Fall 2004 Commodity Prices Driving Metals Industry Capital Investments Continued Incremental Components in a Long Lar Use by the Gypsum and Coal Cost Equation
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EDITORIAL COMMENT Commodity Prices Driving Metals Industry Guest Editor Capital Investments Stephan H. Dake, P.E. Senior Principal, S/D Engineers Inc. There was a time, not so very Mercantile exchange were up 56 ing this aspect we have selected two the domestic metals market, is that long ago, when steel at $750 per percent on the year. 70% of Chi- papers which discuss the application many US companies will wait too ton and coke at $350 plus per ton nese power is produced from coal. of new process technologies, help- long before making investments to was unimaginable. There was also Steel scrap prices in the US are also ing the metals industries maintain a permanently reduce costs. Capi- a time, not so very long ago, when up over 80 percent year on year and competitive posture. tal project implementation deci- most Americans thought everything the longer term projects no signifi- • Pet Coke fines production for sions made today typically begin was being “made in Japan or Tai- cant lasting correction. aluminum anode manufacturing to payback only 18 months out. If wan”. Welcome to the 21st century, With all this demand driving the • Smart Material Screening current predictions of sustained things have really changed and market it is predictable that new Machines Using Smart Materi- commodity price pressure are cor- most of us are just coming to un- production capacities will come on als and Controls rect US production facilities need derstand that the changes, while line in many sectors. Several As a preamble, however, and to accelerate their investments in there will be ups and downs, are projects have been announced. with the reprint permission of the cost reduction processes. This ac- here to stay. China and India are Brazil is looking at a 24 million Society for Mining, Metallurgy, and tion is the only certain protection evolving rapidly with the third metric ton steel making facility on Exploration, we want to point out against shrinking margins and glo- world clamoring to take their places its North Coast with the participa- that even the best new technologies bal raw material prices. The cli- in the development que. In East- tion of CVRD, Posco, and are not going to help unless they mate for high selling prices on fin- ern Europe old economies are ris- Baosteel. This complex if fully are effectively implemented as dis- ished products to sustain high ing anew in Poland, Slovakia, and developed by 2012 will increase cussed by John O. Marsden of profits will not last. the Czech Republic, challenging Brazil’s steel production by 70 per- Phelps Dodge in “Technology De- The two new process applica- Germany and France for regional cent to 58 million tons per year. velopment and Competitive Advan- tions highlighted in this issue, for industrial production. BHP Billiton is considering adding tage: Sustainable or Short Term?” Taconite Ore production and Alu- China is moving the world 40 million tons of coking coal pro- How many of us have seen organi- minum Anode production, are rep- economy at the margins like no duction by 2010. BHP and Posco zations or clients analyze a project resentative of the types of day to force since the industrial revolution are also considering a large iron ore into oblivion only to be subse- day cost reduction actions that are and now accounts for 30 percent of and steel plant in the Indian State quently run over buy competitors constantly adopted by industry. world coal consumption and 40 of Orissa. Announced investments who were not so timid. Nothing so radical as to constitute percent of steel consumption. by the world’s three biggest iron ore The current danger, given the substantial process risk or quantum China has an economy growing at producers approach $5.3 billion lessons learned by the short cycli- leaps in overall cost reductions. 9 percent in 2004 and even with over the next four years. Nelson cal duration of past price cycles in Like most improvements they are some cooling expected the affect on Silva, commercial director of commodity prices is predicted to CVRD recently told the Financial remain strong. The commodity sec- Times: “We believe the steel mar- Biography of Stephan H. Dake, P.E. tor is expected to remain strong for ket will remain in a strong position at least 5 years out as the 20 year for at least another three or four Stephan H. Dake, P.E. — Past President of ESWP (1990) bear market in raw materials has years”. If these projects are real- and is currently Senior Principal with S/D Engineers Inc. Mr. come to an abrupt end. ized the iron ore production of Rio Dake has been active in the Industrial E&C sector for over 30 Global commodity demand is Tinto, CVRD and BHP would rise years with substantial international experience in the area of raising, with aluminum up 8 per- by 210 million tons by 2008. technology transfer and project development. During his ca- cent, copper up 15 percent, titanium The rising costs and continuing reer he has worked for Blaw-Knox, Dick Corporation, Rust up 22 percent, coke up 200 percent demand pressure affecting metals in Engineers and Voest Alpine, and is currently acting as advisor in year over year terms. Coal for general creates a pressing need for for market development to both Putzmeister AG and Claudius power generation has more than domestic producers to look at ways Peters GMBH. Mr. Dake has been involved in capital projects doubled in price from last year and of increasing their margins over the for the steel, aluminum, titanium, gypsum, and hydrometal- projected price changes for 2005 longer term. One of the best ways lurgy sectors. His most recent focus has been on blast furnace are ranged between an additional 8 to do this is to look to new technolo- coal injection systems and grinding application for utilizing to 20 percent. As of late Septem- gies and processes which can help Pet Coke as supplemental industrial fuel. ber coal futures on the New York increase the bottom line. In explor- 2 Fall 2004 Commodity Prices Driving Metals Industry Capital Investments Continued incremental components in a long lar use by the Gypsum and Coal cost equation. Both applications industries. The technology com- Phone: 412-562-7500 adapt technologies across industry bines drying, grinding, and adjust- S/D Engineers, Inc Fax: 412-562-7501 Pittsburgh, PA boundaries finding ways to save able classification into a single pro- www.sdengineers.com energy, increase efficiency, and cess. Costs are reduced both on the improve process consistency. Re- capital and operating sides. Engineering, Construction & liability up and costs down. In summary the global metals Facilities Management Services The Smart Screen Systems, Inc. industries are just emerging from a application has just been named by long down market, but as commod- Process, Mechani cal, Environmental, R&D Magazine to its Top 100 list ity prices have been so low for so for 2004. The high-frequency fine- long demand has not yet balanced Civil, Structural, Electrical, Controls, screening system in use by taconite supply. This will happen, and when Programming, Facilities Inspection and concentrators on the Minnesota it does the US facilities need to be Management, Construction Management iron range is one of the most tech- ready to produce at lower costs to nologically significant products in- maintain healthy margins when Engineering Excellence Since 1850 troduced over the past year. prices inevitably soften. The Claudius Peters Anode Let the capital investment cycle Coke grinding system is adapted begin! from process applications in regu- CALL FOR PAPERS 66th Annual International Water Conference OCTOBER 9-13, 2005 Hilton in the Walt Disney World Resort • Orlando, Florida • USA Visit the International Water Conference® website: www.eswp.com/water After 65 years of being held annually in Pittsburgh, the • Program will cover 3 days of 3 concurrent Conference is going on the road for the first time in 2005. TECHNICAL SESSIONS each day Plan to attend October 9 - 13, 2005 at Hilton in the • Expanded EXHIBIT HALL Walt Disney World Resort. • Company-sponsored INFORMATION SUITES • Expanded Program — The 2005 program is planned • Continuing Education Workshops (CEWs) to feature an expanded list of topics including sessions on Desalinization and expanded sessions on In past years over 15 countries have been represented. Water Reuse and Recycle (both industrial water Please visit the International Water Conference® (IWC) and sewage reuse) in addition to the traditional topics website to request future information and be added to the of Boiler Water Treatment, Cooling Water mailing list: www.eswp.com/water and click on the Treatment, and leading edge Membrane left “Mailing List” tab. Technology issues. It will also build on the successful sessions of the last several years dealing with the latest thinking on the subject of Legionella. Pittsburgh ENGINEER 3 Fines Production for Aluminium Anode Manufacturing With Resultant Cost Reductions By Dipl.-Ing. Thore Möller, Claudius Peters Projects GmbH, Buxtehude, Germany Introduction For anode production in the Aluminium industry, 20%-30 % of the petroleum coke is used as dust in the “fines” fraction. This presentation describes the operation of a vertical type mill with an integrated clas- sifier for the anode industry, that was originally introduced in the coal and mineral industry. With this mill, dust can be produced of every fineness and quantity during full time opera- tion, which leads to consistent dust characteristics and minimum storage silo capacity. The design characteristics of the mill, the control algorithms and the product quality of the production process are the subject of an applied patent. By use of a vertical ball race mill for production of the fines, may influencing factors can be adjusted during operation and negative influences can be reduced to a minimum.