Steel and vanadium producer Evraz Highveld is pursuing a range of initiatives, including cogeneration, designed to reduce its fast-rising power-related costs – the JSE-listed group’s electricity bill has surged to represent nearly 20% of total costs from around 10% five years ago.
CEO Mike Garcia tells Engineering News that the energy-savings initiatives form part of a larger cost-savings drive that aims to shave 15% off the company’s fixed costs by the end of 2012.
A key project currently under review is the possible incremental introduction of cogeneration at the eMalahleni (previously Witbank) steel facility, in Mpumalanga, which could eventually yield up to 200 MW of electricity for own consumption.
A prefeasibility investigation has been completed and the project is poised to move into a full feasibility-study phase, with an investment decision likely during 2012.
Deputy COO Johan Nel says the company is likely to introduce the power capacity in 40 MW increments, beginning with the easiest and lowest-cost options first.
A preferred implementation model is yet to be decided, but Nel indicates that it is likely to contract with an independent power producer to build and operate the facilities, with Evraz Highveld providing the offgases and an offtake agreement.
With South African power prices rising at a rate of 25% a year between 2010 and 2013 and with prospects of yet more increases thereafter, Garcia says the economics of cogeneration are becoming increasingly appealing.
Further, project GM Malcolm Simpson says there could be the added benefit of reducing the mill’s carbon footprint, which is relatively high owing mainly to the unique steel- and vanadium-making process deployed.
The plant, which has signed up to the Carbon Disclosure Project, currently produces about eight tons of carbon dioxide for every ton of steel produced, which compares unfavourably with an industry norm of around three tons.
However, Simpson is convinced that its various energy efficiency initiatives could bring the mill within industry norms over the coming ten years.
Besides emissions, the group also aims to “aggressively” accelerate a number of other environmental remediation programmes, from water to its waste depositions, to ensure full compliance with South Africa’s increasingly stringent environmental regulations.
Garcia says the initiatives are business critical, as any noncompliance would be growth limiting. In fact, he places the environmental programmes on a par strategically with its costs savings, plant stabilisation and mine design priorities.
Many of the recent investments made have had twin efficiency and environmental benefits and Garcia says its recent winter maintenance and upgrade programmes have helped stabilise plant performance, which has been affected in recent months by operational and industrial relations problems.
“The immediate priority is to move down the cost curve,” he says, adding that it also has a number of low-capital growth prospects. But these will be pursued in line with market development.
Evraz Highveld is currently forecasting moderate yearly steel market growth of around 5% for South Africa and its neighbours over the coming five to ten years.
However, it is assessing some niche growth prospects as well as the possibility of doubling steelmaking capacity to around 1.8-million tons over the next ten years, from around 900 000 t/y currently.
“But the immediate priorities are environmental remediation reducing fixed costs by 15%, and increasing our yield by 5%,” Garcia concludes.