Executive Summary
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Energy Conservation & Emission Reduction Technology and Energy Efficiency Investment Potential Study for Sichuan Steel and Iron Sector Task Force Members Lan Shi Vice president of industrial environmental monitoring and research institute of Sichuan Pu Ling Director of Comprehensive environmental impact assessment department of industrial environmental monitoring and research institute of Sichuan GUO Peiyuan Ph.D, General Manager, SynTao Co., Ltd NI Huan Programme Manager, Green Credit Programme, SynTao Co., Ltd CHEN Xiaoyan Vice President, SynTao Co., Ltd CHOU Jingyao Programme Manager, SynTao Co., Ltd August ,2010 Chengdu Sichuan Executive Summary Sichuan province is rich in vanadium and titanium magnetite resources. The reserves and prospective resources total 9.06 billion tons, making it the second largest mine of its kind in the country, next only to Anben. Sichuan's iron and steel sector started early. It currently has five major iron and steel manufactures (including Panzhihua Iron and Steel Group, Chuanwei Group, Dazhou Iron and Steel Group, Desheng Iron and Steel Group, and Southwest Stainless Steel Company). Together they produce five important product series including rail steel(such as high speed rail) and other large-size steel; plate steel used mostly in household appliances, automobiles, and oil pipelines; high quality seamless pipe steel; bar and wire rod; and special-purpose steel. From January to August 2009, the output of crude steel, steel, pig iron, ferroalloy and coke of our province all increased compared with the same period in 2008. But China's regional differences in steel production and consumption are quite evident. The southwest region has net inflow of steel products, given the greater demand than output in this area. Sichuan is now in the crucial stage of accelerated industrialization and urbanization, which require a lot of steel and has big market potential for steel products. In the meantime, Sichuan is rich in vanadium and titanium magnetite resources, but its current iron and steel production capacity cannot match meet the demand. In 2008, steel demand in the province amounted to over 20 million tons, while the actual production output was less than 15 million tons. The iron and steel sector in Sichuan has much room for development. Vanadium and titanium steel enterprises in Sichuan are relatively poorly equipped. That is mainly due to the lack of vanadium and titanium smelting technologies, and the fact that most plants set up long time ago lack fund for technical upgrading and facility replacement. Currently, key vanadium and titanium steel enterprises in the province have a total of 23 coke ovens. Carbonization chambers in these enterprises are above 2.3m. Key steel enterprises have a total of 18 sintering machines, among which 14 are above 30 m2, and 4 are or below. There are only five 1000 m3 blast furnaces in the province and all in to Panzhihua Iron and Steel Group, and the largest blast furnace is 2000m3 in volume (At present, the blast furnace of about 2000 m3 is most suitable for mature vanadium titanium magnetite smelting technology and equipment). In the key vanadium and titanium steel enterprises, there are eleven 400 m3 - 460 m3 blast furnaces and still 6 blast furnaces below 400 m3. (Technological upgrading or phase-out plans have been developed for the ones below 400m3). Currently there are 19 converters (including 4 vanadium converters), in which more than 17 are above 30t, 2 are at 30t or below. There are 7 largest converters with the maximum capacity of 120t (including 6 in Panzhihua and 1 in Dazhou). Energy consumption is comparatively high in these vanadium and titanium steel enterprises in Sichuan. From 2005 to 2008, total energy consumption of key steel enterprises in the province increased by 29%, reaching 10.77 million tons of standard coal. In addition the growth of steel production, increase in energy consumption also attribute to the more comprehensive utilization of vanadium and titanium resources, more coal chemical processing products, and deep processing of steel products in the iron and steel enterprises. During the same period, on the hand hand, the energy consumption of per-ton-steel production key steel enterprises of the province went down. However, energy consumption in sintering, iron smelting, converting, coking and other processes in those enterprises is still higher than national average, and is far below the advanced level. High energy consumption is largely due to the fact that most iron and steel enterprises in the province use vanadium and titanium magnetite as raw materials. This type of ore is of lower grade (54 - 57%), and requires an additional vanadium extraction process in smelting adding more energy consumption to the total and procedural energy consumption than ordinary smelting. Other factors such as less efficient equipment and insufficient clean production technologies and processes in those enterprises also contribute to higher energy consumption. Vanadium and titanium steel enterprises in Sichuan have generally high emission levels. In 2008, Key steel enterprises in Sichuan emitted 137,800 tons of SO2, 10800 tons of nitrogen oxide, 3797 tons of COD, and 164.2 tons of ammonia nitrogen. SO2 emission per ton of steel is higher than the national average, not only because inadequate environmental protection measures in enterprises, but also the vanadium and titanium magnetite in Sichuan being a kind of pyrite with high sulfur content (ranging from 0.73% - 0.23%) While the sulfur content of ordinary vanadium and titanium magnetite, imported ore in particular, is less than 0.03%. Per ton vanadium-titanium magnetite produces ten times more SO2 than the ordinary magnetite in production process. Clean production technology in vanadium and titanium steel enterprises of Sichuan need to be improved. Iron and steel enterprises in Sichuan have actively carried out technological transformation in recent years, achieving remarkably in energy conservation, environmental protection and management. However, progress in technological upgrading is relatively small and slow, and there is still gap if compared with enterprises in the developed coastal areas in terms of the level of clean production. The continuous casting ratio of the Province's iron and steel sector is more than 92%, and the hot loading and hot feeding ratio in continuously casting blooms is up to 70%. The province has 10 coke ovens with 4.3m and above carbonation chambers with gas recovery rate of 100%. 22 gas recovery boilers for 300 m3 and above blast furnaces have a recovery rate of 100%. However, the recovery rate for converters is only 60%. The province has only 4 sets of CDQ, and another two under construction are expected to be put in operation by end of this year. Ten out of the fifteen 400 m3 blast furnaces are equipped with TRT generator. Key steel enterprises have altogether 8 sets of completed surplus gas generators, and 4 more sets are currently under planning and construction. Vanadium and titanium steel enterprises in Sichuan are faced with tough job and time pressure in energy saving and emissions reduction. In recent years, central and local government issued a series of policies to guide the iron and steel enterprises in energy saving and emissions reduction. Emission reduction schedule was formulated during the “11th Five-Year Program” period. During the “11th Five-Year Program” period, the iron and steel enterprises achieved emissions reduction each year but not significantly, particular with SO2 reduction. During 2006 to 2008, only less than 2% reduction was accomplished which is far from the emission reduction target set for the “11th Five-Year Program” period. According to regular monitoring, production activities of some iron and steel enterprises had generated negative impact on the normal life of residents in surrounding areas, while regional environmental quality cannot be guaranteed. The sector is in urgent need of technical upgrading and refined environmental protection measures to strike a balance between development and environment. In addition, the iron and steel enterprises of the province can meet most requirements of Level II (advanced level) clean production indicators, but not the targets for energy consumption and emission requirements. There is still room in improving clean production. Vanadium and titanium steel enterprises in Sichuan offer excellent investment opportunities in the field of energy efficiency. With the current gap in energy conservation and emission reduction technologies, there is great potential in working with the iron and steel enterprises in Sichuan Province. According to the 2008-2020 plan, the province will invest in 166 vanadium and titanium and steel manufacturing projects, with an estimated total investment of CNY 176.64 billion, with output value of CNY 382.754 billion. Among them, there will be 113 iron and steel projects with estimated investment of CNY 124.617 billion and output value of CNY 288.519 billion. 53 of them vanadium and titanium projects out of 166 with estimated investment of CNY 52.023 billion. When completed, the projects could generate a total sales revenue of CNY 94.235 billion. According to the "Action Plan for Restructuring and Revitalization of Sichuan Vanadium and Titanium Steel Sector", during 2009 to 2011, the province would focus on 101 technological transformation projects and 20 energy projects in the vanadium and titanium steel industry. The total investment for technological transformation is CNY 83.94683 billion, including loans of CNY 69.48088 billion. Sales income is expected to reach CNY 171.46256 billion, with the profit of CNY 17.78899 billion and tax revenues of CNY 8.26468 billion. Total investment in energy-saving projects is CNY 1.31083 billion including loans of CNY632.72 million. The additional sales income is expected to be CNY 2.50162 billion with a profit of CNY 577.4 million and tax revenues of 219.6 million. This study suggests that the iron and steel industry in Sichuan Province needs to address the following issues in implementing its energy saving and emissions reduction policy agenda.