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ABM-63 rd Annual Conference Challenges for Steel Industry Pierre Gugliermina, Chief Technology Officer, ArcelorMittal 28 th July – Santos, Brasil.

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Presentation on theme: "ABM-63 rd Annual Conference Challenges for Steel Industry Pierre Gugliermina, Chief Technology Officer, ArcelorMittal 28 th July – Santos, Brasil."— Presentation transcript:

1 ABM-63 rd Annual Conference Challenges for Steel Industry Pierre Gugliermina, Chief Technology Officer, ArcelorMittal 28 th July – Santos, Brasil

2 2 The steel world is moving …. For about 25 years, steel industry suffered from chronic overcapacity and real steel prices declined by about 3%/year Since 2000, the huge demand from China and to a lesser extent from other emerging markets reduces global overcapacity causing prices to surge across the major steel markets. Vicious cycle Booming Growth phase 0 200 400 600 800 1000 1200 1400 1600 1800 2000 1950196019701980199020002010 Global steel production Mt 5.9%/year 0.7%/year 8%/year 4.5%/year Source : IISI, ArcelorMittal Marketing

3 3 Source IISI World steel apparent demand from 1950 to 2007 – millions of tonnes A new demand growth dynamic due to emerging countries expansion… Chinese new dynamic and growth in other emerging economies have led to an average 7% growth of the steel market in the last 7 years China steel apparent demand from 1984 to 2007 – millions of tonnes

4 4 *Developed world includes US, Canada, EU15, Japan and Korea Sources: IISI and ArcelorMittal estimates …has been answered by capacity expansion and increase in utilisation rate The steel industry is operating globally at a high level of utilisation rate Demand and production increase between 2000 and 2007 World steel industry operational capacity utilisation rate estimates Developed world* Emerging world China Increase in capacity utilisation and de- bottlenecking in the rest of the world China capacity increase An increase in steel demand of approximately 500mt over 7 years

5 5 BRICs countries will represent almost 70 % of the steel consumption growth (2006-2015) USA EU15 Japan Total world about + 550 Mt Steel Consumption Growth 2006-2015 650 ChinaRussia/CIS Brazil India 1: Mature Economies steel demand not expected to drop of which BRIC about + 372 Mt, 68% of the total 2: While Emerging countries remain a major driver of steel demand

6 6 Opening new Challenges Growth, if continued at current conditions, will put further strain on: –Energy –CO 2 and on our environmental footprint in general –Raw material resources

7 7 High expected increase of energy demand Energy demand will increase with about 60 % between 2002 and 2030! More than 66% of the increase in world energy demand between 2002 and 2030 will come from developing countries, especially in Asia. China counts for over 20% of the total increase. Source: OECD Factbook 2005 (Organisation for Economic Co-operation and Development)

8 8 …Enhancing CO 2 Challenge ArcelorMittal reduced CO2 emissions by over 20% since 1990, through technological developments and investments. This result exceeds the European Kyoto target by about two and a half times. But there is still much further progress to realize as steel making in countries like the CIS or China has a much higher CO2 emission rate, up to 2 times the levels allowed in Western Europe, Japan or North America. ULCOS (Ultra Low CO2 Steelmaking) Project: –Consortium of 48 European partners –Ambitious project, which aims to reduce steel production emissions by 30% to 70%. –This 5 – year program, begun in 2005, will select from a vast number of potential technologies a few solutions for a pilot program.

9 9 Raw materials…huge price evolution Nickel

10 10 There is no risk of scarcity, but many factors will lead to much more lower quality materials Steel companies securing their long-term supplies through vertical integration Asia becoming the major producer of crude steel (and thus the major importer of raw materials) (*) Based on Hatch Beddows Report, 2005 Concentrated in a small number of countries Unevenly distributed in quality Suppliers: Big-3 oligarchy has no reasons to be reversed

11 11 leaders challengers NAFTA 3,8 / 7,9 SOUTH AMERICA 15,8 / 11,4 EU15+3 2,5 / 3,0 CIS 25,8 / 22,7 China 6,9 / 3,2 AFRICA 6,3 / 3,6 OCEANIA 11,3 / 9,6 Rest of ASIA 6,3 / 4,8 TOTAL 79 / 66 Bt Iron Iron Ores – Mapping of main Reserves (Volume expressed in Ton Billions Iron) Sources : USGS–05 / US Bureau of Mines-85 – ALMOST CONSISTENT

12 12 Iron Ores – Quality of main Reserves

13 13 Demand / Supply – 2004 towards 2015 and more In the medium-term primary raw materials supply should be eased by announced capacity expansions, BUT... Main suppliers will manage these programs to maintain a tight equilibrium Based on a medium growth rate scenario (3 %), various situations Required Announced new capacities Major/ Influent players 2004 ExportersImporters Iron Ores (seaborne) 1185 (600) 1640 (> 830) End 12: + 615 (+ 300) Australia Brazil China Coking Coals (seaborne) 420 (120) 580 (> 170) End 10: global ? (+ 60) AustraliaIndia (?) Pellets (exports) 300 (120) 415 (170) Few visibility End 07: ~ (+ 20) BrazilBF / DRI plants Coke (trade) 350 (30) 484Exist / captive coke50% China Poland ( Expressed in Mt) ? ? 2015

14 14 Continuous decrease for commodity material unlikely to be recovered Landing at [Price 04 + 25 % of the Gap (05 – 04)] considered as the most optimist High prices on a permanent basis should be possible when considering: unprecedented China boom, what about India ? big suppliers power to keep prices under control need to shift towards poorer, less accessible, logistically constrained, …, raw materials Prices – Long-term trends The downtrend is broken, and prices will probably swing around a higher trend line even if very difficult to make valuable forecasts over 15 years In all cases, transition between a RM pricing system dominated by Japan and Europe to one that will be dominated by China 1 2 3 1 2 3

15 15 From Blast Furnaces to new routes Raw material scarcity at higher cost increasing amount of fine ores (from sinter feed to pellet feed) Quality issues of ores: high P ores, high Alumina ores, high Zn ores; Fe content; Fe ++ content Lack of coking coal and of coke Quality issues of scraps Lack, high cost of ferro alloys Requiring process adaptation To use fine ores and non coking coal with wide range of properties Offering flexibility towards iron sources and coals Being an energy efficient process Environmental friendly: Low emissions: NOx, SOx, dioxines, particulate materials, HAP, …

16 16 Corex A technologically proven alternate to BF route Largest unit : Baosteel @ 1.2 – 1.5 Mtpy

17 17 COREX flow sheet AM experience at Saldanha

18 18 Finex 3 or 4 fluidized bed reactors Compacting of DRI Briquetting of coal Evolution of COREX tech. developed by to use fine ores


20 20 ArcelorMittal 2007 key figures An integrated leader of the Metals and Mining sector Sales of US $105.216 billion EBITDA of US$19.4 billion Operating income of US$14.83 billion Net income of US$10.368 billion Shipment of 109.7 mt 116 mt of steel produced Net debt of US$22.5 billion 310,000 employees in more than 60 different countries

21 21 ArcelorMittal not only leading the steel industry but the Metals & Mining sector * Metal Bulletin ** Result from the merger between Ansteel and Bensteel. Crude Steel production in 2006 (Mt)*Turnover in 2006 (USD billion) More than 3 times larger than next competitor **

22 22 ArcelorMittal Growth Plan 2012 Brownfield expansion projects

23 23 8 Greenfield projects focused in growing regions ArcelorMittal Greenfield projects overview Projects ideally positioned to capture market growth expected in India, Middle-East, CIS and Africa 600,000t long products mill in Russia 50/50 JV of 4.8mt hot strip mill in Turkey 300,000t pipe mill in Nigeria 400,000t bar mill in Mozambique 1.4mt DRI/Billet plant in Egypt 600,000t seamless tube mill in Saudi Arabia 12mt integrated plant in Orissa, India 12mt integrated plant in Jharkhand, India

24 Thanks for your attention

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