4. products and technology, plant and equipment

4. PRODUCTS, TECHNOLOGY, PLANT & EQUIPMENT
I. GENERAL ASSESSMENT OF CSN'S SITUATION
CSN is characterised, as of year 1992, by the following features, considering only flat products; the
production of long products, including rails, is presently achieved by outdated equipment & it
should be considered as completely excluded in the future programme of the steelplant; there are
low profits in this sector, and the existence of competitors better equipped, will not make possible a
good return of the heavy investments which should be necessary to modernise the production line.
CSN'S STRONG POINTS.
1.1- Basic equipment is, for a large part, recent or largely modernised.
This, however, was made in a site where an old plant was already existing and maintained in
operation, leading sometimes, for installing the new equipment, to solutions which could introduce
limitations either to productivity or to further implementations (e.g. slabs circuit at the discharge of
the continuous casting units, congestion of equipment in the finishing sections, area limitation of
finished products yards etc.)
Furthermore, if the new equipment are basically sound, it does not integrate the measuring and
control equipment which is necessary to reach the level of quality considered as normal today on the
international market, nor the best productivity performance allowed by the size of the basic
equipment. This refers to all the sections of the plant, but particularly to the steelshop, including the
continuous casting units, and to the hot rolling mill.
1.2 CSN is , at the present time, the only producer of zinc coated sheets and coils in
Brazil, and the biggest in South America.
However, its market for these products is, up to now, essentially limited to conventional products
oriented to the sectors of civil construction and domestic uses, whose growth in the future appears
to be questionable. Only a very small part of the present production is concerned with the "new
coated products", the development of which was particularly significant during the two last decades
in Europe, Japan and Northern America. (See annexe 3).
1.3- CSN is the principal producer in South America of tin and chromium coated products.
Other producers are Venezuela (Sidor), Peru (Siderperu) & Argentina.
The same remark as above applies concerning the product range, as far as "conventional" and "new"
products are concerned.
1.4- Its basic situation concerning raw materials is good.
If the whole of its coking coal has to be imported, most of its potential competitors are facing the
same situation, leading to a similar coal price. Iron ore and fluxes are available with low
transportation costs, and the vertical integration of mines and quarries allows to integrate their
added value in the overall CSN's operational statements.
N.B.: this may only be considered as an advantage because of the good quality of the concerned
raw materials, specially iron-ore.
1.5- CSN's technical team is competent, well trained and informed, and has a good knowledge
of the present situation of the plant as compared with the competition.
1.6- A Total Quality Control plan is in the stage of implementation, constituting a good, but
absolutely necessary, base for further progress.
CSN'S WEAK POINTS.
2.1- Geographical location. CSN is not at closest to the high value products market (i.e.
essentially automotive industry); it needs rail and/or road transportation for shipping to its
customers & to the export market.
2.2 Today's market is principally based on low or medium-grade products, both on the
domestic & on the export markets.
2.3 Lack of measurement and control equipment, even on the most recently invested production
units.
This point was already mentioned in para 1.1 here above. As far as the rolling mill section is
concerned, it is one of the reasons for which CSN cannot reach, at the present time, the highest level
of product quality which is offered by the international competition (geometry of products). The
steelplant's management team is however well aware on this situation, and necessary actions are
provided in the 5 year investment plan, which is presented and discussed later in the present report.
2.4 Lack of necessary process stages to produce more sophisticated steel grades.
This principally refers to the steelshop, and to the lack of the so called "secondary steel making"
units, which allows supplementary treatments, including vacuum treatment, of liquid steel before
casting. This type of facility is definitely necessary to allow production of the sophisticated steel
grades recently developed; the market for these products is growing very rapidly in the higher
industrialised countries. (See annexe 4).
This point is of utmost importance, because practically all CSN's potential competitors, even in
Brazil, are already equipped with this type of facility. Here again, CSN's management team is well
aware of the situation, and the necessary measures are provided in the 5 year investment plan.
However, the urgency of solving this important point is possibly underestimated at the present time,
by the steelplant's technical staff.
2.5- Some problems on finished products quality seem to be connected with insufficient
motivation of base working personal. This type of problem, which is not connected with any
equipment weakness, will disappear if a successful application of a total quality control plan (TQC)
is achieved.
2.6 The lack of vertical integration of CSN on the products side is a limitation for the
company to develop & introduce new products to the market. As examples of such products,
one may mention steel beverage cans or shaped painted panels. CSN is the only steel producer in
Brazil capable of elaborating the steel grades necessary to produce these final products, and it
appears very doubtful that any potential investor interested to produce cans, would take the risk to
be totally dependent on a single producer, with the only alternative of importing its basic material.
Therefore, it appears that, similarly to what has happened in other countries in the world, only
vertical integration of can making within CSN will made it possible to develop into this expanding
and profitable market.
2.7 The emergence of a new and powerful Brazilian competitor on the zinc-coated products
sector, up to now solely covered by CSN, is a new challenge for CSN to deal with.
2.8 The production line for cold rolled & annealed products is limited to 1300mm width.
This constitutes a real disadvantage for selling to the car making industry, because a large
proportion of their orders are in the range of 1500mm or even more.
The following table gives a tentative classification of the relative importance for CSN's future, of
the various above mentioned features
I) STRONG POINTS
- The only producer of Zn-coated products in Brazil
- The only producer of Tin and Chrome Coated in Brazil
- Recent basic equipment
- Major raw materials (iron-ore, quality, captive mine)
- Technical team competence
- Total quality control
⊕⊕⊕
⊕⊕⊕
⊕⊕
⊕
⊕⊕
⊕
2) WEAK POINTS
- Geographical location, cost of transport
- Today's market principally based on low
-grade products
- Lack of measuring and control equipment
- Lack of process to produce sophisticated steel grades
- Insufficient quality linked to personel lack of motivation
- Emergence of a new competitor in zinc coatings
- Maximum width of cold rolled products
- Insufficient vertical integration (e.g. two piece cans)
- transport problems due to railroads for ore, limestone & coal
- necessary transport by trucks of most of the steel products
- unreliable electrical power network (trips & flickering)
-----------
--
---
II CSN'S CHALLENGE
In order to ensure its survival, the challenge for CSN is to maintain, whatever its
competitors should do, its leadership position on the market of the products it is now
the only one to produce, and to develop new products, using the existing basic
equipment of the plant.
Furthermore, its competitiveness should be increased in the other flat products fields.
This general approach leads to the following comments:
1- Tin and Chrome coated steels.
CSN is the only significant South American producer; it is also a major producer at the world level
with an annual production capacity of about 1 Mio.t As far as it is known today, no emerging
competitor is presently to be envisaged in Brazil.
As a comparison, one may compare with the EEC production :
1985: 4.6 Mio.t. out of a total cold rolled production. of 29,7 Mio.t. (15%)
1989: 4.8 Mio.t. out of a total cold rolled production of 34,6 Mio t (14%)
CSN's production of both grades in 1990 and 1991 represents, on the same basis, respectively 17%
and 20,6% of the corresponding overall Brazilian cold rolled production.
Even if such a comparison at the scale of Brazil is not totally relevant, due to the absence of
competitors in the South American continent, the figures suggest that the existing capacity of CSN
should be considered as consequential and not to be increased in the near future.
This is confirmed by the large percentage of the production which is exported (30 to 32% of total
sales in 1990 & 1991).
• Looking only at the internal market, the sales of tin plated and tin-free steels amounts to 14,6 &
15% respectively in 1990 and 1991; this is very similar to the proportion that one may observe in
European countries. However, the structure of the market is slightly different in Europe: the
proportion of cold rolled sheets in the aggregate consumption of steel being greater in Europe than
in Brazil, this increases in effect the relative importance of the tin plate market in Europe. This
suggests therefore that, in Brazil, subject to be confirmed by a more detailed market study:
- The share of tin- and chromium-coated steel sheets in the domestic market appears to be
"normal" as compared with the overall consumption of thin steel sheets.
- So, the future growth of this sector should, in first approximation, be parallel to the overall
economic growth of the country (Gross Domestic Product).
- A quicker growth of the sector could only be expected if the agro-industrial sector grows at
a higher rate than the economy of the country in general. In such a case, the growth rate of
this sector will most probably lead the sales volume of the tin plated products.
- Another way to increase the sales of tin plated products is to develop new markets, which
at the present time are not covered in Brazil. Concerning the products under review, there
is apparently only one important field which could be considered: steel beverage cans. In
this field, Brazil followed the American practice; it has left this entire market to the
aluminium producers.
- In Europe, important efforts were made by the steel producers and this has led to a share of
practically 50/50% of the beverage market between steel and aluminium cans. Such a
result however requires a substantial and voluntary effort by the steel producers:
a) In order to develop the necessary steel grades: large drawing capacity (two piece
cans), thin gage (down to 0.135mm for some of the products), and high tensile
strength. The corresponding steel grades almost impose secondary steel making
and vacuum treatment before continuous casting, in order to ensure a very low
level of impurities. CSN will not be able to economically produce these grades
before the corresponding equipment at the steelshop are available.
b) In order to produce the cans. The can-making plant is a rather large investment,
and the potential claims of the customer will principally refer to the coated steel
quality and not to the can itself. In such conditions, no independent investor will
take the financial risk of being dependent on a single supplier of raw material.
Therefore, the can-producer should be a subsidiary of the steel producer, and the
techno-commercial function should also be assumed by the steel-producer itself:
this is in fact, normal practice in Europe today, but this also means that such a
development has to be considered at company strategy level.
• Concerning exports, one may consider the present average of about 30% of overall sales as a safe
one. However, the observation of the results of the two previous years shows that the nearby South
American market is fluctuating and at a rather limited level (9.8% of total export market in 1990
and 23.6% in 1991. In 1992 the situation appears to have improved, with a 30% mark up as of end
of April) This situation should be improved in the future by specific commercial and/or technocommercial efforts directed to develop customer confidence: the absence of South American
competitors should make this a preferential market for CSN; this is confirmed by the average sales
prices that are observed and which are higher by 50US$/tonne than those which are practised on
average for exports to other countries (base FOB ex-works before taxes: 1990 579US$/t on South
American market, average 514 on other markets. Same figures for 1991 592 versus 548, and 1992
596 versus 542).
• In view of the above , present production capacity may be considered as sufficient and not to be
increased in the short or medium terms. The investments that are necessary (apart from those that
may be decided to develop the production of beverage cans) are investments that are connected to
the quality of products, in order to be in a position to respond to the demand or the trends of
customers for new products or products with improved quality & specifications.
For such quality improvements, the following major points will have to be considered:
- Overall improvement of geometrical quality of the products: thickness regularity, profile
and above all flatness; this is the general problem for all sheet and coils production; it can
only be solved by proper investments on the hot and cold rolling lines
-.Thicker coating for some products (flexibility of tinning lines)
- .Thinner products (increases in the double-reduction proportion, thus limiting the overall
production capacity. Asks also for new high performances steel grades implying the
"secondary metallurgy" stage at the steelshop). As a comparison base, the average specific
weight of the products used for packaging in Europe, i.e. its thickness, decreased by 20%
in the two decades 1970 to 1990.
- When the demand will appear on customer's side, implementation of a varnishing line
should be envisaged.
2. Zinc-coated steels.
CSN is presently the only Brazilian producer of zinc-coated steels and the major one in South
America. Its production is only based on hot-dip galvanising.
A new investment, by a nearby competitor, in a powerful (350kt/y) electro-galvanising line, is
supposed to be commissioned at the end of 1993. This will greatly modify the present situation;
CSN must urgently put itself in a position to respond to this new competing challenge and to
maintain its leadership in this line of products.
NB: "urgently" needs to be qualified by taking into consideration the necessary "learning curve" of
any new plant. The experience that a newcomer has to acquire to enter the market with a new
product , initially more expensive for him to produce, is a limitation that CSN must take advantage
of. In view of this, severe competition in sales would probably not occur before beginning of year
1996, except if a real gap appears between the qualities of the new competing electro-galvanised
products and the conventional zinc coated products of CSN.
Annexe 3 refers to the present situation of both products (galvanised and electro-galvanised) in
Europe; this serves as a basis of evaluation of what could happen in the future in Brazil. Three main
observations are to be made:
- The market of zinc-coated products in Europe is strongly oriented towards the automotive
industry. Apart from some applications in the building industry for internal decoration,
the automotive industry is practically the only customer for electro-galvanised products.
This market has grown from zero during the two last decades. At the present time, this
market does not exist in Brazil.
- The processes of hot-dip galvanising and of electro-galvanising continue to exist in
parallel. Not one of the two products shows a definite advantage for all of the
applications. Even the automotive industry uses both products in average in the same
proportions. This is not only because of price reasons, but also for quality reasons;
indeed, each product features optimum price/quality combination for certain parts of the
car.
- Electro-galvanising leads generally to a better surface aspect of the final painted product,
whereas hot-dip galvanising generally features a better formability. The so-called
"galvannealed" process is not completely challenging the electro-galvanising process.
Generally speaking, both products represented 25% in 1985 and 33% in 1989, of total cold rolled
products in the European Community. As far as Brazil is concerned, the same figures are between
9.5 and 10.5% in 1990 and 1991 on the base of the production, and between 8.4 and 9%, if based on
the domestic market.
The comparison suggests a very high growth potential for these products in Brazil: If they
had reached 30% of the same global market as in 1991, this would have increased domestic
market sales by 560kt, which would have displaced an equivalent amount of cold rolled
products.
However, present consumption in Brazil corresponds well to the consumption that is observed in
Europe for "conventional" products i.e. mainly housing, roofing and household equipment. This part
of the market will probably grow no faster than the overall economy of the country. The only chance
of seeing a "boom" in the consumption of zinc-coated products, depends on the general adoption of
these products by the Brazilian automotive industry. Even if local conditions in Brazil do not cause
the same pressure for increased corrosion protection, at least those car makers who intend to export
part of their production will be forced to meet international quality standards i.e. anti-corrosion
guarantees of respectively 5 and 10 years for "cosmetic" and "go-through" corrosion marks.
One may reasonably conclude that this new market will grow fast during the next decade, and that
steel producers should be prepared to meet this growth. It is difficult to be very specific on the rate
of growth which can be expected without conducting detailed interviews with the car producers.
The growth rate could be high if Brazilian car makers adopt basic car models already designed in
Europe or Japan.
N.B.: considering the specific use of electro-galvanised sheets by the automotive industry,
CSN's competitors that are investing in the new 350kt/year line, have certainly
concluded, on their own side, that this market is now ready and that its rate of growth
will be fast.
• With regard to CSN's strategy, the observations made above lead to the following conclusions:
- Concerning conventional grades of products, the market should not grow faster than the average
rate of growth of the economy. As mentioned before for tin plates, a number of general
measures are to be provided to follow the increasing quality demand of the market: i.e.
regularity of the product as far as quality and geometry are concerned, better presentation of
coils. This is generally linked with improvements at the level of hot and cold rolling, and with
better measuring and control facilities on the galvanising lines. The corresponding investments
are provided in the 5 year investment plan.
- The probable development of the automotive industry a major customer requires that CSN
establish a very close and permanent relationship with the car industry, in order to know its
requirements early enough to be in a position to meet them. (Very close contacts exist in
Europe or in Japan between the steel & the car producers; this includes joint research &
development programmes. For example, steel producers are presently developing the steel
grades required by car makers for the models that will be launched in 1996.)
- Provided necessary quality adjustments are made , which could include steel grades produced
through "secondary metallurgy" at the steelshop in order to increase steel drawability, CSN is
presently in a position to supply two faced galvanised and galvannealed steel. This will be an
answer to part of the market's requirements. However, electro
-galvanised grades will also be
demanded by the car industry & these cannot be substituted, even by "galvannealed" steel.
• In order to be in a position to supply the whole range of qualities required by the customers, and
depending on the future rate of growth of this specific market, CSN will be confronted at some
time, with the necessity to build an electro-galvanising line. However, it is impossible today to
indicate the time when such a development will be required. The challenge may be: the second
electro-galvanising line to be built in Brazil should be CSN's.
• Other products which could be required by the automotive industry are:
- galvanised single face products: produced by conventional zinc coating lines, provided
some adaptations are made. A detailed evaluation of the potential market is necessary to
decide if the corresponding investment is feasible or not.
- Zn-Ni coated: production of these products require an electrolytic line.
- products with final coating with a more or less thick synthetic resin layer: specific &
additional equipment connected to an existing line is not very expansive and could be
decided, depending on the assessment of future market needs.
• All the points mentioned above depend on the assumption that coated products for the automotive
market will develop in Brazil. If not, the present production capacity of CSN's coating lines appears
to be sufficient for the next coming years, to cover the domestic market and a reasonable amount of
exports, say 30 to 35% as in the two previous years. Competition by electro-galvanised products on
these markets should not be very strong in volume: these products are more expensive to produce,
so electro-galvanised sheet cannot put hot-dip galvanised products out of the market. But
competition could lead to lower sale prices and profits for CSN.
If, on the contrary, the automotive market really grows quickly, it could represent in the coming
years, between 200 and 300 kt/year; (assuming an estimated incorporation of 40% of coated sheets
in the cold rolled consumption of the sector which was about 500 kt in the last years). Except if
there is a very strong and successful effort of the competition to increase the proportion of electrogalvanised steel, as compared with normal practice in Europe or Japan, with the result that they
would catch the major share of this new market, CSN has presently the capacity, without reducing
its conventional markets, to supply its normal share in hot dip galvanised sheets i.e. 100 to
150kt/year.
A further development of the market, either due to a faster growth of the automotive production, or
to an increased use of coated products, will lead CSN to face a difficult decision:
- Or to invest in a new production capacity. At this stage, the existing 350kt electrogalvanising line will not be saturated, and the choice between hot-dip galvanising or
electro-galvanising will be difficult, and closely depending on the projects of the
automotive industry.
- Either to supply preferentially the automotive market, abandoning some parts of its
traditional one, supposed to be less profitable.
• Another new product could also be envisaged to increase the market of coated products: coldformed panels made from prepainted coated strip. Coated steel base is most often made from
electro-galvanised products, due to the specific characteristics of this product (better painting, better
surface aspect, even if formability is lower ). This market could be left to the electro-galvanised
sheets. However, it is a high value-added product, and it could also be made from conventional
galvanised sheet. The problem is here the same as for beverage cans: the market should be created
by a voluntary effort of the steel producer in order to incite potential customers such as architects,
civil work enterprises, naval construction yards, to change their habits and to introduce the new
product in their design. The necessary investments, should be made either directly by the steel
producer or through a subsidiary.
3. Other products.
Annexe 4 gives some indications on a certain number of new products, the development of which
was generally induced by the automotive industry, even if other uses are also possible.
Quantities demanded by the market are generally limited. However, these are high value-added
products, and the ability to produce them guarantees the long term confidence of a customer that is
bent on product quality.
Developing such steel grades by CSN will require improvements to be made to the existing
production line, principally on the following aspects:
- Steelshop: secondary metallurgy, including ladle furnace and vacuum degassing unit allowing
metallurgical treatment during degassing (RH-OB type).
Other modernisations at the converter stage are not necessary for producing the considered grades.
However, any improvement allowing to increase the possibility of obtaining the raw steel base on
due time and within the proper analysis and temperature range, will contribute in facilitating the
final processing. This is the case, for instance, of the so called "mixed blown" process, as well as of
control equipment like the "sublance".
- Continuous casting: better control of the operation by measuring continuously the liquid metal
level in the mould and acting on the steel supply in order to keep this level constant. Further
improvements could also appear necessary on the metal discharge side (straightening, secondary
cooling), particularly if the casting speed is increased.
The most difficult to produce of these new steel grades will also require further improvements to the
complete casting line, with an efficient protection against atmospheric gasses trapping during
casting. In order to be efficient, such an investment is not a small one.
- Hot rolling and cold rolling: improvements should be made to increase the accuracy of the
product geometry. This includes measuring equipment (continuous profile gauges in the length and
in the width of the product, flatness measurement gauges), corresponding actuators (AGC, hydraulic
positioner, efficient bending device - to not mention heavy equipment like sexto stands), and an
efficient modelling and in-line computer controlled system to link both together.
Most of these equipment are included in the 5 year investment programme which is elaborated by
the steelplant's management team and to which we refer hereafter.
It should be emphasised that the investments for the three product lines which are
reviewed in the present study, are absolutely essential & most urgent for the survival
of CSN. Indeed, if such investments are not made, CSN will restrict its products to the
market of standard or even low-grade qualities and theses will not permit CSN to
assure the volume of production nor the profits which are needed considering its scale
& size of operation.
Notwithstanding, CSN will remain affected by a real disadvantage in front of the
potential automotive market; this is the limited width of its cold rolled & annealed
products i.e. 1300mm. Future evolution of the automotive market must be very
carefully examined by CSN, in order to assess whether a major investment is to be
made for a new continuous annealing unit & a skin pass mill.
This limitation should however not be significant for the high strength steels that are used for
structural car parts, which are generally of limited size.
III. INVESTMENT PROGRAMME:
A 5 years investment plan is proposed by the works, taking into consideration the necessary
revamping of some existing installations (coke ovens & BFs), and the need to better control each
production stage both for economical & quality reasons.
This plan was reviewed in the light of the above mentioned observations concerning the needs for
allowing CSN to deal with its challenge in the coming years.
Generally, the proposed plan takes into account the main & most urgent necessary investments. Its
careful examination leads to some important comments.
In order to clarify the subject, we divided the proposed investments into 3 categories according to
their major aim or impact:
a: are investments which correspond to revamping or to a major repair of some equipment,
necessary to maintain plant capacity at its level.
Are also included, investments which cannot be avoided for any reason (for example environmental
protection), but which does not increase either the profitability of the plant or the quality of the
products.
b: are investments primarily oriented to increase operational accuracy or productivity and leading to
lower the overall production cost without having a direct effect on the average product quality level.
c: are investments primarily oriented to increase product quality & the capability of producing new
high quality products.
Moreover, we give an urgency level to each investment according to our own appreciation. This
urgency is sometimes different from the plant. Generally speaking & according to the remarks made
elsewhere in this report, we are considering all investments of the "c category" as prime urgency.
This classification is shown in Table 1; one may make the following remarks:
1. Total investment is 954MUS$, higher than the CSN's estimate;this is due to additional
provisions that we believe must be taken into account, on two specific items as developed below.
Even so, we believe that some items are still underestimated & should lead to re-estimate, taking
into account additional costs to be supported by the plant for the installation of some equipment
whose evaluation is made according to manufacturers' budgetary offers.
2. Of this total, 45% (426MUS$) concern "category a", i.e. investments that are not related
to cost cuts or product quality improvements. Careful attention should be given to the components
of this list in order to shift them as far as possible to priorities 2 or 3 in degree of urgency; thus
enabling to reserve the maximum amount of available funds for investments dedicated to real
improvements in plant profitability & its capability to achieve product quality.
3. Categories "b & c" amount to about 530MUS$. They are somewhat complementary in so
far as, if CSN produces high quality products without at the same cutting its costs, this will not lead
it to a competitive position.
In consistency with the observations made in this report on the strategy that CSN
should adopt to maintain its competitive position, we believe that these investments are
absolutely necessary & most urgent, with the exception of only a few items.
In view of the emergence of a competitor in Brasil, CSN should even consider to
accelerate its investment programme & to implement it in a three year period instead
of five as envisaged by CSN.
4. If the volume of investments & its proposed schedule of implementation are adopted, the average
investment per year will be of the order of:
- 85 MUS$/year for category "a" (5 years)
- 175 MUS$/year for categories "b & c" ( 3 years)
- i.e. 260 MUS$/year during the next 3 years.
Considering a production capacity of about 3.6 Mt/year as of today, this represents, for all
categories, a rate of investment of 72 US$/tonne year which is about 70% higher than the
corresponding figure for the best equipped of the European & Japanese plants (4045US$/tonne year); this is only to maintain competitiveness & technical capability, without any
increase of capacity.
Taking into account the present situation of CSN & the technological backlog it has to recover, this
investment effort does not seem to be excessive: it should even be envisaged that the same rate of
investment should continue for more than 3 years if it is supported by increased profits of operations
which would result from the first stage of investments.
5. As far as individual items are concerned in "b & c" categories, some additional comments should
be made:
5.1 BF section- item 240: pulverised coal injection into the BF.
This is an investment which is probably not of prime urgency for CSN.
Pulverised coal injection has 2 main advantages:
- it allows in some cases to lower the reduction cost by substituting lower cost high volatile coal to
good coking coal. In order to obtain a positive effect on the cost, the substitution ratio should be
high as well as the price differential of the coals.
- it allows to reduce substantially the coke rate, but this is an advantage, only if such a reduction
permits to completely shut down a battery of coke ovens or to cut imports of coke. Indeed, if it is
not possible to completely shut down a battery, higher costs will result due to slower operation.
At CSN, closing a battery means a reduction of 500kt of coke i.e. reducing the coke rate by 130 to
160kg/tonne of hot metal, & this requires to regularly inject 150 to 180 kg of coal/tonne of hot
metal: these figures are today only achieved in the better plants.
- Indeed, in order to practise economically such high injection rates, it is necessary to apply it only
to BFs that are already optimised in their performance owing to the use of sophisticated measuring
& automation equipment. If this is not the case, the substitution rate will be low & it will not permit
to achieve the expected benefits.
At CSN, the silicon scattering in the hot metal as well as the present coke rate suggest that in a first
stage BF performance should be improved by applying supplementary control equipment & full on
line automation before coal injection. It is our opinion that the necessary equipment could be
beneficially financed by substituting such a project to coal injection.
5.2 Steel making
- mixed blowing equipment & sub-lance allow a better control of the converter
operation.
their implementation constitutes a chance to bring the steel shop in a position to reach, when
needed, its full capacity of production, i.e. higher than the nominal 4.6Mt: normally, a 3xconverter
steel shop should run on 22000 to 23000 heats/year which in the case of CSN means a steel output
of 5Mt or more. When it installs the new process equipment, CSN should take the opportunity to
deeply modify, by special training, the working team's behaviour with regard to the sequencing of
operations.
However, it has to be realized that this applies to an LD steel plant that is not constrained by many
other constraining factors, both internal to the steel complex as a whole considered as a system, and
also external. It is CSN's view, that such bottlenecks are the reason for CSN's lack of performance.
As was expressed in the summary & conclusions section, we could not examine any of the
bottlenecks in detail with a view to give our own views & recommendations. We feel that CSN's
views should be taken into serious consideration when valuing the company.
It may well be, that by examining in a careful systems approach, the bottlenecks that CSN claims to
be detrimental to its performance, there could appear simple solutions in some cases. Installing a
mixed blowing system & a sublance, would be of no use as long as the main bottlenecks are not
removed and this may possibly lead to a shift in the sequence of urgency of actions to be
undertaken.
- Both a ladle furnace & a RH degassing unit are the most urgent need for CSN's
development as far as steel production & quality are concerned.
However, the estimated investment seems to be largely undervalued for at least 2 reasons:
a:) the layout of the hall in which these equipment are to be built will have to be deeply
modified after careful detail studies, in order to avoid future bottlenecks that would result
from too complicated ladle handling circuits. Moreover, intermediate arrangements will
probably be necessary during the erection stage in order not to interfere with the
production. Final arrangements should also provide for future expansions of both the
ladle furnace & the RH-OB sections.
b) the capacity to be treated either by ladle furnace or by RH-OB, is probably
underestimated: according to the experience acquired in many plants, where this type of
equipment was initially built for treating a specific & relatively small part of the
production, there is a trend, when the equipment has become available, to maximise the
steel quantity that is treated in this way; this extends if possible to treat the total steel
production. Indeed, even standard grades derive benefits from secondary metallurgy
treatment, & production organisation is safer & cheaper if all the production is made
through the same route. We therefore strongly advise CSN not to invest too small a
capacity in this respect.
Considering those two points, we have added a provision of 60MUS$ for the
corresponding items.
5.3 Continuous casting:
The proposed items are relevant. However, it appears that other supplementary investments should
be planned rather quickly, both for productivity & quality improvements, which have not been
considered in the 5 year plan:
- better protection against atmospheric gases trapping when casting will be needed if CSN
wants to produce some specific steel grades like "intersticial free".
- casting speed should definitely be increased to enhance the production capacity. An
increase by 50% is a realistic goal, but will require supplementary investment;
- the automation programme which is planned constitutes only a first step, which will require
further developments (i.e. "no man casting" which is the only solution enabling to reach
the highest quality level);
With increased speed of casting, automatic level control & other improvements, continuous casting
could possibly reach a capacity of 4.2 Mt/year of slabs or even more..
5.4 Automation master plan for the rolling mills
As for hot & cold rolling mills, the integration of a new automation process with new sensors, will
not be the end of the necessary modernisation scheme: indeed the experience of other plants
suggests that to meet at all times the pressure of competition, the performance of automation &
control systems needs to be regularly improved in a step by step process. This will require additional
investments & the efforts that CSN has to do in this field will have to continue long after the 3
coming years.
5.5 Moreover, it cannot be expected that a HRC production of 4.6Mt/year will be obtained by HRM
#2 only, even after it is upgraded. This will require, within the coming years, to envisage also a
substantial upgrading of HRM #1; such a project is not considered at all in CSN's investment plan
& we believe it should be added.
A careful feasibility study of this aspect should be made as soon as possible in order to
optimise the necessary investment, taking advantage of reserving HRM#1 operation to
the production of a limited number of product items.
5.6 Miscellaneous
In the 5 year plan, this item refers to specific investments which correspond in fact to some urgent
needs that have appeared due to circumstances of the last year. It should be noted that similar needs
will continue to appear in the coming years, notwithstanding any systematic planning; so we have
included in the 5 year plan an additional provision of 100MUS$, to cover such requirements.
6. Future investments which could be prompted, either by the market or by cost effectiveness,
are not included in CSN's plan.This concerns for example:
- technical ideas expressed by the plant'steam, such as integration of an existing pickling
line with CRM #3 or continuous operation of CRM #1 or CRM#2. These are investments
which lead to reduce production costs & enhance the product quality only if the
considered units have already reached their maximum capability & reliability of
operation: we believe a lot is still to be done at CSN, before launching such investments.
- as per the market evaluations that are made in section 3, it appears that depending on the
evolution of demand, new installations to be integrated in the production lines could be
envisaged:
. varnishing line at the tin plate section
. enlarging the galvanising capacity or entering the electro-galvanising market.
- or other developments in the follow-up of the products which could be established as
CSN's subsidiaries e.g.
. beverage can production plant
. painting line for galvanised coils
. cold forming line of prepainted coils