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Ferrous metals - July 2012

Following last month’s news of record-breaking outputs and an £185m project to rebuild the No 4 blast furnace at its Port Talbot plant, Tata Steel is now reconsidering its options. In a dramatic change to the giant Indian steelmaker’ plans, the start-up date for the new furnace, previously scheduled for the autumn of 2012, will now depend on the timing of the economic recovery in Europe.

Jon Ferriman, hub director of Tata’s UK strip operations, said: “The possibility that we may not relight No 4 immediately following completion of the rebuild in no way affects the project itself. Our commitment to giving steelmaking in Wales the strongest possible future remains undiminished.

“By the end of this year, Port Talbot will have two state-of-the-art blast furnaces equipped with enhanced safety and environmental features. The rebuilt furnace will be capable of producing larger volumes of hot metal more reliably during the course of a long 20-year life.”

The plant’s chief commercial officer, Henrik Adam, added: “Any decision about when to restart No 4 needs to take the state of the European steel markets into account. We have been fortunate in being able to schedule the rebuild during a period of relatively low demand, but we are aware that there is likely to be a continuing need to stabilise the market once the rebuild is complete.

“We will only delay the start-up if it is clear that an extended period of single-furnace operation at Port Talbot will not compromise the levels of delivery and service that our customers require. We will continue to serve our customers by flexibly deploying the full range of our production facilities in Europe.”

On the plus side, Tata also say that the concurrent project to install a new £53m cooling system in the Basic Oxygen Steelmaking plant will also go ahead as planned. But this is scant relief to the metal recyclers in south Wales, the south-west and the Midlands, who had been looking forward to increased production at the steelworks.

Even so, their prospects could be worse. And with Tata still operating one blast furnace, and Celsa Steel in Cardiff buying all the usual grades more or less normally, their suppliers are better off than those in other parts of the UK who are more heavily reliant on two smaller steelworks, a few foundries and exports.

Trouble at the works is not, of course, limited to the UK, with companies such as ArcelorMittal, the world’s biggest steelmaker, refusing to rule out more closures in Europe. Few are expecting any significant growth in steel output during the next five years.

Citing prolonged weak demand in Europe as the main cause, ArecelorMittal has temporarily shut 10 of its 32 blast furnaces. While there have been no permanent staff layoffs at these plants, two others, in Liege, Belgium, have been closed on a permanent basis.

Naturally, less steelmaking means less demand for recycled steel, but UK recyclers do not see this as the main problem. Most of the UK’s recycling firms can still sell their output, and adjusting margins to suit existing markets is also possible.

But with steelworks and manufacturers cutting production, the raw materials to feed shears and shredders and keep yards open are not forthcoming. That leaves Sims Metal Management and many other UK firms in a dilemma almost parallel with Tata’s doubts about its new blast furnace.

Sims has stated that it intends to review its UK operations, as reported by MRW last week. A press release read: “We regularly review our operations in order to maximise operational efficiency. The UK metal recycling business is no exception. Due to the continued economic malaise in the UK economy, a small number of sites have been targeted for reposition without sacrificing our competitive position.”

This statement does nothing to dispel rumours that the company is about to reduce capacity by mothballing some of its least productive shredders and shears. But it is a move that many will see as nothing more than a more efficient cost-cutting progression from having to shut down expensive plant and machinery for a part of each working week.

The fact that Sims – the world’s largest listed metal recycler with around 270 facilities and 6,600 employees – may have to cut production is no surprise, but it is a measure of the depth of the downturn in Europe. Sims in one form or another has been at the forefront of innovation for decades, and even now is investing in new end-of-life (ELV) research and technology.

The investment has, during the past month, enabled the company’s in-house engineering team based at its Long Marston site to exceed the Government’s target of 85% recovery from ELVs. So, without any extra work beyond depollution and shredding, Sims is now able to offer its suppliers credits towards ELV compliance targets of 41kg for every ELV sent to its shredders.

Sims group business development manager Simon Palmer said: “The 41kg figure is a milestone within the car recycling industry, meaning that we and our suppliers can demonstrate recovery of materials from ELVs in excess of 85%. We are particularly pleased that, thanks to the tremendous efforts of our engineering team, we are the first ELV recycler in the UK to achieve this target through end-to-end in-house processing and to offer it free of charge to our suppliers.”

Sims is now continuing with further investment in anticipation of the new 2015 recycling target for ELVs, which has been set at 95% of each vehicle.

Palmer said; “With improving technology and the opening of our new advanced recycling centre on Teesside, we expect to recover even greater quantities of metals, plastics and other residual materials in an effort to meet and surpass future reporting targets.”

With the same aim as Sims (95% ELV recovery by 2015), European Metal Recycling (EMR) takes a slightly different route. Choosing to adopt a wider approach by targeting other materials as well as metals, it hss formed Innovative Environmental Solutions (IES), a joint venture with Chinook Sciences.

IES says: “The metals which account for 75% of an ELV are fairly easy to recover. It is the need to recover the rest that represents a barrier to the UK increasing its current recycling rate from 85% to the 95% EU goal it must meet by 2015.”

To this end, IES has begun by constructing the world’s largest end-stage recycling plant. Dr Rifat Chalabi, chief executive of Chinook Sciences, says: “We are pleased to have begun construction of the facility at the West Midlands site. It will encompass the deployment of four of Chinook Sciences’ innovative systems to ensure all valuables in the feedstock are recovered.”

Chris Sheppard, chief executive of EMR, adds: “The West Midlands facility is part of our commitment to the environment as well as providing a sector-leading sustainable solution for end-of-life consumer goods. “EMR is a company that takes the lead in developing and applying advanced technologies to ensure that we remain at the forefront of the recycling industry.”

Brendan James, industry reporter

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