance policy. Under the policy, Chile determined that public-private partnerships to explore lithium were welcomed, but the country’s lithium would not be subject to concessions due to its strategic nature.

OM Holdings begins FeMn production in MalaysiaOM Holdings has started producing high-carbon ferro-manganese after the successful hot commissioning of a second manganese alloys furnace at its Sarawak plant in Malaysia. The new line follows the start-up of silico-manganese production from the same site in December 2016.

BOAL sells extrusion plant to E-MAXBOAL Extrusion Group has sold its Belgium aluminium extrusion operation – BOAL Belgium NV – to the Belgian company E-MAX Group. The plant, based in Morsele near Kortrijk, close to the French border, has two 1,600-tonne (seven-inch) extrusion presses and a thermal break machine that enables two profiles to be linked together using thermally insulating material.

News review: non-ferrous

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Afarak Group has restarted open-cast mining operations at its Mecklenburg chrome mine

Rio Tinto is cutting production at Boyne Smelters, Australia, owing to increased power prices

Get the latest metals news at www.metalbulletin.com


we have an opportunity with the favourable market conditions – meaning high zinc prices, relatively low TCs – to really focus on extracting maximum value from the remaining North American assets.”

Myra Falls in Canada was suspended in April 2015, along with Campo Morado, which was suspended in Q1 2015, and Middle Tennessee, which was suspended in December 2015.

Rio Tinto awards Amrun contract to Sodexo Rio Tinto has awarded a A$22 million integrated services contract to facilities management provider Sodexo, which includes an indigenous employment target of 20% within two years. Sodexo will supply camp management services to the Amrun bauxite project on the Cape York Peninsula in North Queensland. A letter of intent has also been signed with the company to provide integrated facilities management services at mine sites at Weipa in North Queensland and Gove in the Northern Territory.

Arconic sells over 60% of Alcoa stakeArconic has offloaded more than half of its remaining stake in Alcoa Corp in order to “bolster [its] cash balance,” the company said in a statement on February 15. Arconic sold 23.4 million of its shares in Alcoa Corp for approximately $890 million.The share total equals 64.3% of the 36.3 million shares that the aluminium manufacturer retained following its split from Alcoa Corp in November.

Ahead of the split, Arconic said it would retain 19.9% of Alcoa Corp’s common stock to give itself security that could be monetised to strengthen its balance sheet, as well as to reduce Alcoa Corp’s need to raise debt, among other benefits.

Progress at EGA’s Guinea bauxite projectEmirates Global Aluminium (EGA) has announced that Jan de Nul, a Belgian marine contractor, has completed a three-month project for site infill and elevation of 50 hectares of land at Kamsar on the Guinean coast for a rail loop and bulk materials handling facilities. The work is part of a $1 billion investment in the development of bauxite mining and export facilities in the Republic of Guinea.

Last October EGA inaugurated a container terminal facility at Kamsar Port in Guinea, which is being used for the export of bulk bauxite samples and the import of equipment for EGA’s Kamsar construction project. In a second phase of the Guinea project, EGA will build an alumina refinery in the country.

Lithium X buys Arizaro lithium project Lithium X has entered into a binding purchase and sale agreement to acquire the Arizaro lithium brine project in Argentina’s Salta Province. The project consists of 33,846 hectares in 11 mining claims covering parts of the western and eastern portions of the Salar de Arizaro, one of the district’s largest known salt lakes.

Record for Antam’s ferro-nickel outputFerro-nickel production at PT Aneka Tambang (Antam) reached an all-time high of 20,293 tonnes of nickel-contained in 2016, up 18% from its output in 2015. Its ferro-nickel sales amounted to 20,888 tonnes in 2016, an increase of 12% year-on-year. The company is targeting 24,100 tonnes of nickel contained in ferro-nickel production in 2017.

Mineco starts tests at Serbian mine Mineco Metals Group is starting test production at its

Bosil-Metal copper-lead-zinc mine in Serbia. With proven reserves of 1.7 million tonnes of copper-lead-zinc ore, Bosilegrad, where reserves could be expanded to 2.3-2.5 million tonnes, is targeted for commercial production in 2019. It is set to become Mineco’s third active mine in the former Yugoslavia. It owns Rudnik in Bosnia and Veliki Majdan, also in Serbia.

“This is a limited test production. Subsequently, on the basis of the findings of that we should be redesigning and building a commercial processing plant,” a spokesman for the company said.

Afarak switches to ferro-chrome at MogaleAfarak has confirmed its decision to convert the second silico-manganese furnace at Mogale Alloys to a ferro-chrome furnace, due to volatile manganese ore prices over the past few months. The Helsinki-headquartered miner said in September 2016 that it was switching one silico-manganese furnace at its South African alloys-producing unit into a ferro-chrome furnace and that it was considering switching the second.

EC fines recyclers over price-fixingThe European Commission (EC) has fined three lead car battery recycling companies a

total of €68 million ($72.7 million) for taking part in a price-fixing cartel. The three companies fined – UK-based Eco-Bat Technologies, Belgium-based Campine SA, France-based Recyclex SA – were found to have fixed prices for purchasing scrap automotive batteries in a breach of European Union (EU) antitrust rules.

According to the EC, the companies fixed the purchase prices of scrap lead-acid automotive batteries in Belgium, France, Germany and the Netherlands between 2009 and 2012. Recylex said in an 8 February statement that it will examine the EC decision in detail: “All options, including an appeal, will now be studied,” it stated. On the same date, Eco-Bat stated that it was reviewing the decision and had not yet determined whether it will appeal. Campine disagreed with the EC decision and planned to appeal in the General Court of Luxembourg.

Potential restart for Myra Falls zinc mine Nyrstar is considering restarting its idled and for-sale Myra Falls zinc-copper mine in light of improved market conditions, according to its ceo Hilmar Rode. “We are reviewing the restart of the Myra Falls mine to capitalise on the favourable market environment,” Rode said. He continued: “We do believe that

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The European Commission has fined a number of car battery recyclers for taking part in a price-fixing cartel

News review: steelLiberty to buy Tata’s Speciality SteelsLiberty House has signed an agreement with Tata Steel UK to acquire its Speciality Steels business for a total consideration of £100 million ($125 million). The sale follows an extensive due diligence period after the parties entered discussions in November 2016.

Speciality Steels has the capability to make around 1.1m tonnes of liquid steel per year from recycled scrap, melted in two electric arc furnaces in Rotherham.

Ponta da Madeira loads first shipsPonta da Madeira Maritime Terminal in São Luís (MA) loaded its first commercial cargo produced at the S11D iron ore mine, in Canaã dos Carajás, south-east of Pará, Brazil. A total of about 26,500 tonnes were loaded, divided into three ships with capacity between 73,000 and 380,000 tonnes. The ships had their capacity completed with Carajás IOCJ ore, from other mines from the North System.

September restart for fire-damaged lineNippon Steel & Sumitomo Metal Corp (NSSMC) has said it expects the fire-damaged plate rolling line at its Oita works, Japan, to resume

production in September. The rolling line was damaged when the electrical room containing the equipment that controlled it caught fire in January. NSSMC’s steelworks at Kashima, Kimitsu and Nagoya have increased production to make up for the lost capacity at the Oita works.

Vallourec reshapes businessFrench steel tube and pipe producer, Vallourec has announced a new organisational strategy as a part of its transformation plan. The reorganisation, which will take effect in April, will see Vallourec’s business split into

four geographical blocks: North America, headed by Nicolas de Coignac; South America, led by Alexandre Lyra; Europe and Africa, with Hubert Paris at the helm; and the Middle East and Asia, led by Edouard Guinotte. Vallourec previously organised its business by market applications (oil and gas, power generation, and industry and other).

The transformation also creates two new departments: the Development and Innovation department (D&I), responsible for innovation and product research and development, and the Technology and Industry department (T&I), which will develop Vallourec’s industrial strategy and aim to improve its cost base.

Delong may cut capacity in HebeiA Hebei-based subsidiary of Chinese steelmaker Delong Holdings may have to reduce its steelmaking output amid de-capacity plans being pushed forward by the local government. Hebei, the biggest steelmaking province in China, is aiming to cut 17.14 million tpy of crude steel and 19.86 million tpy of ironmaking capacity in 2017.

CAP starts up galvanizing line in PeruPeruvian tube maker, Tupemesa, a subsidiary of Chile-based steel producer Compañía de Acero del Pacífico (CAP), successfully commissioned a galvanizing line in Lima in mid-January. The unit, with the capacity to produce 2,000 tonnes per month, required investments worth $10 million, CAP said. “With this start-up, we reaffirm our constant and increasing investment in the development of Peru,” CAP president Roberto de Andraca said.

ThyssenKrupp to invest $32m in ChinaThyssenKrupp has announced plans for a new plant to make automotive springs and stabilisers in Pinghu, China, with an investment of around €30 million ($32 million). Construction work is scheduled to start this year, and from 2018 the plant will produce around 5 million springs and stabilisers per year.

“The new site in Pinghu will be our third plant for springs and stabilisers in the People’s Republic of China, and will further expand our global production network,” said Karsten Kroos, ceo of business area components technology at ThyssenKrupp.

British Steel in profit in Q3British Steel has said it ended the October-December 2016 financial quarter in profit. “Having implemented the first stage of our turnaround plan, returning the business to profit and putting it on a sustainable footing, we are now well positioned to implement the next stage of the plan,” British Steel executive chairman Roland Junck said.

“When we started on June 1 [last year, after Tata Steel Europe divested the long products unit], the company

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Stocksbridge is among the Tata Steel Speciality Steel facilities that have been purchased by Liberty House

With 380,000 tonnes of capacity, Berge Neblina was one of the three vessels that received iron ore from the S11D mine


Get the latest metals news at www.metalbulletin.com

EC approves ArcelorMittal and Cellino joint ventureThe European Commission has approved the creation of Steelcame, a joint venture between the French distribution arm of ArcelorMittal and Italian steel components producer Cellino. The commission approved the tie-up after concluding that the merger complied with European competition law.

“The commission has concluded that the merger would not cause any problem with competition given that the companies are only active in the same markets to a limited extent and several competitors will remain active in the markets concerned,” the EC said.

Big River Steel’s production recordBig River Steel has established a new production record in terms of tons of steel produced by a SMS group supplied flat-rolled mini-mill during the first full month of operation. Having produced over 63,000 tons of hot rolled steel in January, Big River Steel topped the previous first-month production record according to

data maintained by SMS group, Big River Steel’s lead technology supplier.

Steel Dynamics’ $28m expansion planSteel Dynamics Inc. (SDI) is investing $28 million in its Roanoke Bar Division, in the US state of Virginia, to increase its rolling and rebar production capacity. The plan will be to upgrade and integrate a new reheating furnace and finishing area within the facility, allowing rolling capacity to expand to more than 600,000 tpy from 500,000 tpy. Additionally, the company expects rebar production to increase to more than 200,000 tpy.

Welsh government invests $3.5m in domestic steelThe regional government in Wales, UK, is providing around £2.82 million ($3.51 million) in investments to four domestic steel companies. Celsa Steel UK, which produces heavy steel sections, wire rod and bar through electric arc furnace (EAF) production will receive £1.60 million ($2.00 million). Dyfed Steels, the largest independent steel stockholder and processor in Wales, is

getting £750,000 ($933,000). A figure of £400,000 ($498,000) will go to structural steel fabricator Code Serve, and steel fabricator Express Reinforcements will get £65,000 ($80,900).

Gerdau to develop automotive productsBrazilian steel producer Gerdau will invest 1 million Reais ($319,000) to establish a partnership with local companies and research institutes, aimed at developing advanced products, including more durable steel products with increased fatigue resistance, for the automotive sector. Gerdau signed the partnership with niobium producer CBMM, research institute IPT and local non-profit organisation Senai. The automotive sector is responsible for around 19.80% of the Brazilian steel consumption, according to figures from the country’s steel institute, Aço Brasil.

SeAH Steel builds pipe mill in CaliforniaState Pipe & Supply, the US division of South Korea’s SeAH Steel, is building a new spiral-welded steel pipe mill in Rialto, California. Annual production at the facility, called West Coast Spiral, will be 100,000 tonnes of double-submerged-arc welded tube. Tube diameters will range from 16 inches to 120 inches with wall thicknesses from 0.157 to 1 inch. Outside diameters of the water transmission pipe will be 16-56 inches, in lengths up to 40 ft. The A252 pipe pile produced will come in lengths up to 80 ft.

The new large-diameter pipe mill is another move by SeAH Steel to expand its operations in the USA. In November 2016, the South Korean steelmaker became a domestic producer of OCTG when it acquired the former OMK Tube mill in Houston.

was an inward-looking production hub, and now we have focused business units and our responsiveness to market conditions has increased,” Junck added.

The UK steelmaker, which produces more than 2.80 million tpy, said that it is targeting a 20-25% year-on-year improvement in turnover by the end of its financial year on March 31, 2017.

Outokumpu sells US steel plate millOutokumpu has sold its US quarto plate mill in New Castle, Indiana, to private equity firm D’Orazio Capital Partners and the mill’s current management for $30.10 million. “After more than 45 years of Nordic ownership, we are pleased to return this great facility to American ownership,” said Michael Stateczny, president of New Castle Stainless Plate, the newly formed corporate entity representing the mill. Stateczny led the acquisition team, which included five other members of the plant’s senior leadership. All six are now minority owners in the new business and will continue in their management roles.

MMK ships record volume of galvOJSC Magnitogorsk Iron and Steel Works (MMK) shipped 1,135,500 tonnes of galvanized steel to its consumers in 2016, the most in the company’s history. The previous record of 1,115,700 tonnes was achieved in 2014. During the past 15 years, MMK has sustainably grown its galvanized steel output. It commissioned continuous hot-dip galvanizing lines in 2002 and 2008 and in 2012 commissioned the second stage of a cold-rolling unit. Currently, another continuous hot-dip galvanizing line with annual capacity of 360,000 tonnes is under construction with launch scheduled for July 2017.


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MMK shipped a record 1,135,500 tonnes of galvanized steel to its consumers in 2016

MBR analysis


We have upgraded our LME cash price forecasts this month to reflect the resilience of the speculative rally this year and the fact that the market has become, and is likely to remain, bullish to continuing efforts to control air pollution in China. Cost inflation from raw materials has also become a factor. On the key issue of the Chinese supply cuts, we remain non-believers. The government’s proposal to cut 30% of capacity in certain provinces during the winter needs to be re-worked. If, as we suspect, authorities ultimately soften their stance and/or down-size their capacity cutback target then prices will clearly be vulnerable to a sell-off. We understand that

some major producers have already upgraded their facilities to minimise pollution, which may exempt them from the winter cull. We now expect the Q1 LME cash price to average $1,820/tonne – a 3.4% increase from our previous forecast of $1,760/tonne. For the whole year, our forecast has been raised to $1,833/tonne, but remains under review.

The upside break in LME lead prices to a high of $2,458.50/tonne in February quickly stalled, and prices returned to the $2,200-2,400/tonne trading range. The latest data from the ILZSG portrays a balanced market overall in 2016, with an 11,000-tonne surplus. Exchange stocks rose by a similar 19,900 tonnes, again indicative of a market erring on the side of oversupply, but essentially in balance. That benign backdrop is at odds with the steep rally in lead prices last year, which suggests the market was pricing in tighter fundamentals that did not emerge. So without clear evidence of tightness this year, such as a consistent

drawdown in exchange stocks, we believe the lead price may struggle to push higher.

Unfortunately for lead bulls though, LME stocks are flat and SHFE stocks have been rising. The market also has to digest a pick-up in scrap supply brought out of the woodwork by the high prices, and the likelihood of mine restarts and production increases.

Our Q1 LME copper price forecast remains $5,910/tonne and is well-placed relative to the quarter-to-date average, which is rising through the low $5,800s as we write. We had factored in supply disruptions inflating prices for a while this quarter, but as the days tick by and production losses mount in Chile due to the Escondida strike and in Indonesia due to the Grasberg export permit impasse, the resulting bullish sentiment is starting to move the short-term outlook beyond our already-bullish base case view and towards our high-case scenario for this quarter, of $6,100/tonne. We still expect to see a pull-back in prices in Q2.

That assumes the major disruptions have passed by then and that speculators switch to profit-taking for a while, at least until the next round of labour contract renewals threatens to bring other mines in North and Latin America to a halt. This could be a theme that defines 2017 and lays the foundation for a supply-demand deficit.

Volatility has increased as the Indonesian and the Philippine ore supply situations are still evolving and the market is still trying to make sense of it all. A degree of bullishness clearly re-emerged in February, as LME prices returned briefly to the $11,000/tonne level – that is an 18% gain in the space of just three weeks from the January lows around $9,400/tonne. We are increasingly of the view that, for the short term at least, all the bullish news has been well priced in. A retreat to consolidate for a while back into a trading range between the high-$10,000s and the mid-$9,000s would not be a surprise. This would give the market the chance to better digest the recent ore supply developments that have caused

all this volatility in LME prices. After all, actual ore and NPI prices have hardly budged. Over the medium term, nickel should work higher again, but not at the speed of the past month’s gains given the still quite bearish structural themes overhanging this market, such as surging investment in Indonesian ferro-nickel and NPI capacity, resilient Chinese NPI supply, and high stocks.

AluminiumVulnerable to Chinese capacity -cut news

CopperRed alert as supply disruptions take centre stage

LeadNo fundamental case for fresh rallies yet

NickelVolatility has picked up as uncertainty rises

LME cash price, $/t

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p 15

Nov

15Ja

n 16

Mar

16M

ay 16

Jul 1

6Se

p 16

Jan

17No

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LME cash price, $/t

LME/MBR

3,000

5,000

7,000

May

15

Mar

17f

Jul 1

5Se

p 15

Nov

15Ja

n 16

Mar

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ay 16

Jul 1

6Se

p 16

Jan

17No

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LME cash price, $/t

LME/MBR

1,500

2,000

2,500

May

15

Mar

17f

Jul 1

5Se

p 15

Nov

15Ja

n 16

Mar

16M

ay 16

Jul 1

6Se

p 16

Jan

17No

v 16

LME cash price, $/t

LME/MBR

6,000

12,000

14,000

10,000

8,000

16,000

May

15

Mar

17f

Jul 1

5Se

p 15

Nov

15Ja

n 16

Mar

16M

ay 16

Jul 1

6Se

p 16

Jan

17No

v 16

In this regular section, MBR’s base metals team summarise their in-depth reports to highlight key factors driving the markets and short-term price forecasts. MBR’s Base Metals Weekly Tracker service


Ask an analystWhere will the nickel supply-demand balance fall in 2017?

Preliminary ILZSG data for 2016 published in February gave us the chance to re-evaluate zinc’s bull story in the context of fresh fundamental numbers. Generally, we were underwhelmed. The refined zinc market was effectively balanced in December, the 2016 annual deficit was more modest than previously expected and hidden stocks are still buffering the market. Although we are sceptical, ILZSG data at least suggest that Chinese mine output is surging. Given all this, we cannot help but feel that last year’s big zinc rally priced in a more bullish backdrop than this. So we are not surprised that zinc is struggling to push on to new

highs beyond $3,000/tonne this year. Underlying sentiment still seems bullish, but for our liking, more evidence of tightening supply is probably needed to support the zinc bull market’s efforts to move to the next level. With various mine restarts/ramp-ups set to start alleviating some of the concentrate market tightness, the zinc price outlook is less of a one-way bet this year.

The global refined nickel market returned to a welcome supply deficit in 2016 after four consecutive years in surplus. During that time world inventories had soared from 6-7 weeks of consumption to more than 16 weeks, which chased prices to 15-year lows. So the re-emergence of deficit conditions, and the promise of a deficit this year too, heralded the bottom of a lengthy bear market and the start of what should become a multi-year upcycle for prices.

Then, in January, Indonesia announced it was easing its ore export ban. As the largest supplier of ore to China’s NPI sector prior to the ban, that was a bombshell.

But of course the Philippines – China’s alterative ore supplier after Indonesia’s exit from the seaborne market in 2014 – has been going in the opposite direction. The government is coming down hard on miners there and, through its controversial mining audit, has issued closure and suspension notices to many operators, which should reduce ore exports to China.

So what is the biggest development – the partial resumption of Indonesian ore supply, or the partial reduction in Philippine ore supply? And is the outlook for a run of healthy global supply deficits now in peril?

The first point to make is that the situations in both countries are still in flux and there are many unknowns – not least

whether Philippine ore will still be competitive and in-demand with preferred Indonesian material back in the market. But we can still make some useful assumptions.

In Indonesia, government officials have said that they envisage exports reaching about 5.2m tonnes of <1.7% nickel annually. That is about 50,000 tonnes of contained nickel, allowing for moisture in the ore and processing losses.

In the Philippines, we estimate from the government’s hit-list of targeted mines that a reduction in export volumes equivalent to 140,000-150,000 tonnes of contained nickel is possible, again after moisture and processing losses.

So even if we add 20,000 tpy of contained nickel arriving in China now from New Caledonia and Guatemala, simplistically there is a clear net reduction in seaborne ore supply. China’s NPI sector will still be squeezed, the global refined nickel market should still record a meaningful deficit and the price recovery we have forecast is still justifiable. So, beyond all the noise, we remain net bullish for nickel overall.

‘A reduction in export volumes equivalent to 140,000-150,000 tonnes of contained nickel is possible’

TinFight back after bearish over-reaction

ZincStill bullish, but less of a one-way bet

Every month an MBR analyst answers a question raised by readers. If you have a question for our analysts, please email: [email protected]

Analysis by Andy Cole, base metals analyst and editor of MBR’s Base Metals Weekly Market Tracker. Email: [email protected]

World leading market analysis www.metalbulletinresearch.com

Analysis by Andy Cole, Metal Bulletin Research

LME cash price, $/t

LME/MBR

1,000

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17No

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LME tin prices surprised us by going sub-$19,000/tonne for the first time since the summer during February – the only base metal to look so weak. The market is spooked by the threat of higher exports from both Indonesia and China this year. While we doubt Chinese exports will turn out to be a problem, we do expect to see more Indonesian metal this year. However, that is already in our forecast and we still see a deficit market overall in 2017. So, we feel that prices have overreacted on the downside. Their recovery, which already appears to have got underway, will continue, in our view. The technical

chart is starting to look more constructive, exchange stocks are no longer rising and we are forecasting a balanced global market during Q1 2017 ahead of a return to a significant deficit in Q2. We maintain the view that a break of $20,000/tonne is imminent, which will put tin back in line with our Q1 base case price forecast.

LME cash price, $/t

LME/MBR10,000

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provides independent, detailed and timely analysis on the latest data, price movements and developments that impact the market conditions and outlook for LME-traded base metals.

For free samples of MBR’s reports, please call Harriet Hall (tel: +44 (0)20 7779 8000) or access www.metalbulletinresearch.com/freesample.aspx

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MBR analysis


In this section, MBR’s steel and steel raw materials team summarise their in-depth reports to highlight key factors driving the markets and short-term price forecasts. MBR is a leading independent supplier of product and regional price, supply and demand forecasts for steel and raw materials. For free samples of MBR’s reports, call Harriet Hall (+44 (0)20 7779 8000) or access www.metalbulletinresearch.com/freesample

SteelThe calm before the storm?

Steel raw materialsScrap prices are no longer cheap

The rapid gains in finished steel prices seen recently appear to be losing momentum. During the past month, MBR’s Global Flat Products Price Index has actually fallen, while growth in long products has slowed to just 1.8%. Though we detailed one month ago that the upside risks to flat products prices were likely to be limited this year, given a projected slowdown in underlying consumption and a starting point, from 2016, of uncharacteristically elevated and profitable pricing, mills seem increasingly determined to protect their fortunes. Indeed, after two consecutive weekly declines in AMM’s strip-mill price assessments for the US domestic market, Nucor was quick to announce a new target to raise prices by $30/ton.

Nucor has seen the margin or spread between HRC and prime scrap (No. 1 busheling) recover rapidly over the past year, just as the spread between rebar and obsolete scrap (shredded) has retreated rapidly. Market fundamentals for flat and long products in the USA have been quite different in recent years and the difference has resulted in flat-rolled steel prices and related raw materials (iron ore and coal/coke) rising strongly over the past year, just as bar prices and related raw materials (ferrous scrap and their supplements) have retreated.

In the USA, apparent rebar consumption has been particularly depressed, just as imports have actually revived, reigniting concerns for the fortunes of local producers. For flat products such as HRC, especially on a gross basis (including downstream

The sharp downturn in seaborne coking coal prices has continued during the past month. Australian export prices have retreated by a further 15% (or roughly $25/tonne in late February), to under $155/tonne fob. This is $130/tonne below the first-quarter contract prices settled between Glencore and NSSMC in mid-December, when spot prices were closer to $300/tonne fob. Based on MB Indices, Q4 saw spot prices averaging $66/tonne fob higher than contract prices. This leaves Japanese integrated mills, who were among the lowest-cost steel producers in Q4 according to the MBR Global Steel Cost Service, at a large disadvantage of more than $100/tonne today.

As a result of rising costs, Japanese steel producers have been increasing local and especially export prices for finished steel more dramatically than the Chinese. According to the Tex Report, the export quotes for hot-rolled coil, fob Japan, have increased by $30/tonne fob since the end of last year, while Chinese prices have increased by just $10-15/tonne at the same time. Chinese spot buyers, however, have also been at a disadvantage, at least among the majority (about 90%) who are not reliant on imported coal and have seen local prices fall just $20/tonne since the early December peak.

While coal prices continue to contract, iron ore prices continue to strengthen and to such an extent lately that the gains are clearly outweighing the reductions associated with Chinese coal. We estimate that China’s hot-metal proxy, including iron ore and coking

developments in cold-rolled and coated markets), the trend is different as demand has surged, but only for local producers, thanks to effective dumping duties on external suppliers.

While steel users, notably in construction applications if not so much the higher value manufacturing industries, may be increasingly keen to resist the ambitious targets of steel producers, rising raw materials costs, especially of iron ore, are starting to impact margins. Demand does not appear to be slowing so much as we expected, as efforts to replenish inventories, not least in China, are leading producers to raise production.

In recent weeks that the gains in scrap prices have actually been more substantial. This is related to seasonal changes in long products demand. With construction still forecast to trend upwards more rapidly than all other major sectors, so the outlook for long products pricing remains more robust. However, we still believe flat-rolled producers will do well to preserve recent gains, particularly if key integrated producers decide to re-enter the market in the short term, removing supply-side support.

coal, has actually increased since Chinese coal prices peaked in early December and have moved up by about $20/tonne to $295/tonne during the past month. Coastal buyers using seaborne coal, however, will have seen little change, with the hot metal proxy down to $272/tonne, from $273/tonne a month ago.

The link between hot metal prices and ferrous scrap indices is a complicated one, but the last time this latter proxy fell below comparable scrap prices, such as the Turkish import price of blended HMS (1&2), scrap prices fell sharply. This happened in early January, when Turkish prices peaked just over $280/tonne cfr before being slashed by more than $60/tonne. Towards the end of February, Turkish prices of north European origin had moved back above $270/tonne and in line with hot metal. We doubt this time that scrap prices will suffer another short-term correction as demand for scrap is seasonally stronger than it was in January. Moreover we doubt that hot metal prices will become much more competitive, especially if Chinese authorities force local miners to cut output from March.

For access to MBR’s detailed product and regional price, supply and demand forecasts or for a free sample of MBR’s Steel or Steel Raw Materials Market Trackers: www.metalbulletinresearch.com/freesample.aspx

Analysis by Alistair Ramsay, Metal Bulletin Research

50

70

9080

110100

60

Global flat products index

Global long products index

Steel price index MBRJan 2012 = 100

Jan

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Jul 1

2

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Jul 1

3

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14

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4

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40

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Asian import HMS No1 CFR

Fines 63.5% cfr main China ports ($/tonne)

Australian hard coking spot fob price (metric)

80

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120MBR

Jan 2012 = 100

20

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Analysis by Alistair Ramsay, Metal Bulletin Research

Regional review

Even though his first month in office has been more tumultuous than many

people would have liked, there continues to be optimism that president Trump’s policies will have positive implications for the US steel industry.

In fact, about half of the respondents to a recent poll conducted by Metal Bulletin’s sister publication American Metal Market indicated that they believed that the Trump Administration’s policies would be the leading factor driving US steel prices in 2017, exerting more influence than China (at 16%), oil prices (14%), scrap prices (12%) and auto sales (8%).

Tracy L. Porter, executive vp of operations at Commercial Metals Co. says that under the new Administration domestic steelmakers could also expect to see higher duty margins assessed in trade cases. “President Trump is saying what we’ve been saying for a very long time [about trade].” Steelmakers may also benefit from the Administration’s stated goal to relax

North America Myra PinkhamUS steel backs president Trump

environmental regulations. Some analysts believe that a prosperous economy will emerge if people have a level of confidence that such policies are going to go forward.

Philip K. Bell, SMA’s president, termed current optimism as being cautious optimism. “Steelmakers are very pragmatic people. And while we see stock prices soaring to record levels, we also see capacity utilisation in the 70% range.”

Despite a flurry of executive orders, it remains uncertain how many of the new Administration’s policies will go through Congress and in what timeframe. This includes plans to stimulate infrastructure investment, a policy that would bolster steel demand, which has been held back in the past by a lack of consensus upon a funding mechanism. Even when passed, the question is when the industry will feel its impact given the time it takes for projects to progress. Observers say that the steel industry is yet to feel any significant boost from the FAST Act five-year highway bill passed at the end of 2015.

EuropeRichard BarrettReinvigorating industrial strategy

In a joint declaration issued on 16 February, more than 90

European trade and manufacturing associations called on the European Commission for an ambitious EU industrial strategy. The European Steel Association, Eurofer, and the European Association of Metals, Eurometaux, were among them.

The group called on the Commission to reaffirm its commitment to reaching the target of 20% of GDP from industry, with an ambitious and realistic timeline; adopt an action plan to tackle the challenges that the industrial sectors are facing, in the framework of a communication that would include concrete steps and milestones; and commit to implement this action plan in a timely manner and regularly report on progress.

“Between 2000 and 2014, the share of manufacturing in total EU output fell from 18.8% to 15.3%, while 3.5

million manufacturing jobs were lost between 2008 and 2014,” they stated. They also reminded European Commission president Jean-Claude Juncker that he identified the reindustrialisation of Europe as one of his top priorities and confirmed the objective of increasing the share of industry in European GDP to 20% by 2020.

“As we approach the preparation of the next Multiannual Financial Framework, it is vital for the European Commission to act and help the EU remain a competitive global industrial power playing in a fairer world market,” the declaration said.

They specifically identified the “Make in India” strategy and “Made in China 2025” as sources of competition. “The recent US shift towards “America First” will inevitably have a strong impact on their industrial policy,” the declaration added.

Meanwhile, the UK has its own industrial strategy to work on, given the government’s green paper on the subject issued in January.

AsiaJuan WeikGoodbye to TPP

President Trump’s decision to withdraw the USA from the Trans-Pacific Partnership

(TPP), a trade agreement making up approximately 40% of the world’s economy, was a blow to the Asia Pacific region.

Credit ratings agency Moody’s called it “a lost opportunity”, especially for countries that would have substantially expanded their

export access to major markets.“The lost export and growth

opportunities are material for Vietnam and Malaysia, which would have benefited from the opening up of trade with the US, and relatively large foreign direct investment inflows over the long-term,” Moody’s said in a report dated February 1. For Japan, the auto industry stood to gain from freer market access to the US, Canada and New Zealand.

Rajiv Biswas, Asia Pacific chief economist for IHS Global

Insight, said Vietnamese and Malaysian manufacturers were expected to be among the largest beneficiaries of the deal. “Due to the significant gains that both Vietnam and Malaysia were expected to achieve through the TPP for improving market access for their manufactured exports, the outlook for future export growth for both these countries has been significantly impacted by the US decision to withdraw from the TPP.”

Mahamoud Islam, senior Asia economist at Euler Hermes, said the TPP could have boosted member countries’ gross domestic product by more than $38 billion in the first two years.

Now, Asian countries are expected to invest in other trade deals, such as the RCEP (Regional Comprehensive Economic Partnership) and the FTAAP (Free Trade Area of the Asia-Pacific). Biswas notes that the US withdrawal from TPP will particularly help to strengthen China’s economic leadership position in the Asia Pacific, with Islam believing the Chinese-led One Belt One Road initiative could be a good alternative.

However, Moody’s warned the benefits from these trade deals would be less as they would cover a smaller share of global trade, overlap with existing arrangements and be narrower in scope.


Keep up with all our correspondents at www.metalbulletin.com

Middle EastSerife DurmusMiddle Eastern steel markets cautious

Steel prices kept increasing in the Middle East in February, but the buyers in the

region were mostly cautious as demand was not supportive. As raw material prices increased, local and imported steel prices in the region also increased, but the price hikes were faster than the demand increase in the region.

Having started or finalised several antidumping investigations in 2016, the Middle Eastern countries were also cautious about starting new ones, as too much protectionism would harm local production as well.

The UAE is not planning to start any anti-dumping investigations into imports of Turkish steel, according to Mohammed bin Abdulaziz Al Shehhi, undersecretary of the UAE’s economy ministry, although it was possible that it would increase import duties across the board. “The UAE and the other Gulf countries have been seriously affected by imports from China. But there are many large construction projects in the UAE, planned for completion by 2020. We have

no plans for a dumping case for the time being, but import duties might be increased for all countries,” he said.

“However, we maintain a free-market economy, and if [steel] prices increase in 2017, we may not need to increase duties,” he added.

Namık Ekinci, chairman of the Turkish Steel Exporters’ Association, also warned that protectionist measures, are likely to backfire. Speaking at the Turkey-Egypt Business Forum, Ekinci said that anti-dumping measures and protectionism were most likely to damage local businesses in Egypt that rely on imports from Turkey. Ekinci met with Egypt’s trade & industry minister, Tareq Qabil, and highlighted the problems created by the anti-dumping investigations into rebar and wire rod imports from Turkey, Ukraine and China.

Turkey imposed an additional 30% import duty on steel pipes with a diameter larger than 200mm in February. However, the increased duty will not be applied universally with a number of countries and territories being exempt.

Latin America Ana Paula CamargoAn optimistic start to the year

The first month of 2017 has brought positive news for the Brazilian steel

market in terms of output and consumption volumes. Crude steel production increased by 13.30% year-on-year in January, to 2.83 million tonnes, while finished steel output rose by 10%, to 1.77 million tonnes, driven by increases in both flat and long steel segments, according to figures from national steel association Aço Brasil.

Flat steel production was up by 11.30% over the same period, to 1.06 million tonnes, while long steel output grew by 8.10%, to 719,000 tonnes. Apparent steel consumption in Brazil increased year-on-year by 7.90% in January to 1.40 million tonnes.

But are these upswings a signal that the Brazilian steel industry is recovering? Figures for local sales and imports are still forcing market participants to be cautiously optimistic about the short-term scenario.

Domestic steel sales in Brazil were stable year-on-year in January, at 1.23 million tonnes,

while finished steel shipments were unchanged at 1.21 million tonnes, according to Aço Brasil. Of this total, flat steel sales amounted to 739,000 tonnes, up by 8.80%, while long steel sales reached 473,000 tonnes, down by 10.80%.

However, Brazil saw its steel import volumes nearly double year-on-year in January, to 209,000 tonnes from 105,000 tonnes. Imports of flat steel surged to 142,000 tonnes from 46,000 tonnes, while long steel imports increased to 41,000 tonnes from 37,000 tonnes. This growth was stimulated by a more favourable currency exchange rate in Brazil, as well as the difference between prices of domestic and imported products.

That said, the competition in the national steel market is fierce, with players fighting for market share while trying to improve their margins amid higher input costs.

Meanwhile, the export market, which has been an escape valve for Brazilian mills, continues to be unattractive due to the unfavourable currency rate and increasing trade policy actions around the world.

South Africa’s government will this year pursue greater state participation in

mining through new legislation, according to the country’s president, Jacob Zuma.

The government is set to create a standalone state-owned mining company through what Zuma referred to as the Mining Company of South Africa Bill. The president said in his State of

the Nation address, that the bill would be presented to the cabinet and parliament later this year.

However, the details of the Mining Company of South Africa Bill are as yet unstated.

The idea of passing legislation to create a state-owned mining company was floated in 2014 by former minister of mineral resources, Ngoako Ramatlhodi. At present, the state has some involvement in mining through multiple vehicles, including the

African Exploration and Mining Finance Company, held in the Central Energy Fund.

The South African mining industry has been under severe stress for some time amid the global commodity price slump. Adding to mining companies’ woes operating inside the country has been high production costs, slow economic growth, costly industrial action by workers seeking ever-higher wages, as well as an uncertain operating environment while legislation continues to be amended.

Nonetheless, the country’s president said in his address in February that improving

commodity prices have resulted in an upswing in mining output, which bodes well for the industry.

Anglo American’s Mark Cutifani said as much during the Mining Indaba four days before Zuma’s speech, stating that “reports of the death of mining has been greatly exaggerated”, paraphrasing the famous quote by Mark Twain. He also noted that the international commodity environment has improved, but tough and uncertain times lie ahead.

Mining companies, including South Africa’s state-owned ones, will have to step up their game to be successful.

Africa Bianca MarkramState seeks larger mining share



Profile

BRI

TISH

STE

EL


Roland Junck‘Restoring pridein British Steel’British Steel executive chairman Roland Junck, one-time ceo of ArcelorMittal, is calling on his lifetime of international experience in steel to restore pride in the British Steel brand, shape plans for further recovery and growth, and turn the long-products business into a national steel champion, he tells Richard Barrett

“I don’t like the word ‘career’,” said British Steel’s executive chairman Roland Junck. He has worked with thousands of academically trained people during his work life. “They were all wishing to make a career,” he noted, but he says that a career is not something you can plan.

“You must have a view of what you would like to do, so if there is a junction where you have to make a choice between two different paths – but you cannot guarantee that either will end up where you want – then very often it is a question of the moment, of the circumstances. You cannot plan that. It happens,” he explained.

“I prefer to say that I like to do what I like. If you can do that then you are probably better than if you have to do things that you don’t like. If you can combine that with your experience and an idea in your mind, then it works.” He adds that the probability to have made the career he has to date is very low. “The probability to become the ceo

of ArcelorMittal... but it still happened because of the circumstances.”

It is about knowing your direction, but also having sufficient flexibility to select opportunities. “You must have the flexibility and also the ability to sometimes say ‘no’. Most people think that to make a career they just have always to say ‘yes’, and that’s not true. If it’s something that is not aligned with your direction, you have to say ‘no’,” he stressed.

“I come to the end of my own career, if I may say,” he chuckles. It started with Luxembourg steelmaker Arbed in 1980. Junck was promoted to managing director of TrefilArbed Bissen in 1996. He became senior vice-president of Spain’s Aceralia two years later and was subsequently appointed as senior executive vice-president of Arcelor when Aceralia, Arbed and Usinor merged in 2002. He became the first ceo of ArcelorMittal in 2006.

With seven years of experience at zinc producer Nyrstar added to his

many years of steel experience, Junck later acted as an advisor to British Steel before his appointment as executive chairman in July last year. Since then, he has been working on a strategic plan with shareholders Greybull Capital, and British Steel’s management team based in Scunthorpe, to stabilise the long product businesses that were bought from Tata Steel and to make product-specific plans for each of company’s product units: rail, rod, construction and special profiles.

Underpinning all of this is the steelmaking process itself. “Steelmaking has to work as a business in its own right per se. It has to compete,” said Junck. British Steel sells semis, including billet and slab. The company’s blast furnaces in Scunthorpe are famously named after four queens. Junck says they will have to be more agile and British Steel’s system will need to be more flexible in future. Two are in operation, one is on standby and the fourth has retired. The company

‘It is a cultural change as much as anything else’

Profile


produces more than 2.80 million tonnes of steel each year.

Returning to profitability has required getting back to basics according to Junck. He notes that, despite Tata Steel’s focus on flat products now, it had started to change its vision for the long product part of the business during the year before the long product assets now held by British Steel were sold. He describes that change as “a restructuring (or turnaround) programme.” It included cutting costs by closing a coke battery and a plate mill and the launch of a number

of other initiatives to start to improve the financial situation, but there was still a great deal of work to do when British Steel relaunched on 1 June last year upon completion of the sale from Tata Steel.

“Fundamentally, it was a question of where to go from there on. That needed cultural changes. It needed a different approach and a different structure. Because you can ask people to improve, but if they don’t know what ‘good’ means, it is very difficult… You might have some benchmark figures from other plants in the group, but how do you

really improve and generate the results needed to fill the pipeline?

“My main challenge fundamentally was not only to continue with a transformation plan, but to create a sustainable business that is outward-looking out of an inward-looking division. It is a cultural change as much as anything else.”

Achieving changeHow is that change being made?

“Here it was a production hub where there was no business culture – it had to be set up. That had to be

Personal career historyKey roles pastArcelorMittalRoland Junck was ArcelorMittal’s first ceo when the world’s still-largest steelmaking company was formed in 2006. After three months, he resigned the post, but stayed on as an advisor for a year at Lakshmi Mittal’s request. “It was fundamentally that you cannot have two captains on a boat. After the three months, it was a question of integration and I was the only one who was able to do that in bringing the two groups together,” said Junck.

Immediately after the merger, Lakshmi Mittal became company president while Roland Junck became ceo. Junck and Mittal had different priorities in mind for the newly merged global steelmaking company immediately post-merger: “It was clear that we had a lot of differences, but it was also clear that after one year I would in any case be deciding what I wanted to do next,” said Junck. He says that personal relations remained very good and that Mittal asked him who might be his successor as ceo. Junck was flattered that Mittal actually decided that it could only be himself.

Junck originally came from Arbed in Luxembourg. “Then I was taking over the Spanish steel industry (Aceralia) when it was privatised in the name of my mother company. So I was running Aceralia, but I could see that it would be difficult to bring those two companies together because Aceralia was of the same size as Arbed and it was much more profitable.”

He says the question then was whether to merge three steel companies, including France’s Usinor-Sacilor, which had already shown interest in Arbed. “I was in favour of that because I thought that it was better,” he recalled.

Arcelor was thus created. “I was in charge of long products and they were the only ones

that were growing,” said Junck. “Arcelor was created to reduce the capacity for flat products, to optimise that, close all inland plants, and to concentrate on the [long products] division which was growing,” he added.

“After we grew long products significantly, we also wanted to do that in flat products, including looking at other [flat rolled steel product] companies.” He said that made Lakshmi Mittal nervous because Arcelor was waking up to global growth potential. Arcelor were minded to “go for it” with whichever partners globally were willing to become part of Arcelor’s growth.

“He [Lakshmi Mittal] decided that the only way to stop that would be to make his offer for Arcelor. It was a brilliant decision.” Junck also recalls that the European Commission wanted to have a few steel champions and so Mittal’s successful bid for Arcelor was the right decision for him at that time.

Junck’s role pre-merger had actually been to find suitable partners as a defence against Mittal’s bid, which included well-documented tie-up plans with Russia’s Severstal, subsequently abandoned when the merger of Arcelor and Mittal Steel went ahead.

“Fundamentally his [Mittal’s] idea and our idea was that two or three others would also grow like that to a similar size to become steel champions,” Junck recalled. The enormous growth in China’s steelmaking capacity subsequently changed the global steelmaking landscape.

NyrstarJunck’s next role, at zinc smelter Nyrstar, saw him broaden his experience into zinc mining. “You need to have money to integrate into mining upstream,” said Junck, something that he oversaw at Nyrstar, which was a company created in October 2007

from the smelting assets of Umicore and Zinifex. “You have to be optimistic in zinc, but you have to be very optimistic to go into mining,” Junck asserted.

The rationale for forming the new company was that it would be number one in zinc smelting and a base for further consolidation, independent from China’s control of 45% of the global zinc smelting base.

Junck says that when he joined the board at the end of 2007, the company’s prospects actually did not look so good in prevailing market conditions and questions were being asked about the best way forward. At the end of 2008, the board asked Junck whether he could take over the role as ceo for three months. “I took it over in February 2009, but it took me seven years!

“We changed completely. We integrated upstream,” he explained. It was known that the volume of zinc ore mined is limited and that a few big mines, like the Century mine – one of Nyrstar’s suppliers – would come to the end of its life.

“So we decided to integrate into mining, but we also decided to do something else. Too much of our volume was in the hands of traders. So as soon as offtake agreements stopped, we took them in-house. Owing to European requirements, the first one was when Glencore and Xstrata wanted to merge and they had to give theirs up. But they also had to give up their shareholding in Nyrstar, so we lost a relevant shareholder,” said Junck.

“That left us vulnerable,” he recalled. “I was ‘annoying’ [to traders], because I was the biggest producer of zinc metal with our own zinc mining – even if this cost of mining was high – and was taking more and more volume out of the market and taking it in-house.” Junck decided to leave Nyrstar at the end of 2014.


British Steel will build on its existing international supply of rails as railway networks modernise and expand

set up by the organisation, by the structure, creating business units; making sure they understand what a profit and loss is and the balance sheet for each business unit, making sure they understand what the vision and the strategy would be. It starts by looking at strengths, weaknesses and opportunities. Those were things which were not always present,” Junck explained.

He says that the way to make people buy in to such changes is to work them out together. “That’s what we actually did. So that our people can reach their own conclusions as to which direction the future should lie.”

He adds that the willingness of people who had lived through the loss-making years to embrace this approach was high. “It was a kind of relief to be able to work in a different environment, where the total focus was on their business – not an average or an optimised figure – but on them,” he stressed. “This also had significant support from the trade unions, because we shouldn’t forget that the closure of some assets and subsequent restructuring had resulted in a reduction of 1,200 people in the workforce.”

It is about taking local responsibility for the direction of the business rather than depending on a centralised management structure of the past. “It goes not only through the organisation and the focus, but also the processes – a capex process – so ‘How do I ensure that I have a process in place so that for the next budget I know exactly what my capex should be over the next 3-5 years?’ But for that you need to have a vision and you need to know where you want to go. Otherwise you cannot do that.”

He notes that spirals can go up as well as down and that divisions that are not the best performers in a group can get overlooked when scarce resources like capex are allocated, which means matters get worse. “You have a spiral which is either positive or negative. If you realise that and you know where you want to go and what you have to do, there is no reason why you cannot turn it up.”

He adds that has certain conditions linked to the wider world: “Even if you know that you have to turn around and you know

that you have to cut costs, and you understand what it means to be in the first quartile of your steel peer group, you still have to have the creativity to find ways to do that; because realising what good means and realising that the gap exists is not enough.” Then you have to have the ideas and implement them.

A crazy idea?Junck is well aware that in a world in which China produces half of the steel, some wonder how that can work out for British Steel. “Some of our competitors on the continent have said that it’s crazy not to let this business die, but that is ridiculous because the size per se in the world today is far less important than it ever was before,” he stressed.

“I mean when the ArcelorMittal deal was done, and the financial markets pushed it in that direction, [the philosophy] was that ‘big is beautiful’ and the more consolidated you are the better your results, but that is very difficult to do if China produces half of the steel, and especially if you have big swings of overcapacity or investment,” he asserted.

He notes that, for western countries, adding value to activities is more important. “Steel remains a conversion business – you convert a basket of raw materials into finished products. But that is a more ‘antique view’. What you should actually do is the net added value: the added value above the costs of your raw materials allows you to achieve the results,” he explained.

He reminds that, for too long, steel was working more on production volumes and company size. “In the beginning, you also had some significant synergies through procurement, but in this world that is not the case anymore. Being present with this same kind of production in China, South Africa or the UK doesn’t really help you. It increases the complexity, but it does not really help you.”

He says the question now is whether a small producer in its natural environment can still play a ‘right role’: “And a right role means being a sustainable business: being a business that produces something more than it invested: that it has something left on the table.”

Junck says that when he looked first at the new British Steel – before the deal was done on 1 June –he concluded that from the market or product perspective, there would be a raison d’être for the company. “It is the main supplier for rails in the UK and in France, but also in the UK for the construction market, right up to the big skyscrapers in London – plus the special profiles for major customers such as Caterpillar.”

The UK is the main but not the only market for British Steel’s construction products. “Rail is less than 50% UK, with more business in France – so it’s high-speed trains and railway networks: it’s an area where you have to go into much more added value, the logistics, present the rail in the way that it’s needed,” Junck summarised. “So there is a lot of down-the-value chain development that has to happen.”

Just as for steel flat products for the automotive sector, long products developed for, and in partnership with, their end-users are becoming increasingly common. “Even in construction now, supplying a beam is not the point – you have to work together, if possible with the architect. Because you want to be in the process to help design it, or at least contribute in such a way that you are helping towards designing the most efficient building, the lightest weight etc.” Junck said.

“All this is what British Steel was doing in the past,” he recalled. “There was the privatisation, but the other thing is what British Steel once was. When I was an engineer we always looked at [the former]

‘We can really play a role in regional areas that have been paralysed by globalisation’

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British Steel and the fact that steel intensity (per capita steel consumption) was the highest in the UK: the car parks, the buildings, the bridges were made from steel. They had done that, they had developed that, they had been working advanced steps in order to do that and we still have that image.”

He sees pride in the brand, “Because we can revive that part of the metal that made it great, especially when you look at our vision now, which is to be a national champion, and a regional developer and a competitive exporter – that fits perfectly well.”

Embedded in industryJunck also stresses the importance of British Steel being a partner of choice, recalling that many reconnections had to be made: “Suppliers and customers were waiting in case we went bust, but we didn’t. When I look now at the number of reconnected businesses, as suppliers or customers, it comes down to confidence in us and to our brand.”

He sees sustainable advantage in British Steel providing local demand: “That also means that we will become more and more a part of the remaining industrial tissue that still exists and for that reason, also, our interest in everything that the government does in terms of – I don’t call it re-industrialisation – but at least making sure that we are linked and connected to the other national stakeholders, whether it is universities for R&D, for example. Because for those added-value products you can only continue to develop if you work on R&D. It is only by knowledge that you make such things move ahead. We are reconnecting to that.”

He adds that the strategy is aligned with UK government priorities. “We have to redevelop the regions – in our case mainly Teesside or Scunthorpe – which have been really paralysed by, I should say, a very liberal way to look at its industry.”

He says that British Steel works actively with the UK government as part of the country’s steel sector, but

also as an individual company to see what can be done within the framework of the UK’s industrial policy. The government set out plans on UK industrial strategy in a green paper in January this year, including ten pillars on which strategy could rest.

“As I call them, the ‘ten pillars of wisdom’ that the government has issued,” said Junck. “To be honest, they are not very extraordinary – they are just what other countries have been doing over the past 10 or 15 years. So for us, redeveloping and creating jobs in the region, and attracting other suppliers to the region is pretty important.”

British Steel has taken on over 350 employees since its launch in June last year. “We can really play a role in regional areas that have been paralysed by globalisation and by getting embedded in the network of other activities of stakeholders, institutions, government and procurement – another important part in the UK – and then also being competitive in exports,” Junck stressed.

Brexit effectExports have a relation to Brexit via exchange rate impacts. “For the time being, we are more or less balanced in terms of dollar, euro and pound, and so in reality the only impact of the Brexit announcement [the referendum result] was on the exchange rate,” said Junck.

He says that he likes natural hedges. “Our sales outside the UK allow us to bring in the euros and dollars, which are the currencies for our raw material prices. The raw material price basket has been changing, with coal going up and down, but fundamentally it’s neutral for us,” he explained. “For rails, we have our own rolling mill in France, so we are a key supplier for the French railway and those are links which will remain.”

He is not worried about Brexit. “Obviously everybody wants to have free access to every market. I am also not against imports to the UK. But we must be in a position as a local producer to defend our position. Even when we had this spike in coal, and so a strong increase in the costs of the raw materials basket, we had to apply price increases [to company

Personal career historyPerception, truth and liesJunck has a very modern house in Switzerland. “I have a difficult situation,” he says with a smile. “I have my home in Luxembourg. I am a Luxembourger and am deeply European. I live in Zurich, and so I am neutral by nature. And as chairman of British Steel, I support Brexit as much as I can!”

His Swiss home houses a collection of modern art. “I have been in China probably 50 times. Arcelor was trying to buy steel assets there and I was running around a lot,” he recalled. His visits gave him the opportunity to further his and his wife’s interest in the work of contemporary Chinese artists, to build a collection, and for him to meet some of the artists.

Junck’s own creative talents have found photography as an outlet. Among a number of exhibitions of his work, one referenced a poem by a Spanish poet. “When I was running the Spanish steel industry after privatisation, I got more in touch with Spanish culture,” Junck recalled. The poet had said “Nothing is true. Nothing is a lie. It all depends on the glass through which you look at things,” quoted Junck. “That is actually true. It is actually even more true now in the post-factual world!”

Another remark which Junck took to heart was made to him by Severstal ceo Alexei Mordashov when Arcelor had to unwind the deal Arcelor arranged with the Russian

steelmaker before the formation of ArcelorMittal: “‘What means victory? What means defeat? That is a question of the moment.’ It’s true,” said Junck.

“What I am saying by this is that you have to put things into more relative perspective. You are never the winner forever. There is always something different and you can see the same thing in two different ways,” he explained.

Even photography can ‘lie’. “There is nothing so absolute and that is what I was always interested in. When you do photography, you change the distance, the angle, and you can look at things differently and show them completely differently to how other people perceive them. That is the reason I have always been fascinated by that.”

He says that he cannot help himself from taking pictures on his travels: “I just see things. I have not the time to work them out, to prepare them and show them, but I just see things. It becomes a training. Your neurons become oriented like that.”

He adds that Twitter has great power to alter perceptions now. “While an artist might aim to put particular emphasis on this or that, today you can do that with just one quote on Twitter. The power of the new media has overtaken that possibility from [traditional] photography in a much stronger way,” he concluded.


products] in the UK market. Despite the fact that we did that, as the leader for the first time again we were able to increase our market share.”

He says that shows the strength of restoring a leadership role in a national market, adding that the company’s UK market share in construction had fallen to 30% in recent times. “Generally you would expect that to be 50 or 60%. We are back up to 45%, but that is something we still need to work on,” he added. “We achieved that under the most difficult conditions in the market. Even our competitors would expect a national leader to guide them: as they do it in their countries. So we are coming back to that situation.

“We have started now with looking more at partnership on projects – with customers or other producers, with upstream or downstream or sidestream, it doesn’t matter – any partner if it makes sense and it adds more value.” He reiterates the importance of adding value: “Otherwise you are still too vulnerable to the swings of your raw material basket.”

He points out that other companies, such as Austria’s voestalpine – a competing steel rail producer – have done similar in a very successful way. “Our philosophy is the same. It delivers more added value by more co-operation, links and being embedded with other economic actors. But having a competitive steelmaking base. That is already what we do.”

Junck says that fundamentally British Steel has to be “as competitive and efficient as possible in the upstream and dynamic in the downstream.”

CapexSome capex was needed to take the plant in the direction British Steel is heading. Junck says that £40 million has been committed for this year already. “But that is not the point. The point is what is the recurring capex? There again there will be a change in philosophy. I want to invest capex where there is a return – not just for it to be there just to keep things alive. That is a switch that will be important,” he stressed.

Descalers for special profiles are an example of a £2 million spend already made. “It is a question of quality. For

a long time the surface and dimensional qualities that the competition were able to deliver were better, we are now getting back to that level.”

It fits with the overall company strategy. “Tomorrow, delivering a tonne of steel, just rolling a beam, will not be the main target. It will be how you will work in the value chain with your suppliers, customers and the whole industry,” Junck summarised.

“I would call our product an engineering solution because, by the nature of it, that’s the case. That is exactly where it will be, and with the ‘internet of things’ that will be a revolution. In the past, British Steel was in advance. Those genes are still there somewhere. It just has to be adapted to the taste of the time – to the information revolution.”

Discussions are still under way with other UK steel industry companies over access to the UK’s commercial steel R&D centres: “There is a common reflection in the UK steel sector, if I can put it like that, to see which ones should be supporting whom. It is necessary.”

Junck sees revitalising major rail networks, such as India’s, and supplying rails and associated systems for high-speed, high-density modern rail networks as great opportunities for British Steel.

“There will be a revolution in trains in the future,” said Junck. He also wants British Steel to supply some of the supporting infrastructure needed for them. “We would also like to supply the catenaries, the bridges – we can provide more than just the rails. In other words a package plus downstream along the value chain.”

It is a strategy he says can work well for a relatively small steel producer in tonnage terms. “I don’t need to compete against a 100 million tpy steel producer in a world that needs solutions for the place where I am, and I need to be competitive, and then I can make my money.”

Greybull and a new ceoHow close and continuous an interest do shareholders Greybull Capital take in the business? “Not in running the business, but in terms of understanding the business. You need to have different views about

things. For people like myself, entering steel is almost like entering a monastery. You enter the steel business, live and stay with it, which can become a very narrow perspective,” Junck observed.

He says that having a more business-oriented perspective from Greybull and answering questions asked in different ways is “an excellent thing.” All the issues and the challenges have been discussed, he says. “My role is to make that work more understandable, and their role is to look at things differently and generate new ideas for consideration in a very constructive way,” said Junck.

“I have had very different shareholders – from government to private to tycoons. I like this one, and I do it, by the way, also because it is a precondition: if you have a positive relationship with the shareholders, and with the management, and with me in between as the executive chairman, if that works together, then it works very well,” he explained.

Junck says that Greybull are being particularly helpful in the new growth phase for British Steel. “They bring with them an M&A logic. They are bringing expertise to the new British Steel which you would usually find in a much bigger steel company. As one division or a production hub before, nobody was ever asking you that.”

Junck wanted an overall plan and structure in place, together with the direction of the company, in order to define the role of a ceo who can work in co-operation with the chairman, shareholders and local management to make it work. “That’s why I wanted to take the time to find the right candidate,” he said. “Now I think there is a lot of market orientation that needs to be supported, so I needed someone who understands steel, engineering products and what you can do and how you should behave in the market,” Junck concluded.

Just a few days after his interview with Metal Bulletin Magazine, British Steel announced the appointment of Peter Bernscher as the company’s new ceo. He will take up the role in early May, having clocked up 30 years of experience in the steel industry in holding senior positions with voestalpine.

‘I want to invest capex where there is a return – not just for it to be there just to keep things alive’

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LME’s ceo retiresLondon Metal Exchange’s ceo, Garry Jones, has retired from all positions within the Hong Kong Exchanges and Clearing Limited (HKEX) group, including his positions at the LME and LME Clear, where he was the executive director. In a statement issued by HKEX about Jones’s retirement, it is noted that he will serve as an advisor to the LME until the end of the year.

Matthew Chamberlain, the LME’s coo, has been appointed interim ceo of the LME, while Andrew Dodsworth, the LME’s head of market operations, will take up the position of interim coo.

Liberty House gets WildeLiberty House has appointed Mel Wilde, the former chairman of the International Steel Trade Association, as its new business development director.

Over the past year, Liberty House has acquired UK steel assets in Wales, Scotland, Kent and the West Midlands. The company recently reached an agreement to purchase Rio Tinto’s aluminium smelter in the Scottish Highlands and Tata Steel’s speciality steel division in South Yorkshire.

Global marketing manager for Sintavia Sintavia, LLC, a supplier of metal additive manufacturing services, has announced that Carolyn Allan has joined the firm as global marketing manager. Allan is expected to continue the firm’s recent success in providing additive manufacturing services and end-to-end development capabilities to Fortune 500 companies globally.

Outotec’s new president of Minerals ProcessingKimmo Kontola has been appointed president of the Minerals Processing business unit at Outotec and a member of the Executive Board of Outotec.

People moves

Kontola has a long career with Outotec in various leadership positions. He is currently leading the beneficiation business line in the Minerals Processing business unit and, prior to that, he was head of Outotec’s Americas region.

NLMK Europe Strip gets ceoNLMK has appointed Renaud Moretti ceo of NLMK Europe Strip, promoting him from his previous role as coo within the same business unit.

The division was previously managed by Ben de Vos, who is now ceo of NLMK International, which manages Russian parent company NLMK Group’s international operations.

New ceo for Antwerp Port AuthorityJacques Vandermeiren has been made ceo and president of the Executive Committee of Antwerp Port Authority. Previously, he was ceo and president of the Executive Committee of the network operator Elia, where he held various management positions since joining the business in 2001.

Pandir resigns from ErdemirAli Aydin Pandir has resigned as ceo of Turkey’s biggest steel-producing group, Erdemir. He had held the role since November 2013. He was also chairman of the board of directors. His positions have been taken over by Ömer Muzaffer Baktir, a mining engineer, who was previously executive vp of marketing at Turkey’s Ziraat Bank.

Atlas Copco names president and ceoMats Rahmström has been appointed president and ceo of Atlas Copco AB by the company’s Board of Directors. He has taken over the roles from Ronnie Leten who is leaving the business after eight years. Rahmström will be

the 12th president and ceo since the company was established in 1873.

Westgate joins LevmetLeon Westgate has joined Levmet as a senior metals and bulk analyst where he will lead the company’s analytics team. Westgate, who was ranked the top base metals analyst in Metal Bulletin’s third-quarter 2016 Apex ranking, with 98.44% accuracy during the period, has over 13 years’ experience in base and precious metal markets, including physical base metals finance and trading.

Fortescue appoints new cfoFortescue Metals Group has named Elizabeth Gaines, a member of its board, as its new cfo. Gaines will continue on the board as an executive director and will relinquish other corporate non-executive director positions prior to commencing as Fortescue’s cfo.

Promotion at Ovako for EricssonPhetra Ericsson, currently HR manager for Ovako’s Hällefors business unit, has been appointed as the new executive vp HR, Communication & Safety-Health-Environment for the Group.

Phetra Ericsson has been at Ovako since 2011 and has 16 years of experience in human resources and leadership, as well as operational experience, including as acting site manager at Ovako in Hällefors since the summer of 2016.

Trafigura appoints copper concentrates tradersLorenzo Konialidis and Ross Ridgway have been jointly appointed to the roles of co-heads of copper concentrates trading at Trafigura. The pair step into the role vacated by Maha Daoudi, who left the company for personal reasons last year according to a company spokesperson.

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reached the point where prices bottomed out. “The situation came about due to lots of copper supply, including new production, especially in Peru, and this in combination with a limited Chinese demand created a perfect storm for low metal prices,” he explained.

Limited supply?“For the rally to continue we need to see lower supply from strike action and export restrictions out of Indonesia. If these do not materialise copper will be at risk of a 10-15% correction,” said Hanson (see panel opposite). “The focus will primarily be on the supply side given the number of labour contracts which are up for renegotiation,” he added.

Alongside industrial action currently taking place in Chile at Escondida (see panel on p29), negotiations are also on the horizon for other Chilean mines. Freeport-owned Grasberg’s labour contract expires in mid-September, and the labour contract at Collahuasi, where ownership is split between Anglo American and Glencore, expires in mid-October. How willing workers will be to actually strike will largely depend on the outcome of the current stand-off at Escondida between Union No.1 members and BHP Billiton.

Underlining the potential impact of industrial action, research by JP Morgan suggests negotiations regarding labour contracts could involve 13%, or 2.8 million tonnes, of copper production this year, compared with 9%, or 1.9 million tonnes, of production in 2016. To put these figures into perspective, a 25-day strike in 2006 by workers at the Escondida copper mine resulted in a 22% year-on-year decrease in production. JP Morgan has now estimated that should Union No.1 members hold a prolonged strike at BHP Billiton’s copper mine roughly 75,000 tonnes could be removed from Escondida’s first-quarter production estimates this year.

Metal Bulletin Research’s Andy Cole estimates that the impact of an extended strike at Escondida

Copper supply uncertainties are looming large. Duncan Moore looks at the market outlook for the red metal in 2017

Copper prices hit a multi-year low of $4,310.5/tonne (LME Daily Official cash price) on 15 January 2016. Brief signs of recovery followed, and on 18 March last year the price peaked at $5,070/tonne, before dropping again to oscillate in the range around $4,500-$5,000/tonne. A rally late last year saw the price peak again at $5,910/tonne on 11 November. Volatility has continued into 2017.

Many analysts cite Chinese copper demand as being the main cause of fluctuations last year. “Copper, as well as other

commodities, got hurt by devaluation fears in China and the collapse in global oil prices which led to a rout in stock markets,” recalls Ole Hanson, head of commodity strategy, Saxo Bank. He says that the current upsurge is the result of Chinese demand, “both real and as a hedge against a weaker yuan, together with Donald Trump’s infrastructure pledge working to keep prices high.”

INTL FCStone Financial’s Edward Meir points out that 2016 was the fifth year of a bear market for commodities and it

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The world’s largest copper mine, Escondida in Chile, where a strike has helped to push copper prices higher

Copper supplyuncertainties


and industrial action at other locations later in the year could affect about 2.5 million tpy of capacity. “On top of that, there is capacity originally suspended in 2015 due to low prices, power issues in central Africa and the ever-present battle against declining ore grades. Supply will struggle this year and, historically, headlines about supply disruptions get speculators buying. We’ve seen that already, as copper prices burst through $6,000 on the back of the Escondida strike and force majeure. A lot of that strike-related speculative froth may well be blown off once the strike ends, but there’ll be another one not far off. It’ll create a volatile market, but one with an upward bias.”

New productionWhile industrial action is taking place in Chile there are plenty of other sources of copper that will be looking to fill the void created in the supply chain. International Copper Study Group (ICSG) figures show that global mine production actually rose 5%

year-on-year, or by 815,000 tonnes, in the first 10 months of 2016, with much of that growth attributed to a 43% (590,000-tonne) gain in Peruvian mine output, which stemmed from new and expanded capacity that has come online over the past two years.

Brazil’s Mineração Caraíba is expected to produce nearly 17,000 tonnes of copper in concentrate in 2017 as it resumes production under the new majority shareholder, Ero Copper Corp. “We forecast production to increase annually with an improvement in grades mined and with the commissioning of the Vermelhos underground mine

in the first half of 2019,” Ero Copper Corp ceo David Strang told Metal Bulletin in January. “With the commissioning of Vermelhos we expect production to be in excess of 50,000 tonnes of copper in concentrate annually thereafter,” he added.

Meanwhile, in Vancouver, British Columbia-based First Quantum Minerals’ copper production grew significantly in 2016, with continued gains anticipated through to 2019. First Quantum produced 539,458 tonnes of the red metal in 2016, up 31.2% from 411,025 tonnes the previous year. Its fourth-quarter production increased 26.1% year-on-year to 146,101 tonnes.

First Quantum’s Kansanshi mine (Africa’s largest copper mine) and its Sentinel mine in Zambia both saw increased output in 2016 too, producing a combined 392,872 tonnes of copper. The company is also currently expanding the Kansanshi Mine. First Quantum’s copper production is forecast to rise to 570,000 tonnes in 2017,

Saxo Bank’s Ole Hanson: “The focus will primarily be on the supply side given the number of labour contracts which are up for renegotiation”

Indonesian minerals export banFreeport-McMoRan’s Grasberg copper mine has been unable to export copper concentrate since the middle of January 2017. A ban on mineral ore exports by Indonesia’s Ministry of Energy and Mineral Resources was part of a wide range of mining laws first introduced in 2009, designed to keep revenue and income from the mining sector in the country. Until recently, however, the US-based miner had been granted temporary permits to allow its exports to continue.

PT Freeport Indonesia (PT-FI), which is Freeport-McMoRan’s Indonesian subsidiary, had a licence to export copper concentrate under a six-month permit which expired on January 11. The following day, the Indonesian government issued new rules stipulating the terms under which companies would be allowed to export minerals.

The new regulations permit the export of copper concentrate until January 2022, subject to various conditions, including conversion from a contract of work (COW) to a special operating licence (an

IUPK), commitment to completion of smelter construction in five years and payment of export duties to be determined by the Ministry of Finance.

In addition, the new regulations require foreign IUPK holders to divest 51% to Indonesian interests no later than the tenth year of production. Export licences are valid for one-year periods, subject to review every six months, depending on smelter construction progress.

Following the issuance of the January regulations, PT-FI advised the Indonesian government that it was prepared to convert its COW to an IUPK, subject to obtaining an investment stability agreement providing equivalent rights with the same level of legal and fiscal certainty enumerated under its COW. In addition, PT-FI advised the government that it is committed to commencing construction of a new smelter following approval of the extension of its long-term operating rights. PT-FI requested that concentrate exports be permitted without the imposition of a duty while the new licence

and stability agreement are negotiated. The COW would remain in effect until it is replaced by a mutually satisfactory alternative.

Indonesia’s Ministry of Energy and Mineral Resources has recommended that PT-FI be given a year-long permit to export over 1.1 million tonnes of copper concentrates in a statement released on Friday 17 February. However, Freeport-McMoRan reaffirmed its need for guarantees over its Indonesian investments in response to the recommendation.

“The permit was granted conditional upon PT-FI’s acceptance of an IUPK. As previously reported, PT-FI will only convert its COW to an IUPK if it is accompanied by an investment stability agreement with the same level of fiscal and legal certainty enumerated in the COW. PTFI will continue to protect its rights under the COW while working with the Government on a mutually satisfactory replacement,” a PT-FI spokesman said in a statement issued on 17 February.

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6

05

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Copper


imports in December, indicating a solid close to a strong year for China’s copper market. Barclays analysts estimated that China’s imports of the metal in December 2016 rose by 7.9% year-on-year. “The large year-on-year gain occurred despite a drop in scrap imports and net imports of refined copper, as China’s copper concentrate imports (on a gross tonnage basis) rose by 28% year-on-year. In the coming year, we expect the trends that drove 2016 to continue, although growth rates should moderate as China’s copper demand slows,” their report concluded.

Prices remain high“The refined copper market will be in deficit this year and stay close to balance at worst in 2018-2019,” says MBR’s Andy Cole. He continues: “But mine supply growth has peaked and will slow. This should be the precursor to a concentrate supply crunch coming around 2020. Markets are forward-looking and prices will start factoring this in early. So, although there will be plenty of volatility on the way, we forecast a generally upwards trend in copper prices over the coming years.”

His opinion on the direction of copper prices is echoed by Edward Meir: “We think prices will likely move higher heading into the strike and then retreat slightly once the action itself starts, [which is] typical of these situations.”

How high prices will go through 2017 will largely depend on how committed to industrial action miners are, not only at Escondida but also at other mines where labour contracts are due for renewal, in tandem with the Indonesia government’s desire to control its country’s mineral exports.

At the time of writing (February 22), the LME Daily Official cash price for copper stood at $5,976/tonne, as the strike by members of Union No.1 entered its third week and Freeport-McMoRan had not yet reached an agreement with the Indonesian government.

and to 600,000 tonnes and 605,000 tonnes, respectively, in the two subsequent years due to mine expansion.

Yet more new copper sources could be forthcoming from other African locations. Alecto Minerals plc, an Africa-focused gold and copper exploration and development company, has raised £1 million/$1.25 million (before expenses) through the issue of convertible loan notes, which it will use to recommence operations at the Mowana Copper Mine in Botswana. In a report published on January 17, Alecto Minerals said: “The mine has a mineral resource inventory of 683,000 tonnes copper in the Measured and Indicated categories (JORC-code compliant) with an additional 945,000 tonnes Cu in the Inferred category”. The company’s plan is to bring the mine back into production in Q1 2017.

Demand growthChina’ global leadership in copper demand looks set to continue through 2017, albeit with less growth. Customs data released on 13 January show China’s imports of unwrought copper and copper fabricated products totalled 4.95 million tonnes in 2016, up 2.9% compared with the previous year.

“Chinese demand is still reasonably good and will continue to be so for the first half of the year – continuing to be up around 3%,” notes Edward Meir. “Demand for copper has had a good run in China thanks to the boom in real estate. There was a huge demand for iron and steel because of that and base metals have been piggybacking on that demand. By the second part of the year, the market will cool,” he predicts.

Meir’s forecast is similar to the outlook put forward in November 2016 by the International Wrought Copper Council (IWCC), when it published a report showing its latest six monthly review of the copper market and its finalised forecasts for copper supply and demand. It stated that: “For China, in 2016 the IWCC forecasts that reported (or real) demand for refined

copper might increase by 4.1% to 10.50 million tonnes. For 2017, the forecasts suggest reported demand in China might be 10.75 million tonnes, up 2.4% compared with 2016.” This suggests that while there is still a strong demand for copper in China it is beginning to weaken.

Aurubis also addressed potentially weaker demand growth in its Copper Mail (January 2017). It noted that China is facing considerable challenges in 2017. “These arise from the balancing act between maintaining the growth targets established in the five-year plan (at least 6.5% for the years until 2020) and the structural reforms necessary to secure growth.”

The Aurubis report noted International Copper Study Group data that showed, for the period January-September 2016, there was actually a global production deficit of 84,000 tonnes of refined copper. For that period, demand increased by 565,000 tonnes compared with the previous year – a 3% boost. China evidently played a key role in this development though, at 276,730 tonnes, the country’s imports of refined copper in November were 23% lower than their level in November 2015.”

In late January 2017, Barclays Research ‘Instant Insights’ noted that there had been a recovery in China’s net refined copper

Miners strike in ChileBHP Billiton, which owns 57.5% of the Escondida copper mine in Chile, rejected worker demands for a 7% rise in wages and a 25-million-peso end-of-conflict bonus, according to Union No.1 – the largest mining union at the mine. That is what prompted a strike that began on 9 February, as government-mediated negotiations between the company and workers failed to bring the parties any closer to an agreement.

According to Union No.1, which represents the majority of Escondida’s workers, the company explained that workers must adjust to the market in order to keep competitive with low costs. The union says the company has maintained its tough position, limiting itself only to declare its willingness to discuss all the issues, but maintaining its intentions over wages and benefits.

The union had said it is prepared for a “tough and long strike” – one that could last as long as or even longer than the 25-day strike effected in 2006.

FCStone’s Edward Meir: “A limited Chinese demand created a perfect storm for low metal prices”

MBR’s Andy Cole: “Historically, headlines about supply disruptions get speculators buying”

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Copper


copper miner with a minority stake in the asset, initially challenged the decision to sell to a Chinese owner on the grounds that it said that it had not been fully consulted on the proposed deal.

Gecamines has interests in the Kambove, Kipushi and Kolwezi copper mines, a copper smelter in Lubumbashi and a hydro-met plant in Shituri. Other major operations include Eurasian Resources Group Frontier Mine, and Sicomines, which is a joint venture between Gecamines, China Railway Construction Corporation and Sinohydro Corporation.

Exciting prospectA new and exciting prospect is Ivanhoe Mines’ US$2.5 billion Kamoa project, of which it owns 95% with a 5% stake held by the DRC government. It is reputed to be Africa’s largest high-grade discovery and the world’s largest undeveloped high-grade copper deposit. Kamoa requires US$1.4 billion to be commissioned and is expected to produce 300,000 tpy when fully developed.

It is expected to produce concentrate with an exceptional 56% copper content and an extremely low arsenic content of 0.02%. Power supply is a big challenge in the area of the deposit, but Ivanhoe – in addition to its 30-year mining licence – has secured a deal with DRC’s power utility SNEL to refurbish two hydroelectric plants to provide power to the project. Currently power supply in the region is met by imports from Zambia, but this can prove unreliable even at the best of times. Vedanta Resources, which operates mines and a smelter in Zambia, recently stated that “The Zambian power situation is challenging, but improving” and that “Power tariffs are being increased.” Low water levels periodically affect hydropower production at dams in Zambia.

Mining royalties in DRC are set at the competitive rate of 2%, with a corporate tax rate of 30%. Despite a high and unfavourable score in the World Bank’s “ease of doing business index”, copper production and exploration in the country are set to increase more rapidly over the next few years.

Jonathan Barnes outlines the contribution that the two largest producers of copper in Africa, the DRC and Zambia, are making to the continent’s output nowAfrican mined copper output is dominated by the copper belt that runs through the southern part of the Democratic Republic of Congo (DRC) and the northern reaches of Zambia. The copper belts of DRC and Zambia hold the world’s second largest reserves of copper deposits – approximately one-third of the scale of Chilean reserves according to Metorex. Reserve grades can be as high as 5%, which compares very favourably against a global average of 0.7-0.8%. The region also holds considerable reserves of cobalt – perhaps as much as one-third of the world’s proven reserves.

DRC and Zambia typically produce 85% of total African mined copper output, with smaller contributions from Eritrea, South Africa, Botswana, Morocco and Namibia. DRC’s copper mine production averaged 400,000-500,000 tpy between 1970 and 1988, but dropped to less than 50,000 tpy during 1992-2001, owing to regional conflict.

Since then production has been on a steady upward trajectory and may well exceed 1 million tonnes for the first time in 2017. According to the local Chamber of Mines, total mined copper production (concentrates and electrowon) in DRC, fell by 14% year-on-year to 466,250 tonnes in H1 2016, compared with 990,000 tonnes in 2015. For 2016 as a whole, the latest projections imply only a 1.7% fall to 978,414 tonnes.

This performance is remarkable, considering that output from Glencore’s Katanga mine was suspended in September 2015, initially for a period of 18 months. It is, as yet, unclear if the mine will restart in Q1 2017 as intended, or whether its restart will be further delayed. Glencore announced this voluntary production cutback – together with the Mopani mine in

Zambia – at a time when copper prices were falling steeply and there were fears of oversupply in the concentrates market.

The recent sharp recovery in copper prices, if sustained, may pave the way for mining to recommence at Katanga, perhaps sooner rather than later, and especially if problematic labour contract negotiations in Chile result in strike action in H1 2017. Glencore has purchased the remaining 31% stake in Mutanda Mining and a 10.25% stake in Katanga Mining for US$922 million and US$38 million, respectively, from Fleurette Properties. Glencore now owns 100% of Mutanda Mining and 86.33% of Katanga Mining. Mutanda is the largest copper mine in the DRC, with production of 162,300 tonnes in the first three quarters of 2016.

Changing handsOne of the largest copper mines is Tenke Fungurume Mining in the south-east of DRC. It comprises open pit mining, leaching and SXEW operations in addition to producing cobalt hydroxide. Following the completion of its second-phase expansion, its production capacity is now 195,000 tpy. In 2015 it sold 467 million pounds of copper cathode (from ore graded 4.0%) and 35 million pounds of cobalt.

The mine had long been operated by Freeport McMoran (56%), Lundin Mining (24%) and Gecamines (20%), but Freeport chose to sell this asset (its 70% stake in TF Holdings Limited which owns 80% of Tenke Fungurume) to China Molybdenum for $2.65 billion in cash and a consideration of up to US$120 million, depending on the subsequent movement in copper and cobalt prices. The deal was completed on 16 November 2016.

Gecamines, the state-owned

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Copper


DRC politics are difficult. The government and the main opposition parties have recently reached an agreement on a deal that will see President Joseph Kabila leave power after the next election. Kabila was due to have left power after the end of his second term in December. The end of his mandate on 19 December brought protests, deaths and arrests across cities in DRC after two days of violence. However, in a concession, the vote for a new election will not now take place until the end of 2017.

Zambia resurgentZambian copper mine production reached a historical peak of 769,000 tonnes in 1969, before the industry was nationalised in 1973 under Zambia Consolidated Copper Mines. After this the industry went into a serious and steady decline, with production reaching a low of 250,000 tonnes in 2000. Since then production has witnessed a fast recovery after re-privatisation, with annual output exceeding 500,000 tonnes by 2007 and 763,000 tonnes by 2013.

After dipping slightly in 2014-2015, production is expected to reach 764,000 tonnes in 2016, with a further increase to 850,000 tpy predicted by the Zambia Chamber of Mines. Mine production in the first nine months of 2016 reached 576,000 tonnes, up by 8% from the previous year. However, because the price of copper had fallen further in 2016 than in 2015, it was actually worth US$3.2 billion, or 20%, less to the Zambian economy. Furthermore, 99,000 tonnes of this production came from a single new source – First Quantum Minerals Sentinel mine in the north-western province.

The mining industry, and especially the copper industry, is critical to Zambia’s economy. Recent studies have shown that 86% of the foreign direct investment into Zambia was due to the mining industry. Furthermore, 80% of the country’s export earnings come from the mining industry, as well as over 25% of all tax receipts.

The re-privatisation of the mining industry began in 2000 when the Mopani Copper Mines (incorporating the Nana and Mufulira assets) were sold to Glencore as the major

shareholder. At the same time, the Konkola Copper Mines (including the Nchanga, Konkola, Nampundwe and part of the Nkana assets) were sold to Anglo American, but these assets were subsequently returned to the government in 2002 and later sold again to Vedanta of India in 2004 (now Vedanta Resources).

According to the US Geological Survey, Zambia has proven copper reserves of some 20 million tonnes. That is worth US$95 billion at current market prices. Mine expansion projects planned for 2017 include the Mopani Copper Mine synclinorium project, NFC Africa Mining’s south-east ore body, Konkola Copper Mine’s Nchanga upper ore body and Lubanube Copper Mines’ Phase II expansion.

“The problem is that Zambia’s overall effective tax rate is still among the highest in the world. The most recent change in the mineral royalty tax in 2016, albeit a positive one, was the eighth change in the country’s mining tax in the last eight years, making Zambia’s mining tax regime one of the least stable in the world”, according to the Zambian Chamber of Mines.

The worst excesses were seen in 2015 when government revised the mining royalty tax to rise from 6% to 20% for open pit mines. This provoked an immediate reaction from Barrick Gold Corporation, which intimated a potential shutdown of its Lumwana asset in Solwezi. In July 2016, the government of Zambia introduced a new Mineral Royalty Tax based on a sliding scale of between 4% and 6% depending on the copper price: royalties of 4% are applied if the copper price is less than US$4,500/t; 5% royalties are charged at copper

prices in the range US$4,500-6,000/t; and royalties of 6% at copper prices above US$6,000/t.

It was hoped that this was to mark “A New Beginning” in the relationship between government and the mining industry as partners in the country’s development, despite a corporate tax rate of 35% before royalties. A World Bank study has shown that for every one job created in the mining industry a further five jobs are created in the local economy. However, just when it looked as though a more stable policy was about to be pursued, the Zambian Finance Minister Felix Mutati proposed an import duty of 7.5% on copper concentrate imported from DRC in his 11 November budget speech, designed to boost government revenues, with the tax due to come into effect with little warning from 1 January 2017. The Zambian Chamber of Mines successfully lobbied against the imposition of this duty. The smelters that would have been most affected had the duty been applied were Eurasian Resources Group’s Chambishi smelter and Vedanta Resources’ Konkola division.

The growing shortfall between Zambian smelter production and refined production is explained by sharly rising exports of anode and blister to feed China’s rapidly expanding smelting and refining industry.

The African copper industry continues to face a series of challenges and opportunities. Given China’s and Asia’s insatiable appetite for the red metal, the world certainly needs African copper.

The author is a senior UK analyst of global copper markets

Recent trends in African copper production

Source: ICSG Historical; 2016 Forecasts Bloomsbury Minerals Economics

Mine Concs Mine EW Smelter RefineryMine Concs Mine EW Refined

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Lead & zinc


deficit this year of plus or minus about a quarter million tonnes, although it will probably be slightly lower than it had been in 2016. He says that supply tightness should continue to be a key factor influencing the global zinc market, much as it had been last year.

This is because recent mine production cuts were so drastic, particularly with the permanent closure of two big mines – the MMG Century Mine in Australia and the Vedanta Lisheen Mine in Ireland late in 2015, due to exhausted resources – as well as Glencore idling about 500,000 tonnes of mining capacity. White observes that a total of 800,000 tpy of zinc mine production capacity was taken out of the market in 2015, which was the highest amount of capacity that had ever been taken out in one year. “Most of that capacity was either permanently lost or has not yet been reopened or brought back to full capacity and I’m not sure when it will be brought back on-stream,” he says.

Also, despite the rising zinc pricing environment, with LME prices going from a trough of $1,520/tonne in January 2016 to over $2,800/tonne by mid-February 2017, there have not been a lot of new mines starting up yet, with most of the mines that have started up being fairly small operations, according to KC Chang, a senior economist for IHS Markit’s pricing and purchasing service, explaining that the miners remain cautious about the cost of doing so.

Rather, miners are watching the current supply-demand conditions closley. They want to be confident that consumption – primarily galvanized steel demand – trends will sustain higher zinc prices before they are willing to invest in higher cost operations.

Steve Hardcastle, Sucden Financial’s head of client liaison, agrees, maintaining that because of the high cost of investment, zinc prices would need to get back to $3,000-$3,500/tonne and to hold there, which he says is likely due to strong investment activity and expectations of a greater rate of inventory drawdown, before there

The zinc market is likely to remain the star performer amongst base metals this year, and possibly into 2018, thanks to a combination of tight supply and improving demand fundamentals in both China and elsewhere, writes Myra Pinkham

“While 2017 should be a good year for most base metals, the outlook is particularly positive for zinc,” says Kash Kamal, senior research analyst with Sucden Financial Ltd.

It is possible, however, that zinc prices could begin to soften somewhat around mid-year should the current hints of tightness begin to disappear, if investor confidence begins to fade, if Chinese growth starts to ease and if discipline among zinc producers begins to slip, says Andrew Cole, principal base metals analyst with Metal Bulletin Research. Nevertheless, he is predicting that LME zinc prices will average somewhere between $2,225 and $3,050/tonne this year, up from $2,093/tonne in 2016 and $1,939/tonne in 2015.

“Metals analysts are in agreement that zinc prices will continue to go up. The only question is how high they will go over what time period,” observes

Stephen Wilkinson, executive director of the International Zinc Association (IZA).

Michael Widmer, metals strategist for Bank of America Merrill Lynch (BAML) says he believes the market will stay in deficit for the next two or three years. Robin Bhar, head of metals research for Société Générale has a similar opinion and predicts that the deficit should further incentivise demand and result in modest price increases for the next few years.

According to the International Lead & Zinc Study Group’s February monthly bulletin, the global zinc market’s balance of supply and demand fell into a 286,000 tonne deficit last year after experiencing a 189,000 tonne surplus in 2015. Paul White, ILZSG’s director of market research and statistics, says that the market will remain in a fairly hefty

SHU

TTER

STOCK

The growing use of zinc coating to protect steel from corrosion in construction and infrastructure projects is boosting demand

Zinc shines


‘China will continue to be a major force for increased zinc demand’

is likely to be any significant investment in sizable mines.

InventoriesInventories have been drawn down a bit, responding to market prices. Chang says this is definitely true as far as visible inventories, which started 2016 at 700,000 tonnes and are expected to go down to 500,000 tonnes in 2017. Widmer, however, notes that visible inventories have been declining for the past three years.

It is, however, uncertain what is happening with invisible inventories, although it is assumed that they were, and could continue to be, somewhat sizable given that, according to MBR’s Cole, at least to this point, there has not been a real shortage of metal to mirror the shortage of concentrate. “If the refined market starts to feel shortages of metal this year – and we may be seeing that in the decline in exchange stocks and the pickup in premiums lately – then that should maintain support for the zinc bull story,” he says. “But we are still wary that the structural tightness has already been priced in after the big outperformance by zinc prices last year.”

Despite the reluctance for miners to make new investments, ILZSG’s recent New Mine and Smelter Projects report observes that there was a net addition of 78,000 tonnes of global zinc mine capacity in 2016, with the most important openings being Nevsun Resources’ 85,000 tpy Bisha copper-zinc mine in Eritrea, East Africa, and the 58,000 tpy expansion of Trafigura Group’s Aguas Tenidas operation in Huelva, Spain.

White says that the Bisha Mine project had been on the backburner for a while, so that capacity was widely expected. As a result, global zinc mine production inched up slightly to 13.225 million tonnes last year, up from 13.202 million tonnes in 2015.

MBR’s Cole estimates that there could be a 14% – about 627,100 tonne – global zinc mine production increase this year with the restart and ramp up of Nyrstar NV’s Middle Tennessee mine, which is expected to reach its full 50,000 tpy capacity by November;

the restart of Red River Resources’ Thalanga project in Queensland, Australia; and higher output from Vedanta’s Hindustan Zinc Rampura Agucha Mine in India and the Antamina Mine in Peru.

Kamal says that the capacity idled by Glencore is not likely to be restarted until late this year at the earliest, with that restart likely to be done in a staggered fashion over a period of nine to fifteen months, depending on how high zinc prices go.

The tightness is now filtering down to the metals side. With concentrates being in such tight supply, it is affecting treatment charges, observes Sucden’s Steve Hardcastle, who notes that because of that it has been increasingly difficult for China to import zinc concentrates to be used in its smelters. Wilkinson says that not only are Chinese treatment charges at record lows, but the shortage of concentrates is having an impact on zinc metal production worldwide.

There were no zinc smelters closed and just limited capacity cutbacks last year. But that is already starting to change now that concentrate stocks are being drawn down, Cole says, observing that there are reports that certain Chinese smelters, including Zhuzhou Smelter Group, have begun to make cutbacks. Also, Korea Zinc, the world’s third largest producer of metal, announced early in February that it would be reducing its annual refined zinc production by 50,000 tonnes, which is a 7.7% year-on-year decline. “Other smelters may follow suit in the very short-term, which will likely strengthen the conviction of the zinc bulls,” Cole says.

Demand growsMeanwhile global zinc demand growth has been escalating. Kamal notes that with business sentiment improving as it has, global zinc demand will probably see about 2-3% year-on- year improvement this year. This follows a 3.6% increase in global refined zinc usage to 13.949 million tonnes in 2016 and a 2.0% decline to 13.462 million tonnes in 2015, based on the latest ILZSG data. This, Kamal says, comes on the back of infrastructure stimulus programmes both in China and Europe and improved sentiment in the USA that the policies of the new Trump administration, including plans for greater infrastructure investment, will support greater galvanized steel consumption. Galvanized steel accounts for about 55% of global zinc use, BAML’s Widmer estimates.

The renewable energy and infrastructure stimulus programmes of a number of countries have been a plus for galvanized steel, including galvanized rebar, production. Wilkinson says the global galvanized rebar market, led by the USA and Canada, is primed for rapid growth as more municipalities recognise the need for better corrosion protection. He says the American Galvanizers Association predicts that the galvanized rebar market could quadruple in size over the next few years with production growing to about 400,000 stpy in the USA alone.

“China will continue to be a major force for increased zinc demand,” Wilkinson says, noting that China has been consuming more zinc than had been previously anticipated. Not only is China using more galvanized steel in autos than in the past, but its manufacturers are using more zinc die castings in some of their consumer goods. “Also Chinese authorities are becoming more aware of the value of using more galvanized steel in their buildings and infrastructure projects to make them last,” Wilkinson notes.

With the Chinese economy being fairly weak at the beginning of 2016, there had been a lot of fear at the

Zinc settlement LME daily official $/tonne

Source: LME, Metal Bulletin

3,500

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Lead & zinc


time that there would be a hard landing there, Bhar says. However, after China’s government launched an infrastructure stimulus programme at the end of the first quarter of last year, it raised the country’s economic growth to 6-7%, which was double what it had been in 2015.

That, Bhar says, lifted Chinese demand for galvanized steel for both its building and construction and its automotive sectors. ILZSG reports that Chinese refined zinc metal usage increased by 8.6% to 6.724 million tonnes in 2016.

MBR projects that China’s refined zinc growth rate could slow to 4.6% this year. This, Cole says, is largely due to signs of lower, but still comfortably positive, infrastructure spending. He notes that short-term interest rates for commercial banks were raised by the People’s Bank of China right after the Chinese Lunar New Year holiday. “That could suggest that the authorities are preparing to take more concerted efforts to rein in credit growth going forward.”

While it is consumption in the construction sector that most industry observers say has had the greatest impact upon Chinese zinc consumption, the Chinese automotive market has been doing very well as wealthier Chinese households move from e-bikes to autos. Already at near record levels, IHS Markit’s Chang says Chinese auto output could move up slightly to about 26.2 million vehicles this year.

Bhar says that auto sales will probably rise about 5% this year, which would be a much slower growth rate than seen last year when, helped by a governmental tax cap on small–engine cars that is expected to be lifted this year, they increased by 13%. But, he says, should the tax cap be extended, another double-digit auto sales increase could be possible.

While it is possible that automotive growth in the UK and the USA could slow, Kamal says that is off of a very high level and will remain quite robust, with a lot of that coming from steel, including galvanized steel. “Aluminium use hasn’t really taken off other than for high-end vehicles,” he asserts. Meanwhile there is a growing trend

of more, larger vehicles being produced on both sides of the Atlantic.

Chang observes that with Europe and the USA being mature economies, they are not growing as quickly as China. Of the two, Europe is seeing the least growth in zinc demand even with policymakers looking to stimulate demand there. According to ILZSG’s White, Europe’s zinc metal usage actually eased 0.3% to 2.405 million tonnes last year and is expected to either remain flat or improve just slightly this year.

That, Bhar says, is because there continues to be a bit of uncertainty in Europe with expectations of only about 1-1.5% GDP growth despite the fact that its automotive sector has seen some recovery from its low point a few years ago. Also, while the building and construction market has strengthened in some portions of the region, particularly in Germany and the UK, it remains weaker in others, such as in France and Italy.

White says that US refined zinc usage saw a 12.4% decline to 816,000 tonnes last year, but he expects that it will rebound this year due to increased demand for galvanized sheet there in the construction, automotive and white goods sectors this year. “How much

it rebounds depends upon the impact of the Trump administration’s policies, including infrastructure investment, trade policies, tax reform and the easing of regulations,” he says.

In general, market observers indicate that just one month into the new administration it is too early to quantify its likely impact. “There is hope that there will be a significant increase in infrastructure investment,” Bhar says. “But that isn’t likely to happen until late 2017 at the very earliest, and more likely not until 2018 or 2019.” Also, he says, there should be a net positive amount of zinc use in the US auto sector this year, despite the increase in aluminium use in an effort to meet the new, more stringent fuel-efficiency standards. This, Bhar says, is because North American auto output hit another record last year with about 17.5 million units produced with nearly 62% of those vehicles being light trucks, which are larger vehicles and therefore use larger volumes of galvanized steel.

In addition, while down 1.5% in 2016, US zinc die casting demand, which accounts for about 25% of all US zinc consumption, is expected to be up about 2.5% this year thanks, in part, to increases in housing starts, according to Daniel Twarog, president of the North American Diecasting Association.

Demand in Asia outside of China, especially India, is also seen as being on an upswing. Last year refined zinc usage increased 14.4% to 723,000 tonnes, according to ILZSG. IZA’s Wilkinson says that it could continue to see double-digit growth in coming years.

“This is one of the best times to be in the zinc market,” Wilkinson maintains. “It is a sustainable market and will likely continue to grow in both existing markets and such new applications as fertilizers.” He admits that the aluminium industry is spending a lot of money to increase its automotive share, helped by new fuel efficiency standards. “But advanced high strength steel is also very lightweight,” Wilkinson points out. “I think the zinc market has never looked better.”

The author is a specialist writer based in New York.

Global refined zinc supply-demand balance (‘000 tonnes) 2015 2016 2017f Year Year YearChina 5,860 6,086 6,281Americas 1,779 1,707 1,756Europe 2,472 2,418 2,394Others 3,541 3,316 3,364Production 13,651 13,527 13,795% change y-on-y 1.2% -0.9% 2.0% China 6,191 6,710 7,022USA 931 809 819Europe 2,413 2,452 2,482Others 3,928 3,905 3,893Consumption 13,463 13,875 14,215% change y-on-y -2.0% 3.1% 2.5% Balance 188 -348 -420% of consumption 1.4% 2.5% 3.0% Reported stocks 1,465 1,298 878% change y-on-y -6.4% -11.4% -32.4%Weeks consumption 5.7 4.9 3.2

Source: ILZSG, WBMS, Metal Bulletin Research

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To meet the requirements of today’s steel

industry, innovative technologies are called for.

At Primetals Technologies, we strive to be your

partner in the manufacture of ultra-thin steel pro-

ducts and high-quality steel grades through the

patented Arvedi Endless Strip Production (ESP)

technology. Our know-how and experience will

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Lead & zinc


galvanizing conference in New Delhi that his ministry was engaged in discussion with the railways and other ministries to ensure zinc coating of at least the minimum thickness required for steel for use in corrosion-prone regions, and in particular in areas where corrosion could cause accidents.

Some observers have interpreted Singh’s announcement as a step towards “compulsory galvanization of fish plates and bolts.” Sunil Duggal, ceo of Hindustan Zinc – a subsidiary of London-headquartered Vedanta Resources – says: “Galvanization will significantly enhance the useful life of fish plates and bolts lending to track security. Not only will track maintenance work become easier for the railways, but on life-cycle cost basis, galvanization of fish plates and bolts remains the best option for the railways.”

An official of, the Steel Authority of India Limited owned, Bhilai steel plant, which remains the principal supplier of rails to Indian Railways, says that it has not heard anything from the government as yet about galvanizing rails.

Curse of corrosionIt is estimated that corrosion claims about 4-5% of India’s annual GDP. The country has a coastline of 7,517 km where corrosion remains particularly acute. At Singh’s initiative, inter-ministerial discussion on the mandatory use of zinc-coated steel in all kinds of construction in coastal areas and nationally in house building, bridges, highways and automobiles has made sufficient progress for the drafting of a cabinet note. What India is planning do is to emulate developed countries.

Developed countries have been mandating the use of galvanized steel instead of black steel in many structures, from bridges to airports, for the long life and safety of all public structures. “Galvanized rebar withstands chloride concentration four to five times more than black

The potential for demand growth in zinc and lead in India is large. Kunal Bose highlights drivers for zinc consumption, and recycling of lead, in the country

For Indian Railways, 2016 was a bad year for train accidents. Last year saw eight of them claim at least 150 lives and leave many more badly injured. The New Year started on a sad note too, with a train accident at Vizianagaram in the coastal state of Andhra Pradesh on 21 January, causing the death of 41 passengers and serious injuries to 70 others.

Inquiries conducted by the wholly government-owned railways confirmed that corroded and thus weakened fishplates and bolts joining the rails are among

the causes of train derailment. Indian Railways has tracks running over 115,000 km. The task of checking whether some of the fishplates and bolts have lost the strength to hold rails together because of corrosion is a large one, to say the least.

A site inspection carried out by the commissioner of railway safety at Kanpur, where last year’s most disastrous train accident took place, revealed that “nearly 10-km stretch of the tracks” was “badly corroded.”

Steel minister Birender Singh said at the recent international

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There is scope for a higher percentage of vehicles made and sold in India to have galvanized steel bodies

Lead & zinc drivers in India


steel rebar, thereby significantly slowing the rate of corrosion,” says Duggal.

The zinc intensity of Indian steel will rise if Singh is able to prevail upon the government to make use of galvanized steel in specific areas. India’s use of zinc per tonne of steel is now 7.8 kg, compared with 12 kg in the USA and 10.2 kg in South Korea, says Duggal. He would like the government in India to keep the practices in the Gulf, where a certain minimum thickness of zinc is specified as the model when steel galvanizing is ordered. Duggal recommends hot dip galvanizing since “it gives a good bonding between steel and zinc with minimum thickness of the latter.”

Hot dip galvanized steel clearly costs more than the equivalent uncoated product, “But HDG steel is free of maintenance cost even in punishing environments, unlike black steel which needs periodic application of corrosion-resistant coatings such as paints and powder. On a life-cycle-cost basis, HDG steel is a clear winner,” says an official of Indian Lead & Zinc Development Association.

For the government, a major concern is that the country’s automobile industry, which has a share of over 7% of GDP, has often remained indifferent to using galvanized steel. Giving vent to his frustration, Singh says: “As ants can kill an elephant, corrosion-prone non-galvanized steel will do damage to the car body after some years on the road.” In agreement, Tata Steel chief technology officer Vinay Mahashabde says that while cars made from galvanized steel have a life of up to 20 years, “Here in India rust appears on car surfaces in three to four years,” which forces owners to go for expensive repainting.

Industry officials claim that India has built capacity to meet more than 90% of the country’s automotive steel requirements. What, however, remains unsaid is what percentage of that steel is hot dip galvanized. Duggal says: “Hardly any cars on Indian roads

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India has over 100,000 km of railway track to monitor for – and ideally protect against – corrosion

are galvanized. I will say 80-90% of cars in the country are not made from galvanized steel. Galvanised steel is, however, used for making cars that are exported from India. For our kind of weather and especially for use in coastal zones, the bottom of cars should be galvanized to fend off corrosion.”

Explaining the reason why cars mostly are not galvanized in India, an official of the Federation of Automotive Dealers Associations says: “India is a highly price-sensitive market and the use of galvanized steel will jack up prices of small- to medium-size cars quite a bit. Demand growth is mostly in these categories and carmakers will be chary of raising prices on zinc’s account unless mandated by the government.”

While no estimates are available as to how much zinc will be needed if India decides to go for the rust-proofing of fishplates and bolts, the International Zinc Association (IZA) says use of galvanized steel to make cars will create an additional demand for at least 150,000 tpyof zinc.

Hindustan Zinc, which produced 758,938 tonnes of refined zinc during the year ended March 2016, meets around 85% of the country’s zinc demand. “To meet the balance demand, India imports zinc from a number of countries. But the major quantities come from South Korea and Japan. This is because under the comprehensive economic partnership agreements, zinc coming to India from the two Far Eastern countries has the benefit of nil import duty,” says Duggal.

Indian zinc demand is growing at an annual rate of 3%, according to Duggal. But the annual demand growth could rise to 7% if the government finally mandates compulsory galvanizing of steel for use in certain areas such as automobile and building construction. Incremental demand on the expected government edict will have to be largely met by imports. Hindustan Zinc has maintained the guidance that expansion of zinc-lead mined metal production capacity will rise from 1 million to 1.2 million tpy by 2019-20. Even after

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Lead & zinc


that expansion, the gap between demand and domestic supply will grow.

Other marketsIn India, 75% of zinc is used for galvanizing, against the global average of 58%. The two other promising areas where zinc will see increasingly greater use are die casting and zinc oxide, says Duggal. Deficiency of zinc is among the most common micronutrient insufficiencies in crops in most countries, including India, resulting in substantial losses in yield and also contributing to human health problems. An official of the Indian Council of Agricultural Research says zinc is an important component of various enzymes that drive metabolic reactions in crops. Hindustan Zinc sees an opportunity for promoting the use of zinc fertiliser in the country. The company is seeking guidance from IZA for development of “new applications for zinc in the country, including fertiliser,” says an official.

In pursuit of value addition, the company has recently launched a die-casting alloy using primary zinc and pure aluminium. The downstream unit, with a capacity of 36,000 tpy, is located next to the company’s lead-zinc smelter at Chanderiya in Rajasthan, giving it “considerable advantage of logistics.” India’s present requirement for the alloy, which finds use in auto components, domestic appliances, sanitary-ware and defence items, is estimated at 70,000 tpy. Half the country’s demand for the alloy is met by imports.

The current manufacturers of the product, all in the small-scale sector, buy zinc from Hindustan Zinc. “We are now ramping up capacity. Once we are in full production, imports of the alloy will not be needed,” says Duggal. The company has also started producing ‘toning alloy’. It is used in a steel galvanizing bath for the “precise” control of aluminium.

The author is a specialist writer based in Kolkata

Recycling leadSpurred by the rapid growth of the automobile, telecom and renewable energy industries – all users of lead batteries – Indian lead demand is rising at an annual rate of 11-12%. The supply of primary lead by the sole Indian producer, Hindustan Zinc, is around 155,000 tpy. The government is putting increasingly stringent restrictions on the import of used lead acid batteries, so battery manufacturers depend heavily on metal recycled from local used batteries. India imports both primary lead and remelted lead from used batteries for purification and refining. Estimates by the government and India Lead Zinc Development Association (ILZDA) of the amount of recycled lead from used batteries procured from within the country significantly differ.

The government figure for recycled lead supply is around 600,000 tonnes. However, L Pughazenthy, executive director of ILZDA, says that: “user industries must be using nothing less than 1 million tonnes of secondary lead.” He says the difference can be accounted for by a significant portion of lead recycling being done by any number of small unauthorised units across the country. These often work without suitable protective gear when breaking open used lead-acid batteries and with scant regard for local environmental damage.

According to Pughazenthy, an unceasing campaigner for stamping out the environmentally damaging recycling of lead in backyard smelters, the country has about 600 registered smelters and they have a 60% share of recycled lead production. He estimates that as many as 1,500 unauthorised backyard units have managed to stay in the lead recycling business, producing around 400,000 tonnes of secondary lead every year.

“Pollution control laws in India are as stringent as in most developed countries. The problem is their lax enforcement in the case of unauthorised battery breaking units and smelters,” says environmental activist Sahana Mullay.

Not only have informal recyclers managed to carry on their business flouting the Batteries (Management & Handling) Rules (BMHR) enacted by the central government in 2001, their operational cost is much lower than registered recyclers.

“Unlike every unit of Gravita India or of Exide Industries, India’s largest automotive and industrial battery maker, where very high levels of environment and safety standards are maintained at all stages from breaking of batteries to lead smelting, the unauthorised

recyclers manage to do without installing any pollution control equipment worth the name,” says Mullay. Low costs also enable unauthorised recyclers to pay higher prices for used batteries than registered units. “This has resulted in many in the organised sector nursing varying degrees of unused capacity,” says Mullay.

Exide Industries is a recycler of used lead of significant size. The company, which through its extensive countrywide network of dealers procures used batteries, owns two high-technology smelters close to Bangalore and Pune cities. The combined capacity of the smelters is 150,000 tpy. Exide also supplies old batteries to authorised third-party smelters in different parts of the country for making lead ingots on a conversion cost basis. Exide managing director Gautam Chatterjee says: “We are hopeful of building a new smelter at Haldia in West Bengal with capacity of 30,000 tpy.” The smelter, for which the state government has promised 25 acres of land, will be next to Exide’s battery plant.

A Confederation of Indian Industry spokesperson says: “to the extent battery makers in the organised sector actively participate in recovery of old batteries using their extensive countrywide dealer network and smelting, there will be a dent in unlawful and environment-damaging lead recovery by the unregistered recyclers.” He says battery makers in the organised sector with no lead recovery smelters should “diligently follow” the government-prescribed battery handling management rules requiring near total recovery of old batteries when new ones are sold to be sent only to registered environment-friendly smelters.

If the 2001 rules are followed to the letter, then most of the unregistered smelters should wither away as they will not be able to procure sufficient numbers of old batteries. Nevertheless, some will still survive because the small battery makers and battery re-conditioners have a fairly large share of the battery market. Old batteries coming back to these units can end up with unregistered backyard lead recyclers.

In the hope of improving the vigilance over the secondary sector, New Delhi transferred the responsibility of monitoring the collection of used batteries and registration of recyclers from the Ministry of Environment andForests at the centre to pollution control boards in the states through an amendment of BMHR in 2010. Unfortunately, the unauthorised lead recyclers are thriving, not just surviving, thanks to poor policing by state-level agencies.

New orders


Our regular review of new orders placed for both new and upgraded plant

New plant orders

Customer Supplier Order details Start-upAUSTRALIA MMG Outotec Continuous paste backfill plant for Dugald River zinc mine in Northwest Queensland February 2018

AUSTRIA Böhler Edelstahl Primetals Technologies Flat rolling block automation and drives modernisation at Kapfenberg plant for special steels, producing flat bars Mid-2017 43-205 mm wide and 4.5-86 mm thick. “RollMaster” to handle pass schedule management

BANGLADESH GPH Ispat Primetals Technologies Complete mini-mill for 815,000 tpy of long products and 130-180 mm dia billets. Includes 80 t EAF Quantum, Early 2018 80 t ladle furnace, 3-strand continuous billet caster and a bar and section mill. 1st installation worldwide of WinLink Flex for near continuous rolling of 2 strands on 640,000 tpy bar and section mill

BELGIUM ArcelorMittal Liège Primetals Technologies Three SIAS surface inspection systems for two continuous galvanizing lines and a continuous pickling line H1 2017

BRAZIL Advanced Metallurgical Group Outotec Lithium beneficiation plant for Mibra mine site. Plant to produce 90,000 tpy of lithium concentrate H1 2018

BULGARIA Alcomet SMS group 6-high CVCplus® cold rolling mill for aluminium strip up to 2.2 metres wide and down to 0.15 mm thick –

CHILE Compania Siderurgica Primetals Technologies Replacement 100 t LD (BOF) converter No. 2 system in Talcahuano works, which produces long products November 2017 Huachipato (CAP Acero) with Vapor Industrial SA and wire rod

CHINA Baoshan Iron & Steel Danieli Medium bar mill revamp and peeling machine Q4 2017 (revamp); Q1 2018 (peeling)

Foshan Chengde Stainless Steel Fives New 500,000 tpy cold annealing and pickling line for 200, 300 and 400 series stainless steels (includes 2-Hi By end 2017 in-line skin-pass).

Henan Mingtai Al. SMS group 6-high cold rolling mill for wide Al strip up to 2,650 mm. Mill to roll alloys from AA1xxx to 8xxx. Includes CVCplus® – Industrial Co., Ltd roll shifting technology and inductive roll barrel heating system. –

Trends highlightedOur quarterly new plant orders section provides interesting insights into the present scope, scale and location of capital investment in metallurgical plant, from mines to mills and processing lines.

Every project listed says something about the priorities and outlook of the customer ordering it. The nature and quantity of projects listed in any one country hint at anticipated domestic product demand as well as the geographical export markets within viable reach of that nation.

Although not every significant order placed can be listed, given the confidentiality requirements some clients have of their suppliers, and the unavailability of details

about orders placed with some plantmakers, the fact that the list includes many orders placed with the world’s largest international plantmakers and other specialist suppliers means that it gives a strong indicator for where growth in output or the pattern of production is changing.

The latest list which follows gives plenty of examples of current trends. Unsurprisingly, China claims the largest number of orders, but Vietnam and the USA also have half-a-dozen orders each. Order number alone is a crude measure of activity, of course, as an individual order can be for something as small as a shear or as large as a turnkey mini-mill.

Although there are some on the list, bigger orders have become

more of a rarity as large parts of global steel and metal industries deal with overcapacity. The trends now are to make the most of existing equipment to maximise productivity while minimising operating costs, create plants that are as flexible as possible in terms of delivering a diversity of semis and products in response to volatile demand, and to automate as much as possible. Another trend is to integrate as many potential benefits of ‘Industry 4.0’ as possible in order to benchmark performance, predict maintenance, maximise product quality and integrate production software systems with business software for management strategy and scheduling to gain as clear a view of complete operations as possible.


Huaigang Special Steel Co. Ltd Danieli 2-roll straightening line Q1 2018

Jiangsu Dingsheng Aluminium Primetals Technologies 60 sets of air bearing shapemeters, ISV spraybars, magnescale transducers and four packages of spare Oct 2016 – Feb 2019 parts for part of Dingsheng s foil rolling mill expansion project taking place on 3 sites

Jiangyin Xingcheng SMS group Modernisation of 1m tpy SBQ mill No. 1. Includes installation of 3-roll precision sizing mill (PSM®) type 450/4 for rolling – Special Steel Works 40-130 mm bar

Ningbo Powerway Alloy Material Danieli Coil to bar high speed chain track drawing line, X-Cu Alloy (CTDM) Q4 2017

Sichuan ChangCheng Danieli 300,000 tpy garret line Q4 2017 Special Steel

Shandong Iron & Steel Danieli Hot plate leveller and cold plate leveller Q4 2018 (Rizhao Steel)

Shandong Laigang Primetals ERT-EBROS endless rolling billet welding system for bar. Yongfeng’s 1.2m tpy mill produces 12-50 mm dia reinforcement Q2 2017 Yongfeng Steel Technologies steel from 150 x 150 mm square billet

Shanghai Meishan Iron & Steel Danieli Baosteel Meishan 1422HSM RBL system revamp Q3 2017

Shougang Jingtang Danieli DUE® (Danieli Universal Endless caster and mill for production of 2.1m tpy of HR strip (thickness from 0.8 to 12.7 mm Q2 2018 United Iron & Steel in a wide range of steels)

Western Superconducting SMS group High-speed 63/80 MN two-column push-down open-die forging press with two integrated 25 t rail-bound End-2017 Technologies manipulators and an 8 t mobile loading and unloading manipulator for titanium alloys

Yongxing Special Stainless Steel Danieli 200 kW HiGrind billet grinder for about 40,000 tpy of 150, 180 and 220 mm square billets up to 7 metres long Q1 2017

EGYPT EZDK Danieli QTB quenching tempering of bars system for bar mill No. 2 in Alexandria. To quench 3 x 10 mm rebar at 12.9 m/s and – 12 mm rebar at 9 m/s

FRANCE ArcelorMittal Danieli Entry section revamp of existing pickling line in Fos-sur-Mer Summer 2017

Vallourec St. Saulve Danieli Round bloom caster upgrade with a new 325 mm round section (extends original range of 180-310 mm dia) February 2017

FINLAND SSAB Europe Primetals Technologies Hardware and software to modernise the cooling section automation for HR strip mill in Raahe April 2018

SSAB SMS group Modernisation of entry section of continuous pickling line at Hämeenlinna, including X-Pro® laser welder and End-2018 tension leveler for 1.5-6.5 mm thick, 650-1,650 mm wide strip

GERMANY ArcelorMittal Hamburg Danieli Centro Turnkey supply of 175 tph walking beam furnace for 16.5 metre special steel billets, with ultra-low NOx burner – Combustion technology, for wire rod mill.

Salzgitter Flachstahl Primetals Technologies Level 2 process optimisation system for a twin RH degassing plant and its two downstream treatment stations April 2017

INDIA APL Apollo Fives Two OTO hollow shape universal forming mills for square and rectangular tubes (20 x 20 mm – 120 x 120 mm) at – 120 m/min (max)

Nuclear Fuel Complex Danieli W+K Quarto cold pilger mill to roll stainless steel tubes (10-35 mm OD; 0.4-5 mm wall thickness) –

Orissa Metaliks Primetals Technologies 3-strand continuous billet caster to produce 384,000 tpy of (100 mm cross section) carbon steel billet for rebar production Q4 2016 (Concast (India))

Ryker Base Private Ltd SMS group Contirod® CR-3500 line with a capacity for 35 tph of cast and rolled 8 mm dia copper wire rod Q1 2018

SAIL (Bokaro Steel Plant) SMS group 130 t twin ladle furnace Summer 2018

INDONESIA PT Gunung Raja Paksi SMS group 500,000 tpy light section mill for rolling products including equal & unequal angles, channels, H-beams, squares and 2018 hexagonal bars, starting from 12-metre-long 150 or 200 mm square billets or 300 x 250 mm beam blanks prepared in a 100 tph walking beam reheat furnace

ITALY Pittini Group Danieli Two-strand wire rod mill with six-strand caster for 150-160 mm square billets with Q3 integrated automation and Mid-2018 intelligence system for Acciaierie di Verona

Customer Supplier Order details Start-up


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Iron & Steel Worksof the WorldDirectory 2017

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The brand new edition of themost comprehensive buyer’sguide available in the iron andsteel industry.• Access full company contact details

for over 1,200 steel producers andiron ore miners

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New orders


MEXICO Nucor-JFE Steel Mexico SMS group 400,000 tpy HDG line for deep-drawing grades and high-strength steel for the automotive sector. Can coat HR & CR H2 2019 strip. Width: 800-1,880 mm. Thickness: 0.4-2.6 mm. Zinc coating at up to 180 m/min. Also to produce galvannealed

Tenaris Tamsa Danieli Olivotto Ferré RHF for bright annealing 24,000 tpy of carbon steel tubes (15-120 mm dia, 3-16 m long) in Veracruz January 2018

NEPAL AARTI Strips (P) Danieli Nano-mill ( 200,000 tpy) for rebar and future wire rod Q2 2018

NETHERLANDS Tata Steel IJmuiden Primetals Technologies 2.7 million tpy continuous caster for slab to be delivered on a process turnkey basis. Slab width: 900-2,150 mm. March 2019 Thickness: 180-305 mm. Steel grades include carbon, peritectic, structural and HSLA

OMAN Moon Iron & Steel (Misco) SMS group Complete mini-mill for 1.2m tpy of billet, 1.1m tpy of which for rolling into 8-40 mm rebar. 140 t AC EAF, 2018 140 t ladle furnace, 5-strand continuous billet caster. CMT® continuous mill technology

PHILIPPINES OceanaGold (Philippines) Outotec Continuous paste backfill plant for the Didipio gold mine Q2 2017

RUSSIA Evraz NTMK Paul Wurth Technology for 2.5m tpy BF No. 7, including parallel hopper Bell Less Top® charging system, hearth refractory lining 2018 with ceramic cup and two sets of fully hydraulic tapping machinery

Evraz NTMK Primetals Technologies Automation, electrical equipment and instrumentation for new 2.5m tpy blast furnace No. 7. Basic automation End-2017 (level 1) and the process optimization (level 2) will be installed as a virtualized automation system

OJSC Ural Foil Danieli Fata Hunter Revamp of aluminium foil mill in Mikhailovsk, Sverdlovsk H2 2017

OMK Danieli Automation Manufacturing Execution System for Vyksa steelworks pipemaking and railway wheel rolling facilities February 2017

Vyksa Steelworks Danieli Threading finishing line (7-in) Q4 2018

SAUDI ARABIA Ma’aden Gold Outotec Modular flotation cPlant for modernisation of Al Amar gold processing facilities –

SWEDEN Boliden Metso Corp Surface crushing station for Aitik copper mine. Includes two primary gyratory crushers, two rock breakers, two apron – feeders, chutes, conveyors and spare & wear parts.


X-Pro® laser welder with fibre laser to be integrated by SMS group into SSAB‘s new entry section for a continuous pickling lineSMS

www.metal-expo.com

New orders


TAIWAN SuperAlloy Industrial (SAI) SMS group (Hertwich) 40,000 tpy compact remelt plant for aluminium billets (max 305 mm dia; max 7,000 mm length) for internal September 2017 recycling

Tung Ho Steel Danieli EWR/K-welding line to join (12 metre long, 150 mm square) billets for endless welding rolling into rebar products Autumn 2017 at Taoyuan’s 600,000 tpy Rolling Mill No. 1

TIBET Tibet Julong Copper Metso Corp Mineral processing equipment for Qulong copper mine including 6 crushers, 8 semi-autogenous grinding mills and 2018 8 ball mills, 8 stirred mills, 4 vertical plate pressure filters and 16 vibrating screens for 300,000 tpd of ore

TURKEY Diler Demir Celik Danieli Bell annealing furnaces Q3 2017

UKRAINE Ilyich Iron & Steel Works Primetals Technologies 2 strand slab caster, 150 t twin position ladle furnace, alloying station and dedusting system for capacity increase – of Mariupol (MMKI) by 2.5m tpy to 4m tpy of slabs in thickness of 170 and 250 mm. Width: 900-1,550 mm. Carbon, low-alloy and alloy grades

USA Atlas Tube SMS group Modernisation of 16-in ERW tube line in Blytheville, Arkansas. Includes new sizing section using uniform rigidity – design (URD®). Will enable rolling of structural tubes up to 18-in OD plus square and rectangular hollow sections

Gerdau California (Rancho) SMS group FTP Revamping & Secondary Fumes Package Q3 2016

NLMK USA Tenova Walking beam furnace (395 st/h) with material handling facilities for 60-in hot strip mill –

Nucor Primetals Technologies Upgrade of Cofield, NC, plate mill’s drives and control system with Siemens drives, automation and May 2017 HMI, a WinCC software system, and level 2 automation system to control the mill’s side trimmer, cold shear and shipment preparation areas

Nucor Danieli New cold shear for Jackson plant Q3 2017

Steel Dynamics Danieli Fata Hunter New cleaning section and post-treatment coating machine to revamp galvanizing line No. 1 for CR sheet up to Early 2017 1,950 mm wide and 5 mm thick at up to 137 m/min

VIETNAM Hoa Sen Group SMS group 6-high twin-stand 400,000 tpy reversing cold mill (CCM®) to include CVCplus® and X-Pact® electrical and automation – (Esmech Equipment jv) technology. For low-carbon steel strip; 1,250 mm max. width; 0.11 mm min. gauge; coils up to 27 t

Tay Nam Tenova New pickling line with acid regeneration plant Q1 2018

Nam Kim Steel SMS group Third reversing cold mill for 650-1,250 mm wide strip to minimum of 0.11 mm from max entry thickness of 4 mm. – (Esmech Equipment jv) Max. rolling speed of 1,400 m/min

SSSC Tenova Upgrade of colour coating line Q1 2018

Ton Dong A Danieli Fata Hunter Triple-coat continuous coil coating line for 120,000 tpy of HDG steel coils (up to 1,250 mm wide and up to 1.20 mm thick) Q1 2018

Tung Ho Steel Danieli New water treatment plant for 600,000 tpy long product rolling mill also supplied by Danieli End-2017 for plant & mill

Vina Kyoei Primetals Technologies Upgrade with Morgan intelligent pinch roll and Morgan laying head with SR Series pipe for wire rod, to extend laying Early 2017 head pipe life and improve laying pattern


Danieli coil coating linePrimetals slab casterDANIELIPRIMETALS

Steel


played a role in a perfect storm,” he recalls.

EAF advantagesEAF technology itself has many advantages, Nicholas Sowar, partner with Deloitte & Touche says, including emission control, outstanding metallurgical control, higher temperature attainment, consumption of less specific energy to produce steel, high flexibility and an ability to be started and stopped quickly. Mini-mills can also be sited relatively close to the markets for their products.

Paolo Burin, executive vice-president of sales for the steelmaking department of Danieli C. SpA, says that the EAF is “a perfect recycling machine” since it runs with scrap as well as other iron units. While the EAF was originally just seen as a means to melt scrap, he notes that over the years it has become increasingly flexible, accepting feedstock such as direct reduced iron (DRI), hot briquetted iron (HBI), pig iron and hot metal where available, based on local, and possibly varying, market conditions.

He adds that this, in addition to the use of higher grades of scrap and the ability to control the presence of elements such as nitrogen and sulphur through downstream or secondary metallurgical treatment of the steel, including by vacuum degassers, also allows the cleanliness of the steel produced to be similar to that produced with a BOF.

Ronald E. Ashburn, executive director for the Association for Iron & Steel Technology (AIST) agrees: “While at one time the term ‘mini-mill’ was a handy way to help identify a class of scaled-down facilities designed to annually produce, at most, a few hundred thousand tons of carbon merchant products for a specific geographic region, today these facilities that we call mini-mills have scaled up on capacity, and process innovation has empowered them to compete with integrated producers on quality and grades.”

He adds that although today’s mini-mill operators do not have

In some countries, the mini-mill concept is being revisited and rejuvenated with modern levels of automation and control. Myra Pinkham reviews mini-mill history and present progress from technology and business perspectives

Well before the mini-mill era bloomed in the 1960s, steelmakers were using electric arc furnaces (EAFs) in small-batch-oriented production for specialised steels and high-end niche alloys. While there were many different steelmaking technologies in the early 1950s, the two main ones today are basic oxygen furnace (BOF) converters, used by integrated steelmakers, and the EAF used by steel mini-mills.

“There really was a big transformation in the global iron and steel industry over the second half of the 20th century,” says Philip K. Bell, president of the Washington-based Steel Manufacturers Association (SMA) – a trade association that represents US EAF steelmakers – when over time a group of companies in North America, Europe and Asia made moves to build a new steel industry, often referred to as the mini-mill steel industry, by using EAFs and ferrous scrap as their means of production.

Italy in particular saw entrepreneurial family businesses build steelmaking and rolling plants based on electric steelmaking. In the USA, the steel mini-mill concept took off in the 1960s as large quantities of steel scrap began to enter the US market, with Nucor really starting the ball rolling, says William H. Emling, vice-president of the steelmaking and casting division of SMS USA, Pittsburgh. He points out that, at least at first, production was limited to long-products such as rebar and wire rod.

However, using the new compact strip production (CSP) technology developed by SMS, in 1989 Nucor commissioned a thin-slab mini-mill

at its Crawfordsville, Indiana, works. This, according to Emling, was a turning point, enabling EAF technology to be used for flat-rolled steel. He says that EAF and caster developments over the years have allowed more sophisticated grades to be made for critical applications.

These developments include sidewall injection of oxygen, carbon and lime and the increased use of chemical, or non-electrical, energy. Emling says this has allowed tap-to-tap times to be reduced to 30 minutes from 45-60 minutes 15 years ago. Ancillary equipment, such as ladle furnaces, has helped to make the EAF more efficient.

Emling notes that the trend for EAF steelmaking in the USA is different from other areas of the world. “In the United States there is more entrepreneurial movement and they have had an opportunity to move in certain directions that some other countries didn’t,” he says. “The low cost power, the infrastructure available and the support of the government all

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Steadily increasing flows of scrap are one driver for growth in EAF-based steelmaking

Mini-mills revisited


capital tied up in coke ovens, blast furnaces and ancillary equipment needed to support them, they have invested heavily in other production areas and will continue to do so.

Business philosophy“While the technology is key to the mini-mill concept, the concept of the mini-mill is more closely tied to a business strategy and management philosophy than it is to technology,” Ted Lyon, managing director for iron and steel at Hatch Associates, Pittsburgh, says. He reminds that the definition of conventional mini-mills, at least as they were originally conceived, were EAF-based facilities that generally produced less than 1 million tpy of steel and exploited local conditions as far as possible in terms of good-quality scrap, cheap and stable power sources and a local market to distribute their finished products.

SMA’s Bell agrees, noting that most of the new, largely US-based, mini-mills were non-union and emphasised autonomy on the shop floor and co-operation between management, which he says incentivises its workers to make high-quality steel safely, sustainably and efficiently. In fact, he says that US mini-mill workers are the most productive in the world, producing steel for as little as 0.9-0.5 man-hours per ton.

Balance changesAbout 24.5% of all steel produced worldwide is being made via EAFs, according to Christopher Plummer, managing director of Metal Strategies, West Chester, Pennsylvania, who notes that while this is up from about 10% in 1960, it is actually down from a peak of just under 34% in the mid-1990s.

In the USA, however, Plummer notes that while actual EAF output volumes have been fairly flat, the EAF share of total US steel production has increased from 47% in 2000 to 66.8% in 2016. This reflects in part the number of US blast furnaces that have been closed or temporarily idled. “I see the US EAF share continuing to increase, eventually reaching about 70% of the domestic market,” Plummer says.

The dominance of integrated steelmaking in China and India

looms large in the global share of steelmaking routes. Plummer notes that while China produced an estimated 790.1 million tonnes of steel last year, China’s EAF steel production has fallen from a peak of 71 million tonnes (10% of its output), to about 47.7 million tonnes (6%) last year, largely due to the sharp declines in iron ore and metallurgical coal prices helping to make BF steel production more cost effective.

China also had to build up its steel industry very quickly, notes James Moss, a partner with Pittsburgh-based First River Consulting: “It needed a large steel industry to support its large population. Because of this, and that they had little if any domestic scrap, they went with the high-volume technology, which is the BF and BOF,” building 600-700 million tonnes of BF capacity in just about 10 years. This, he says, dwarfed its EAF steelmaking.

“But this situation should be overcome when the production capacity of China resets to a sustainable value and scrap becomes more available,” Emling says, especially given that some Chinese producers seem to be setting themselves up for future conversion to EAFs by installing EAFs beside their integrated plants. He says that he believes it will be awhile – at least 10 years – before there is an acceleration of the EAF industry there.

Burin observes that the Chinese government has launched a programme to reduce the number of integrated steel plants, closing obsolete plants and replacing them with mills located outside the major cities that have new, more environmentally friendly

technologies. With a greater availability of scrap becoming available and the focus upon the environmental impact, he says the tendency has been at least partly to substitute old BOF plants with EAF facilities. “And considering the speed that China is looking to make these changes, I’d assume that we will see at least some additional EAFs there within a few years,” he says.

However, John Anton, director of steel analytics for the pricing and purchasing service of IHS Markit, says that calls on electricity production in China and the fact that a lot of its electricity is coal generated might not see as positive an environmental impact as has been seen elsewhere.

Growth outside ChinaOutside China, on average 30-40% of all steel is produced by EAF steelmakers. That percentage is growing, First River’s Moss observes, although that rate of growth varies by region according to factors including the availability of scrap, alternative iron units and electricity.

“In developed economies, such as Western Europe and the United States, there is a higher percentage EAF steel production because mature economies have a much larger scrap reservoir and more mature scrap collection, processing and distribution capabilities,” Hatch’s Lyon points out. Developing countries are likely to follow suit in future.

European EAF share of total steel output stands at about 45%, although Danieli’s Burin notes that that share is expected to reach about 60% by 2020. Charles Bradford, president and analyst with Bradford Research, New York, notes that while Europe has the necessary

Crude steel production by process for 2015 OBC EF OHF Other Total OBC EF OHF Other thousand tonnes % total productionEuropean Union (28) 100 619 65 497 166 115 60.6 39.4 Other Europe 12 809 23 368 36 178 35.4 64.6 C.I.S. 67 054 26 959 6 853 641 101 507 66.1 26.6 6.8 0.6North America 41 524 69 421 110 945 37.4 62.6 South America 29 886 13 479 534 43 899 68.1 30.7 1.2Africa 5 138 8 562 5 13 705 37.5 62.5 Middle East 2 407 27 022 29 429 8.2 91.8 Asia 937 714 173 024 882 1 111 621 84.4 15.6 0.1Oceania 4 380 1 337 5 717 76.6 23.4 World 1 201 531 408 670 6 853 2 062 1 619 116 74.2 25.2 0.4 0.1OBC – oxygen blown converter, EF – electric furnace, OHF open hearth furnace Source: World Steel Association

30thInternational CopperConference13-15 March 2017 | Steigenberger Grandhotel, Leipzig, Germany

Easy ways to register+44 20 7779 7222 [email protected] metalbulletin.com/events/copper

Speakers include:• Roland Harings, CEO,

MKM Mansfelder Kupfer und Messing, Germany

• Robert Morris, Vice President Marketing, Vale Base Metals, Canada

• Benedikt Zeumer, Partner, McKinsey & Co, Germany

• James Jian Wu, Managing Director & Head of Global Metal Physical Trading, Mercuria (China) Metal Resources Co Ltd, China

• Nicholas Snowdon, Metals Analyst, Global Research, Standard Chartered Bank, UK

• Michael Widmer, Metals Strategist, Bank of America Merrill Lynch, UK

• William Adams, Head of Research, FastMarkets, UK

• Robin Bhar, Head of Metals Research, Societe Generale Corp & Investment Banking, UK

• Carlos Risopatron, Director of Economics and Environment, International Copper Study Group, Portugal

• Panos Lolos, Commercial Director, Halcor, Greece

• Alexander Dehnelt, Member of the Management Board, Diehl Metall Stiftung & Co, Germany

• Leonardo Botti, Global Head of Product Management & Marketing, Power Conversion, Product Group Solar, ABB, Italy

• Max Brandt, Head of Sales, Marketing and R&D, MKM Mansfelder Kupfer und Messing, Germany

• William Berry, SVP and President SCR & International, Southwire, USA

• Rudolf van Rooyen, Business Development Manager, TMS International, South Africa

• Monica di Cosimo, Co-founder and Partners, Cu2 Consulting, Italy

• Stefan Eitel, Director of Metals & Mining, KfW IPEX-Bank, Germany

www.metalbulletin.com/events/copper

Steel


“We are never satisfied. We are constantly trying to reinvent how we do things. That is a culture that is tough, and uncomfortable, for many companies to duplicate.”

Micro-mills tooThe concept behind micro-mills is to meet, through a small-sized facility, the needs to produce a range of steel products for a certain regional market. By using certain technological advances, they have been able to do this in a way that they did not need to penalize their cost of production.

“It is more the high speed of the casting unit than the EAF melting unit that makes the difference with the micro-mill,” Danieli’s Burin points out. “It is the way it casts and how the casting line connects with the rolling line that is beneficial.”

For CMC, Hatch’s Lyons says the choice of building micro-mills is more an individual business decision to fit the products that it sells, using a “Back to the Future” business case, building a steel mill of the right size to meet specific local market requirements in a region that could be economically met by a mill of a certain size. He adds that he does not believe that the concept of a micro-mill is restricted to rebar or long-products.

Deloitte’s Sowar agrees, noting that Nucor’s Castrip process, which involves the direct casting of molten steel into near final shape and thickness without further hot- or cold-rolling, is also a micro-mill technology, allowing an entire mill to be built in a sixth of the space of a traditional mini-mill and at a tenth of the cost of a traditional integrated mill. Nucor currently operates two Castrip plants – in Crawfordsville, Indiana, and Blytheville, Arkansas.

“I foresee further growth in in the percentage of worldwide EAF production,” Emling says, going hand in hand with advances in raw material charging practices, preheating and waste gas recovery, and environmental control processes and strategies.

“I believe the future is very bright for EAF steel production both domestically and elsewhere in the world, with the only thing that could slow its rate of growth being low iron ore or metallurgical coal prices,” Bell concludes.

scrap availability, its EAF share is being suppressed by very high electricity costs. First River’s Moss says he believes that, pushed by strict environmental regulations, European steelmakers are going to have to increase their use of EAFs.

Turkey’s EAF industry has grown through imports of scrap, while the Middle East has a high percentage of DRI-fed EAF steelmaking. The EAF share of the Middle East’s steelmaking is about 92%.

New capacityIn the USA, EAF steelmakers already have garnered a 66.8% market share and the percentage is set to climb further. Two new greenfield EAF steel mills are coming online. The new Big River Steel mill in Osceola, Arkansas, which is in ramp-up mode after starting up in December, recently reported that in January – its first full month of operation – it produced over 63,000 short tons of hot rolled steel. It is also expected to begin producing cold rolled and galvanized steel by April this year.

Irving, Texas, based Commercial Metals Co. (CMC) is building its second rebar micro-mill in Durant, Oklahoma, looking to duplicate the success of its first micro-mill in Mesa, Arizona. The Durant micro-mill, which is expected to come online this autumn, will not only be producing straight-length rebar, but will be the only US steel mill to make spooled rebar.

Big River SteelBig River is described as a “flex mill.” That, Emling says, could be a trend that future mills will follow “because going forward steel mills need to be more flexible because of global economic trends.”

Emling observes that Big River Steel is able to use the SIS sidewall oxygen injection/burner system that SMS has developed, which has been shown to increase its chemical energy efficiency while reducing operational cost by up to 70%, which should allow it to make steel faster than mini-mills with older technology. He says that the company should also be able to make cleaner steels because of its raw material flexibility, that it can make wider product because of its ability to cast thicker slabs, because

of its caster design, and hot strip mill capabilities to produce thicker gauge material, but also being able to make very thin gauge products. The plant’s RH degasser allows it to produce large quantities ultra-low carbon steels.

“The EAF combined with the RH degasser makes us much more akin to an integrated mill,” Mark Bula, Big River’s chief commercial officer, says. “Our capabilities, including the cleanliness of the steel, the carbon levels and the nitrogen levels, are all closer to that of an integrated mill than that of a traditional mini-mill,” he says, adding that this is something that has made some in the steel market believe that the company could eat into what has been traditionally integrated steel product capabilities. “A greener steelmaking process is important to automakers and other OEMs in how they purchase steel,” he explains.

Big River has the ability to avoid using scrap altogether by using 100% virgin iron, although Bula says he is not sure it would actually do that given the added expense. “But in some grades, such as high-end electrical steels or advanced high-strength steels, we might use a much higher mix of scrap substitute products.” Bula says that Big River is also the first generation of what will eventually become known as a smart mill, with data collection that he says is second to none.

While others, both in the USA and elsewhere, may use such technologies in future mills, Bula says he is not sure that they will replicate the company’s entrepreneurial style as well, which includes a push to deconstruct to reconstruct – a difficult business philosophy for many companies.

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Big River Steel is an example of the latest developments in mini-mill technology and business strategy


9th World Lead Conference29-30 March 2017 I Hilton Garden Inn Krakow I Krakow I Poland

+44 20 779 7222 [email protected] www.metalbulletin.com/events/lead

KnowledgeJoin the debate about how leadneeds to adapt. Hear the verylatest information when it comes toforecasts and industry direction,allowing you to make businessdecisions more confidently in 2017.

Exclusive insightGain an exclusive look intoEuropean battery production withour field trip to the state-of-the-artAUTOPART plant in Mielec.

International connectionsConnect with senior lead industrydecision-makers from around the globe,giving you the chance to expand yourbusiness, seek new investmentopportunities or simply learn from therest of the international market.

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5th

International Nickel Conference24-25 April, 2017 I DoubleTree by Hilton, Lisbon

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Connecting members of the global nickel supply chain.

Combine it with the INSG’s bi-annual meeting

This year’s event will be co-located with the International Nickel Study Group’s bi-annual meeting, taking place inLisbon after the main event.

All delegates will be granted access to afternoon meeting and drinks reception of the INSG on the afternoon ofthe 25th April, usually accessible only to its members. It means even more networking and deal makingopportunities for you - can you afford to miss it?

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Supply chain services

Tenova Takraf, of Germany, has acquired the assets of FMC Technologies’ Material Handling Systems (FMC MHS) business unit based in Lansdale, Pennsylvania, USA. The move sees Tenova Takraf strengthen its position as a global supplier of equipment and systems for open pit mining and bulk material handling.

FMC MHS offers expertise in engineering, procuring, and construction assistance of complete material handling systems for its customers. It also provides a line of proprietary equipment for rotary drying and cooling of various materials. The company markets on a global scale with installations worldwide, including the USA, Canada, Chile, China, India and

Takraf acquires FMC Technologies Bank of China joins Bolero for exportBank of China (BoC) has become the first of the Big Four banks in China to offer exporters the benefits of using the Bolero electronic trade document platform. The electronic transfer service has been introduced in response to requests from BoC’s customers for the use of Bolero’s ePresentation solutions and electronic documents, such as bills of lading and documentary credits.

BoC has also announced that it will offer its customers Bolero’s Multi-Bank Trade Finance (MBTF) solution, enabling corporates increased visibility and control in relation to applications for letters of credit or bank guarantees. The MBTF solution is claimed to reduce working capital requirements and minimise risk while allowing for far greater price arbitrage than conventional methods. These moves follow the success of BoC’s 2013 adoption of the Bolero platform for import-related electronic presentation of documents.

Ross Wilkinson, head of Global Accounts for Bolero, said: “We are very excited to have the first of the Big Four banks in China offering Bolero ePresentation in support of increased export activity outside China, given that this is currently a very strong trend in global business. The fact that more of Bank of China’s overseas customers are requesting our platform for their export transactions is a sure sign that we are at the heart of world trade. As more Chinese banks expand their involvement in global trade, Bolero will be there to support them, bringing their customers gains in speed, ease-of-handling and security.”

By working together, GE Additive and GE Capital aim to make 3D printing technology available to a wider market

Rio Tinto’s Nammuldi central mine in Pilbara is one of the sites covered by a contract awarded to Decmil

GE has announced that its GE Additive business will collaborate with GE Capital to sell and finance metal additive machines. The businesses state that the move will mean manufacturing companies will have more ways to access 3D printing technology. GE Capital is developing a range of customised financial solutions for its customers. These solutions will allow GE Additive customers the

Decmil has been awarded contracts valued at $90 million for mine infrastructure at Rio Tinto’s Nammuldi and Silvergrass iron ore mines in Pilbara and Amrun bauxite project in north Queensland, Australia.

The Amrun bauxite project contract is for the construction of heavy mining equipment workshops, refuelling and wash stations, workshops and welding bays, waste transfer stations and administration buildings. The additional work

GE develops 3D printer financing

Decmil secures $90 million of Rio Tinto contracts

Australia. The business unit is being integrated into Takraf’s USA business, located in Denver, Colorado, and will retain its office presence in Lansdale.

“This acquisition brings with it a number of advantages that we seek to leverage. We identified a need to add to our equipment portfolio and this opportunity enables us to realise our strategic goals – to strengthen our position in the lighter material handling business and reinforce our growth strategy,” said Frank Hubrich, ceo of Takraf, “FMC MHS’s product portfolio is complementary to Takraf’s and now enables the company to provide a range of equipment catering also to smaller volumes and integrated in-plant conveyor solutions.”

ability to access strategic and flexible financing solutions to acquire 3D printing technology.

“Our dual expertise both in manufacturing and in equipment finance, allows us to create competitive financial solutions that support our customers’ strategic business goals,” said Trevor Schauenberg, president and ceo of GE Capital Industrial Finance.

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covers the design, construction and commissioning of new facilities at the existing Nammuldi central mine services and also at the Silvergrass mine services area.

Solidflex released by thyssenkrupp Packaging Steel

Stability and resilience are the main requirements of packaging steel. In addition to having good stackability and resistance to breakage, state-of-the-art packaging also requires high degrees of formability and precisely adjusted properties – for example, to make opening the can easier for the end user. At the same time, the material needs to be used as efficiently as possible. To meet these demands thyssenkrupp Packaging Steel has created Solidflex.

“Solidflex is the latest example of our constant search for advantages for our customers. In further processing, Solidflex also increases process reliability and product quality. The greater material efficiency also helps reduce costs and thus provides our customers with a competitive advantage,” said Peter Biele, ceo of thyssenkrupp Packaging Steel.

“By increasing the hardness, we can make available a packaging steel [Solidflex] that has a tensile strength of 700 MPa instead of the previous 580 – and this with not just an equivalent, but rather with an extended elongation of between 5 and 10%,” said Burkhard Kaup, manager of Material Technology at thyssenkrupp Packaging Steel.

For data management with the Spectroport, advanced tools verify, record and document complete testing results and the data can be delivered to a wide variety of devices via WebApp and PC connections from WLAN/LAN to USB. The Spark Analyzer Pro software enables users to quickly and easily define different testing modes, sample identification fields, and more. Preset applets perform much of the work and eliminate most errors, while simplified, predefined operator views are said to exclude unnecessary selections. Users are, instead, presented with clear choices for tasks such as pass/fail sorting and grade identification, via dedicated toolbar buttons.

Spectro Analytical Instruments has introduced its new Spectroport portable arc/spark optical emission spectrometry (OES) metals analyser, which is claimed to deliver advanced OES technology in a unit that is as easy to use as a handheld analyser.

The company states that the Spectroport delivers many of the advantages of its flagship mobile Spectrotest OES analyser in a smaller, lighter unit featuring point-and-shoot performance. The Spectroport accurately analyses elements such as carbon, sulphur, phosphorus and boron with its new optical system, covering a wide range of elemental wavelengths.

Spectroport portable arc/spark OES metals analyser

Innovations

MPa tensile strength and 19% tensile elongation, which exceeded the strength target and was close to the ductility target for the DoE’s exceptional-strength/high-ductility steel.

These results enabled the development and calibration of a functional ICME model for 3GAHSS, which integrates material and forming models. The project used DoE National Laboratories to produce, test and characterise the alloys. It also developed 3D representative volume elements of the microstructures and a newly developed 3GAHSS ICME model for steel alloys.

Now the project team is validating the 3GAHSS ICME model through forming trials, working to improve model accuracy, and preparing its final report. The team expects the delivered models to aid the steel industry in developing 3GAHSS alloys that could be used in manufacturing lightweight steel components to meet automotive mass savings, performance and safety requirements.

A team led by the United States Automotive Materials Partnership (USAMP) is nearing completion of a multi-year project to develop an integrated computational materials engineering (ICME) model for third-generation advanced high-strength steels (3GAHSS). When complete, the ICME model is expected to aid the development of 3GAHSS alloys for use in lightweighting automotive vehicle components and assemblies.

By engaging experts with a wide range of scientific and engineering backgrounds, the USAMP team has successfully produced small-volume heats (or sample casts) of two 3GAHSS alloys with mechanical properties close to those targeted by the US Department of Energy (DoE).

The first of the alloys, a medium manganese 3GAHSS alloy, achieved 1,200 MPa ultimate tensile strength and 37% tensile elongation, exceeding DoE targets for a high-strength/exceptional-ductility steel. The second 3GAHSS alloy, a 3% manganese steel, achieved 1,538

USAMP team develops third-generation advanced high-strength steels

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Thyssenkrupp Packaging Steel has developed Solidflex in response to the specific needs of the food and drink packaging industry

Spectro Analytical Instruments’ new Spectroport metals analyser is smaller and lighter than the company’s flagship Spectrotest OES analyser

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Fairphone focuses on material supply

Škoda has opened its new PXL II servo press line for aluminium body parts at its main plant in Mladá Boleslav in the Czech Republic. Construction work on the 11,600 square metre facility began in 2015, with an investment of €86.4 million ($91.67 million).

“The new press line is an important investment in the growth of Škoda and the future of Mladá Boleslav plant,” said Michael Oeljeklaus, Škoda board member for Production and Logistics. “The press is one of the most modern of its kind in central Europe. In addition to its exemplary energy efficiency, thanks to decentralised servomotors, it also enables a particularly flexible production process.”

Conventional mechanical press drives use the energy accumulated in a flywheel, but the new PXL II press line is based on innovative servo technology. The energy needed to produce the press parts is generated

Škoda inaugurates new press line

ŠKODA

Future models of cars made in Škoda’s Mladá Boleslav plant will be built with aluminium body parts produced on its new PXL II press line

Social enterprise smartphone manufacturer Fairphone is using its development of new generations of handsets to look even more closely at the material supply chains providing components for its phones. The company was founded with the aim of opening up the consumer electronics supply chain, gaining a better understanding of how it works and taking action to make improvements.

Development of the Fairphone 2 has seen the company work with ethical advisory firm The Dragonfly Initiative to assess 38 different materials found in smartphones. A range of criteria were used for the evaluation – from consumption by the electronics industry, criticality for smartphone functionality and current recycling rates, to mining-related social and environmental issues – to determine which materials’ supply chains are associated with the most significant issues and which offer the greatest opportunities for improvement.

Dragonfly’s results helped Fairphone create a shortlist of 10

materials (tin, tantalum, tungsten, gold, cobalt, copper, gallium, indium, nickel and rare earth metals) to focus on. The phone maker believes these metals currently offer it the most potential for successful interventions. It has already set up traceable supply chains for tin, tantalum, tungsten and gold – four recognised ‘conflict minerals’.

Fairphone states: “Transparent sourcing from conflict regions doesn’t address a wider range of human rights and environment concerns.” Therefore, the plan for the company is to now focus on further improving the four existing supply chains while evaluating the possibilities for making a positive impact in the other six of the 10 metals identified.

To create greater momentum to tackle the issues related to these materials, Fairphone is currently pursuing opportunities to collaborate with participants spanning the electronics industry, including major brands, suppliers and non-profit organisations.

directly in the press line’s 14 servomotors. The conversion energy from the PXL II press line can be flexibly adjusted and regulated as required. In addition, the energy released during pressing can be partially recovered. Compared with conventional systems, the new press line is said to consume up to 15% less energy in continuous operation.

Barnshaws shapes tubes for viaductPoland’s planned S5 Expressway viaduct has been designed to offer a direct route across Poland from north to south around Wroclaw, the country’s fourth-largest city.

The project’s lead contractor, Mostostal Kielce, tasked Barnshaws Polska with supplying 17 precision-curved steel tubes to enable its construction. Mostostal Kielce requested the 813 mm diameter tubes, in varying wall thicknesses of 70 mm and 50 mm, be bent to a 200 m radius. The difficulty of bending such large-diameter tubes led Barnshaws Polska to enlist the help of the company’s UK Coseley plant to service the order. Barnshaws UK, which can deliver curved sections up to 35 m in length with the capacity to bend tubes and pipes up to 1,524 mm outside diameter, was able to shape the tubes accordingly for delivery to Mostostal Kielce.

Barnshaws Polska used the large-diameter-capacity of Barnshaws UK to bend the 813 mm diameter tubes needed by Mostostal Kielce for the construction of the S5 Expressway viaduct

BARNSHAWS


EventsAMM & MBR 10th Steel Tube & Pipe Conference 8 - 9 March 2017 Houston, USACovering the North American steel tube and pipe industry, this year the conference will include an updated format for the pipe distributors’ panel.amm.com/events

30th International Copper Conference 13 - 15 March 2017 Leipzig, GermanyThe first international gathering in the 2017 copper industry calendar, this conference gives the entire supply chain an opportunity to meet and discuss industry strength and direction. metalbulletin.com/events

23rd Bauxite & Alumina Conference 14 - 16 March 2017 Miami, USAThis event is the only one of its kind to cover both metallurgical and non-metallurgical markets. New regions, growing markets, key trading and pricing concerns, and issues to watch out for will be covered by panels, presentations and extensive Q&A discussions.metalbulletin.com/events

18th Asian Ferroalloys Conference 22 - 23 March 2017 Kowloon, Hong KongTopics will include protectionism, pricing, supply and demand, and the outlook for carbon and stainless steels.metalbulletin.com/events

9th World Lead Conference 29 - 30 March 2017 Krakow, PolandOver 100 industry professionals will gather to discuss the challenges and opportunities for the lead market, including how lead batteries can increase effectiveness to compete against other systems.metalbulletin.com/events

5th International Nickel Conference 24 - 25 April 2017 Lisbon, PortugalThe conference will be in the home city of the International Nickel Study Group (INSG) in 2017. The INSG is an organisation with members comprising producers, users and traders of nickel from many countries.metalbulletin.com/events

5th World DRI & Pellets Congress 26 - 27 April 2017 Dubai, United Arab EmiratesFocused on the role of DRI in steelmaking, tracking the markets from raw materials to finished products and bringing cutting edge technology updates, this event offers a balance between commercial outlook and technical developments.metalbulletin.com/events

21st Zinc & its Markets Seminar 15 - 17 May 2017 Krakow, PolandAn established international conference for zinc executives from the entire value chain, this year’s seminar will include optional visits to two of Poland’s major zinc plants – ZGH Boleslaw or Huta Cynku Miasteczko Slaskie. metalbulletin.com/events

23rd International Iron Ore Symposium 6 – 7 June 2017 Prague, Czech RepublicAs the biggest European gathering of international iron ore professionals, this conference will be an essential meeting place for the iron ore industry in 2017.metalbulletin.com/events

12th Asian Stainless Steel Conference 14 – 15 June 2017 Hong KongA key event focused on market fundamentals and end user applications, attracting major companies in the region.metalbulletin.com/events

6th Copper Recycling Conference 15 – 16 June 2017 Sofia, BulgariaThis event provides a unique opportunity for networking within the copper recycling industry, providing business growth potentials and valuable access to new clients. In 2016, 47 companies attended to discuss the copper and electronic scrap generating, processing and consuming industry.metalbulletin.com/events

AMM & WSD Steel Survival Strategies XXXII 26 - 28 June 2017 New York, USAIn partnership with World Steel Dynamics, this event brings together executives from over 700 companies for in-depth debate and valuable networking opportunities. amm.com/events

16th International Stainless and Special Steels Conference 5 - 7 September 2017 Ljubljana, SloveniaWith three days of expert content and two field trips for both flat and long products planned for 2017, this conference continues to be a prime event for all those involved in the stainless and special steel markets.metalbulletin.com/events

North American Ferro-alloys Conference 7 - 8 September 2017 USAIn 2016, more than 150 delegates from 114 companies across the industry spectrum, including 35 raw material buyers from major steel producers in the region, attended the inaugural event dedicated to the North American ferro-alloys industry. amm.com/events

Automotive Supply Chain Conference 20 - 21 September 2017 USAWith more than 85 companies in attendance, including OEMs and manufacturers of steel, aluminium and various composite materials, this is the best opportunity to network with the entire automotive supply chain from across North America and Mexico. High on the agenda will be the latest developments and challenges in automotive lightweighting and OEM user preferences in automotive markets.amm.com/events

For full details of Metal Bulletin Events www.metalbulletin.com/events

Miami, Florida

Sofia, Bulgaria

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Low High

Low HighAluminiumAluminium P1020A, in-warehouse premiumRotterdam duty unpaid spot $/tonne 73.14 83.82Aluminium P1020A, in-warehouse premiumRotterdam duty paid spot $/tonne 125.56 137.78

AluminaIndex fob Australia 342.30

AntimonyMB free market Regulus 99.65%, max Se 50ppm, $/tonne in-warehouse, 7,443.75 7,703.13MMTA standard grade II, $/tonne 7,381.25 7,631.25

BismuthMB free market min. 99.99%, $/lb tonne lots, in-warehouse 4.57 4.88

CadmiumMB free marketmin 99.95%, in-warehouse, cents/lb 65.00 70.00min 99.99%, in-warehouse, cents/lb 68.00 76.75

CobaltMB free marketHigh grade, in-warehouse, $/lb 15.59 16.39Low grade, in-warehouse, $/lb 15.30 16.10

CopperUS High-grade cathode premium indicator $/tonne 110.23 118.50

Germanium DioxideMB free market min 99.99%, $/kg 640.00 740.00Rotterdam $/kg 870.00 970.00

GoldLondon $/troy oz Morning 1,192.65$/troy oz Afternoon 1,192.62£/troy oz Morning 967.60£/troy oz Afternoon 966.79$/troy oz Handy & Harman 1,192.10

IndiumMB free market ingots, min 99.97%, in-warehouse, $/kg 190.00 230.00

MagnesiumMB free market min 99.8%, $/tonne 2,150.00 2,300.00China free market min 99.8% 2,067.50 2,115.00

MercuryMB free market min 99.99%, in-warehouse, $/flask 1,050.00 1,275.00

MolybdenumFree market in-warehouse Europe drummed molybdic oxide $/lb Mo 7.22 7.36US canned molybdic oxide $/lb Mo 7.19 7.43

NickelFree market in-warehouse premiumUncut cathodes 74.00 104.004x4 cathodes 196.00 236.00Briquettes 112.00 177.00USMelting $/lb 0.17 0.24

PalladiumMorning $/troy oz 746.38Afternoon $/troy oz 748.38Platinum: per troy ozMorning $/troy oz 970.90Afternoon $/troy oz 971.76

RhodiumEuropean free marketmin 99.9% in-warehouse, $/troy oz 781.14 881.18

SeleniumMB free marketmin 99.5% in-warehouse, $/lb 12.75 14.75

SiliconMB free market, ¤/tonne 1,847.50 1,912.50

SilverLondonspot pence/troy oz 1,363.43spot cents/troy oz 1,680.76Handy & Harman, cents/troy oz 1,690.20

TinEuropean free marketSpot premium 99.9%, $/tonne 324.00 407.00Spot premium 99.85%, $/tonne 292.00 332.00Kuala Lumpur (ex-smelter), $/tonne 20,753.25

TitaniumFerro-titanium 70% (max 4.5% Al), d/d Europe, $/kg 3.25 3.61

TungstenEuropean free market APT, $/mtu 190.75 199.13

FOUNDRY INGOTSAluminiumLM24, £/tonne 1,452.50 1,508.75LM6/LM25 £/tonne 1,660.00 1,715.00Aluminium Europe, ¤/tonne 1,635.00 1,712.50Phosphor bronzePB1 ex-works, £/tonne 6,800.00Zinc alloy10 tonne lots ZL3 £/tonne 2,669.00

LONDON METAL EXCHANGEHigh, low and average January (21 days)LME averages are mean of buyers and sellers except for settlement and 3 months sellers. January 2017 January Low High average $ $ $Copper grade A ($)Cash 5,500.25 5,920.75 5,736.993 months 5,517.00 5,929.50 5,758.42Settlement 5,500.50 5,921.00 5,737.433 months seller 5,518.00 5,930.00 5,759.21Copper grade A (£)Settlement 4,477.78 4,954.94 4,658.323 months seller 4,482.17 4,867.27 4,661.14Tin ($)Cash 19,697.50 21,295.00 20,741.313 months 19,722.50 21,212.50 20,705.12Settlement 19,700.00 21,300.00 20,749.763 months seller 19,725.00 21,225.00 20,718.33

January 2017 January Low High average

$ $ $Lead ($)Cash 2,006.75 2,389.50 2,236.253 months 2,021.00 2,387.50 2,236.13Settlement 2,007.00 2,390.00 2,236.693 months seller 2,022.00 2,388.00 2,237.12Lead (£)Settlement 1,635.70 1,924.01 1,813.703 months seller 1,644.30 1,920.28 1,810.24Zinc ($)Cash 2,529.50 2,847.75 2,712.683 months 2,554.50 2,849.75 2,727.25Settlement 2,530.00 2,848.00 2,713.003 months seller 2,555.00 2,850.00 2,727.74Aluminium ($)Cash 1,700.50 1,869.50 1,790.373 months 1,688.25 1,867.25 1,786.02Settlement 1,701.00 1,870.00 1,790.793 months seller 1,688.50 1,867.50 1,786.38Aluminium alloy ($)Cash 1,540.00 1,605.00 1,578.103 months 1,560.00 1,620.00 1,594.05Settlement 1,545.00 1,610.00 1,583.103 months seller 1,565.00 1,625.00 1,599.05Nickel ($)Cash 9,377.50 10,445.00 9,980.713 months 9,425.00 10,477.50 10,032.50Settlement 9,380.00 10,450.00 9,984.293 months seller 9,430.00 10,480.00 10,039.76Nasaa ($)Cash 1,715.50 1,782.50 1,748.123 months 1,735.00 1,805.00 1,767.74Settlement 1,716.00 1,785.00 1,752.193 months seller 1,740.00 1,810.00 1,772.62Cobalt ($)Cash 32,750.00 37,000.00 34,738.103 months 32,750.00 37,000.00 34,723.81Settlement 33,000.00 37,250.00 34,961.903 months seller 33,000.00 37,250.00 34,973.81Molybdenum ($)Cash 15,000.00 15,000.00 15,000.003 months 15,000.00 15,000.00 15,000.00Settlement 15,250.00 15,250.00 15,250.003 months seller 15,250.00 15,250.00 15,250.00Steel billet ($)Cash 312.50 312.50 312.503 months 312.50 312.50 312.50Settlement 325.00 325.00 325.003 months seller 325.00 325.00 325.00LME Settlement Conversion Rates$/£ 1.23$/yen 114.99$/¤ 1.06

Monthly pricesJanuary averages

DisclaimerThis Disclaimer is in addition to our Terms and Conditions as available on our website and shall not supersede or otherwise affect these Terms and Conditions. Prices and other information contained in this publication have been obtained by us from various sources believed to be reliable. This information has not been independently verified by us. Those prices and price indices that are evaluated or calculated by us represent an approximate evaluation of current levels based upon dealings (if any) that may have been disclosed prior to publication to us. Such prices are collated through regular contact with producers, traders, dealers, brokers and purchasers although not all market segments may be contacted prior to the evaluation, calculation, or publication of any specific price or index. Actual transaction prices will reflect quantities, grades and qualities, credit terms, and many other parameters. The prices are in no sense comparable to the quoted prices of commodities in which a formal futures market exists.

Evaluations or calculations of prices and price indices by us are based upon certain market assumptions and evaluation methodologies, and may not conform to prices or information available from third parties. There may be errors or defects in such assumptions or methodologies that cause resultant evaluations to be inappropriate for use. Your use or reliance on any prices or other information published by us is at your sole risk. Neither we nor any of our providers of information make any representations or warran-ties, express or implied as to the accuracy, completeness or reliability of any advice, opinion, statement or other information forming any part of the published information or its fitness or suitability for a particular purpose or use. Neither we, nor any of our officers, employees or representatives shall be liable to any person for any losses or damages incurred, suffered or arising as a result of use or reliance on the prices or other information contained in this publication, howsoever arising, including but not limited to any direct, indirect, consequential, punitive, incidental, special or similar damage, losses or expenses.

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For the latest prices see www.metalbulletin.com/my-price-book


Chartist

Can Trump make US metals and steel great again?Jim Lennon, managing director, Red Door Research Limited ponders the USA’s global impact in metals

The election of Donald Trump as US president has coincided with considerable positive momentum in equity and commodity markets in recent months. This has been due partly to positive expectations surrounding US domestic economic growth. The main factors driving this include expected US tax cuts, a rise in infrastructure spending and the return of manufacturing activity by US companies from overseas back to the USA.

The USA is the world’s largest economy by a significant margin, accounting for 24% of global GDP (in nominal terms) compared with the 15% share occupied by the world’s second largest economy, China. Make no mistake, changes in US economic policy still have a global economic impact and that is why the world’s policy-makers are watching the Trump Administration closely.

From an economic perspective it still remains clear that “when the US sneezes, the rest of the world catches a cold”. However, China’s emergence as a major economic super-power, driven mainly by domestic economic policies, has reduced the absolute impact of changes in US growth on global growth.

The data for the US metals’ industry reveal a very different picture than that of GDP of the USA’s global impact. In 2016, the US share of global steel and metals use was between 6% and 9%, compared with China’s share of 45-50% (see chart). The US share has always been highest in aluminium (due to a large aerospace industry and greater use of aluminium in the auto industry than elsewhere). It is significantly lower in steel.

As our charts show, the US share in global demand has been on its way down for a long time. From a global perspective, the USA was the dominant consumer up until the mid-1980s and changes in the USA affected global price determination. Over the past 15-20 years, the US impact on global demand has been negligible and price determination has been mostly driven by China. The big exception, of course, was the US housing market collapse in the late-2000s, which then triggered the global financial crisis and a collapse in metals demand and prices. The USA still matters in macroeconomics, but it does not so much in metals.

It does need to be noted that the reported metals usage numbers understate the US

and over-state the China impact globally. China exports goods containing metals and steel, while the USA and other developed economies import metal-containing goods. Estimates from the World Steel Association and base metals researchers suggest that by including indirect trade (metal content of total imports and exports) , “true” consumption in the USA is 15-20% higher than reported, while Chinese “true” consumption is 10-15% lower. However, even after allowing for this adjustment for the USA, its world share only rises by 1.0-1.5%, not enough to really alter the conclusion that the US does not really matter for metals.

The main reason for the long-run US decline is well-known and is due to the changing structure of an economy as GDP per capita rises with growth moving from an economy dominated by infrastructure and construction to one driven by consumption and services. This is particularly marked in steel, where US per capita consumption peaked in the early 1970s (at a higher level than China’s recent peak!) and is now less than half that peak.

For base metals, such as copper and aluminium, the declines in per capita consumption started later than in steel, from the late-1990s. This was due to the offsetting impact of new applications in copper and aluminium and also the greater proportional use of metals in consumption-related applications than steel. Copper demand in the USA took over in the 1990s due to a boom in high-tech investment, but this collapsed in the early-2000s. The 2000s also saw a collapse in US auto production as auto imports rose sharply.

There is no question that US consumption of metals has fallen in part due to the relocation of manufacturing activity to other countries (including to Mexico and China, in many cases to manufacturing units owned

by US companies). Any change in US trade policy (such as renegotiating NAFTA or applying import tariffs) that leads to industries relocating back to the USA would, of course, boost US consumption. However, it would also mostly be a zero-sum game as far as total global consumption is concerned.

Where gains in US consumption could add to total usage is a major boost to investment in infrastructure. This would have a strong US demand kicker, especially as the Trump Administration is insisting on a “buy US steel” policy for major projects.

This is probably the area where there is some potential for stronger demand growth, particularly in steel. However, early in the Obama Administration, a similar plan to significantly boost infrastructure spending fizzled out due to political opposition and major delays due to planning and environmental bottlenecks. The Trump Administration is promising to greatly simplify the approval process to fast-track new investment, but the jury is still out on how successful this will be.

So the answer to the question as to whether Trump can make US metals and steel great again is a definite ‘no’ since the glory days when the US dominated world consumption are long gone. Can the seemingly inexorable decline in the US share in global demand be arrested and even turn around? The answer is probably ‘yes’, but partly at the expense of consumption in the rest of the world.

One thing that is already unusual about the first year of the Trump presidency is that it almost uniquely appears to be a year of rising metals’ demand – a good start. Almost every previous president has presided over a slowdown in his first year of office, in part as the monetary authorities have had to offset the impact of expansionary policies of the previous Administration in the year of the election.

US and China share of global consumption60%

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Source: WBMS

Copper - USA Steel - USA Aluminium - ChinaAluminium - USA Copper - China Steel - China

Consumption of steel per capita700

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China USASource: worldsteel

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Iron & Steel Worksof the WorldDirectory 2017

Order your copy herewww.metalbulletinstore.com/ironandsteelworks2017For more information call:+44 (0) 20 7779 8260 (World excl Asia)or +61 3 5222 6154 (Asia)

The brand new edition of themost comprehensive buyer’sguide available in the iron andsteel industry.

• Access full company contact details forover 1,200 steel producers and ironore miners

• Discover new business leads

• Source the right producer- by productor by country instantly with the user-friendly A-Z buyer’s guide

Data compiled by:

mbdatabase.com

MB_Directories_FP_2016_209x274_209x274 25/08/2016 15:56 Page 1

www.mbdatabase.com

With aluminium components, cars are lighter, use less fuel and emit less pollution. Put your car on a diet. The planet will thank you – and so will your wallet.

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