R/€ = 15.25Change: 0.05
R/$ = 14.43Change: 0.05
Au 1064.35 $/ozChange: 0.65
Pt 831.50 $/ozChange: 0.00
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?

And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Letters About Us
RSS Feed
Article   Comments   Other News   Research   Magazine  
Jul 13, 2012

Steel supplier implements cost-effectiveness initiatives, mitigates losses

Engineering|Africa|Cogeneration|Design|Efficiency|Environment|Eskom|Evraz Highveld Steel|Gas|Hatch|PROJECT|Projects|Sustainable|System|Technology|Witbank|Africa|China|South Africa|Cogeneration|Disciplinary Professional Services|Electricity Intensity|Energy|Energy Consumption|Maintenance|Off-gas Energy|Reduction Technology|Services|Steel|Steel Facility|Steel Giant Faces Additional Challenges|Steel Producer|Steel-making Costs|Steel-making Process|Vanadium Supplier|Environmental|Cogeneration|Franz Holy|Iron Ore|Iron-ore|Mike Garcia|Power|Operations|Existing Technology|Reduction Technology
Engineering|Africa|Cogeneration|Design|Efficiency|Environment|Eskom|Gas|Hatch|PROJECT|Projects|Sustainable|System|Technology||Africa||Cogeneration|Energy|Maintenance|Services|Steel||Environmental|Cogeneration|Iron Ore|Iron-ore|Power|Operations|
© Reuse this

Steel and vanadium supplier Evraz Highveld Steel has identified 2015 as the target year for commission- ing its cogeneration plant, which will produce an estimated 75 MW to 150 MW of power, depending on the final process design and capacity converted, says COO Franz Holy.

South Africa’s second-largest steel producer will go ahead with its plans to install the plant at its eMalahleni (previously Witbank) steel facility, in Mpumalanga, after an initial environmental-impact assessment, which is currently under way.

CEO Mike Garcia says the assessment results are likely to be announced in the first half of 2013. The company hopes to reach financial closure of the project at that time. This will be followed by con- struction, which should take about two years to complete, and lead up to the final commissioning phase in 2015.

If all goes as planned, the cogenera- tion plant will ultimately convert off-gas energy, produced at the company’s iron plant, into electrical power through steam generation.

Conflicting Initiatives
Evraz Highveld is not the first company to pursue cogeneration using off-gases from processing plants but, as Garcia points out, the steel giant faces additional challenges that are offsetting the plant’s progression.

While continuing with its plans for cogeneration, the steel producer is also implementing new reduction technology at its iron plant. Reduction technology is used to reduce iron-ore to metal content before it is placed in furnaces to make iron. “This consumes a lot of energy and it’s this point in the process where a lot of off-gases are produced,” says Garcia.

He adds that changing the reduction process will affect the amount of off- gases produced, which will impact on the progression of the cogeneration plant. Unless the company knows exactly what it is going to do in terms of the new reduction technology, it cannot properly design the cogeneration process.

“Ensuring that we understand the interdependencies and the timing of that decision has probably been the biggest challenge for us. This is why we haven’t accelerated implementation of the cogeneration plant as fast as we would have liked to, because we’ve had to wait for the determination of the new reduction technology,” he explains.

The new reduction technology involves a more efficient reduction of iron-ore, which will reduce the company’s energy consumption and improve its overall process efficiency.

Garcia stresses the necessity of reviewing this technology and notes that the existing technology has not changed in any substantial way since it was com- missioned more than 40 years ago.

“We now have the opportunity to work with our technology partner, multi- disciplinary professional services firm Hatch, to review the technologies that are available and have continued to undergo refinement over the last 40 years, and update [our own] technology,” he says.

Garcia believes that, the cogeneration plant and, the new reduction technology will significantly reduce the electricity intensity of the company’s steel-making process.

He adds that, as a result, the company’s steel-making costs will be significantly lower, owing to the fact that energy is one of the primary drivers in the steel- making process.

Continued Improvement
Garcia emphasises the company’s continued efforts to improve efficiency and reduce its overall costs, adding that, together with a handful of strategic projects like new reduction technology and cogeneration, Evraz Highveld also has multiple continuous improvement projects under way.

For instance, the company continues to pursue efficiency gains in the mills from multiple projects that are designed to increase the availability of production assets and increase metallic yield through the process, he says.

“But those are not large one-off projects,” he explains. “Those objectives are being pursued through multiple small projects and continuous improvement, as well as working with our workforce to operate more efficiently and in a more standardised way.”

Garcia adds that all the projects serve the purpose of moving the company down the cost curve, increasing its competitiveness and making it more sustainable in the South African steel market.

Meanwhile, Evraz Highveld also signed a power buy-back deal with State-owned power utility Eskom, in terms of which it agreed to curtail its electri- city demand when necessary, and to make a portion of that demand available to the utility.

In exchange, Eskom offered a monetary amount that would contribute to offsetting some of the total cost of the steel producer’s electricity use.

“The agreement is permanent, but it can be terminated with one month’s notice,” explains Holy. He adds that, in the winter months, Eskom will not demand as much of an electricity use reduction from Evraz, as all the utility’s power plants will be running.

“We will see from September or October, once [Eskom’s] plants start undergoing maintenance again, if we will continue with the agreement.”

Officially, the agreement enables Eskom to request Evraz Highveld to reduce its consumption by 25% for up to two hours a day if the electricity system is taking strain, Engineering News reported in March.

“[Eskom] has asked us a couple of times to take demand offline, which we did,” says Garcia. He emphasises, however, that the agreement is not a prenegotiated deal during which Evraz Highveld agreed that their demand would be capped at a certain level.

“Basically, we [are] unconstrained until Eskom runs into challenges with overall demand and we are one of the customers that has agreed to take some of our demand off line, where necessary,” he clarifies.

The company did this by reducing the power input at its iron plant’s furnaces. “So, while we did not have to shut down production completely, we did slow it down,” he says.

By curtailing production, the steel- maker produced less iron, which means it was producing fewer tons of steel. While Garcia admits that he would have preferred to make and sell steel, he still feels positive about the agreement, and tells Engineering News that its buy-back deal with Eskom did not significantly affect the company.

“We did not have to shut departments down or send people home. We simply reduced the power input at our furnaces, which slightly reduced throughput,” he says.

Mitigating Challenges
It is no secret that, in recent years, pressure has mounted on the steel sector in South Africa with regard to costs, says Garcia, who cites rising energy, labour and raw material costs as significant contributors.

He notes that, while every steel industry in the world has its own unique cost challenges, he does not think these challenges compare with the escalating costs in South Africa.

Further, because services and other costs have increased to match the rate of inflation, Garcia says that passing addi- tional costs on to customers in the current market environment is very difficult. “Customers have options, one of which is to buy imported steel. Ultimately, the price is set by this open market in South Africa.

“For a South African steel producer to compete successfully, we have to be very good, very aggressive and very passionate about mitigating these multi- ple cost increases, because steel from China is being imported at a very com- petitive price that we have to match,” he states.

In June, Engineering News reported that Evraz Highveld recorded a loss of R94-million for the first three months of 2012, owing to lower sales volumes, compared with a profit of R21-million for the first quarter of 2011.

It was also reported that the producer was moving forward with a comprehensive cost reduction plan, which included labour restructuring.

Garcia confirms that the company is still focused on its current cost position, and is doing what it can to shed costs internally. “This includes restructuring, evaluating our operations and practices, and restructuring our operations and maintenance structures, as well as our front-office structures.”

He looks forward to the long-term pay out of the strategic projects currently being put in place, including the new reduction technology and the cogenera- tion plant, envisioning a real benefit to the company’s cost position.

Edited by: Chanel de Bruyn
Creamer Media Senior Deputy Editor Online
© Reuse this Comment Guidelines (150 word limit)
Other Metals News
ArcelorMittal's South African unit priced its $320-million cash call at more than a 50% premium on Tuesday as it battles falling steel demand and rising costs, sending its shares soaring. "They're sending the signal that someone with deep pockets is backing them and...
South Africa’s crude steel production increased by 23.8% year-on-year to an estimated 650 000 t in October. Global crude steel production for the 66 countries reporting to the World Steel Association (worldsteel) was down 3.1% year-on-year to 134-million tons.
Students from the Southern African Institute of Steel Construction (SAISC) School of Draughting at Genrec Engineering, in Wadeville, Germiston, have excelled in the recently held on October 2nd  University of Johannesburg Department of Civil Engineering Technology’s...
Latest News
The tide has turned for South African ports and the Transnet National Ports Authority (TNPA) is pressing ahead with its investment under Transnet’s Market Demand Strategy (MDS) notwithstanding poor economic growth. TNPA CEO Richard Vallihu told a TPA...
A 7 500 m2 rooftop solar system has been installed on several buildings at the V&A Waterfront, in Cape Town. The powering of several buildings on the iconic property will result in an estimated 1 640 000 kWh/y of clean energy. So far, 900 kW have been successfully...
The 865 km gas pipeline from the central processing facility (CPF) in Temane, Mozambique, to Secunda, South Africa, is to undergo a further $210-million expansion, the Republic of Mozambique Pipeline Investments Company (Rompco) confirmed on Monday. Rompco is a joint...
Recent Research Reports
Water 2015: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2015 Report considers the aforementioned issues, not only in the South African context but also in the African and global context in terms of supply and demand, water stress and insecurity, and access to water and sanitation, besides others.
Input Sector Review: Pumps 2015 (PDF Report)
Creamer Media’s 2015 Input Sector Review on Pumps provides an overview of South Africa’s pumps industry with particular focus on pump manufacture and supply, aftermarket services, marketing strategies, local and export demand, imports, sector support, investment...
Liquid Fuels 2015: A review of South Africa's liquid fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2015 Report examines these issues in the context of South Africa’s business environment; oil and gas exploration; fuel pricing; the development of the country’s biofuels industry; the logistics of transporting liquid fuels; and...
Road and Rail 2015: A review of South Africa's road and rail sectors (PDF Report)
Creamer Media’s Road and Rail 2015 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail infrastructure and network, the funding and maintenance of these respective networks, and...
Defence 2015: A review of South Africa's defence sector (PDF Report)
Creamer Media’s Coal 2015 report examines South Africa’s coal industry with regards to the business environment, the key participants in the sector, local demand, export sales and coal logistics, projects being undertaken by the large and smaller participants in the...
Real Economy Year Book 2015 (PDF Report)
There are very few beacons of hope on South Africa’s economic horizon. Economic growth is weak, unemployment is rising, electricity supply is insufficient to meet demand and/or spur growth, with poor prospects for many of the commodities mined and exported. However,...
This Week's Magazine
The BMW Group will invest R6-billion at BMW Group South Africa’s (BMW SA’s) Rosslyn plant to produce the next-generation X3 sports-activity vehicle (SAV) for the local and export markets. Rosslyn will continue production of the current 3 Series through its lifecycle,...
The lack of consequences for poor performance and transgressions on the part of contractors remains a significant hurdle to tackling South Africa’s service delivery challenges, delegates heard at the Consulting Engineers South Africa Infrastructure Indaba, on...
City of Ekurhuleni executive mayor Mondli Gungubele earlier this month officially named the city’s bus rapid transit (BRT) system, Harambee.
NICK CHRISTODOULOU As about 58% of data stored by organisations is dark, they must identify this dark data to expose risks and valuable information
About 58% of unstructured data stored by companies is dark data, which means that the value or regulatory importance of the data has not been determined. Subsequently, most of the stored data add costs, rather than increasing revenue or reduce regulatory risks, says...
BRIAN VERWEY Effective management, review and administration of non-core elements can improve business operations and increase revenue and decrease unforeseen risks
Effective logistics, import/export and manufacturing consulting services require detailed industry knowledge and experience, but can add significant value to these industries by providing expert advice on various technical elements in their value chains, says...
Alert Close
Embed Code Close
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks
Subscribe Now for $96 Close
Subscribe Now for $96