Arctic Business Forum 2018 Outokumpu Tuula Untinen BA
Arctic Business Forum 2018 Outokumpu Tuula Untinen BA Europe Outokumpu 12. 4. 2018
World needs long lasting and sustainable solutions Economic and population growth Mobility and urbanization Climate change and limited resources Stainless 6/13/2021 2
Advanced materials are everywhere and for almost every need Energy Chemical industries Architecture, building & infrastructure Heating, cooling & ventilation Automotive & transportation Oil & gas Catering, food & beverage Pulp & paper Home appliances 6/13/2021 3
We create advanced materials that are efficient, long lasting and recyclable Corrosion resistant Heat resistance Aesthetic material High strength Cost efficiency Hygienic material Sustainable material 6/13/2021 4
Our market position Major stainless steel producers Outokumpu’s market share Million tonnes 2018 2017 At the end of 2017 Tsingshan 10. 2 8. 2 Europe ~29 % TISCO 5. 5 NAFTA ~21 % Outokumpu 3. 3 Globally ~6 % POSCO (incl. ZPSS) 3. 2 Acerinox 3. 2 Beihai Chengde 2. 4 Aperam 2. 1 Lisco 2. 0 Baosteel 1. 5 2. 3 Source: Global stainless steel capacity, SMR January 2018. 6/13/2021 5
Outokumpu operates around the world Avesta Tornio Kemi Degerfors Sheffield Krefeld Calvert Nyby Dahlerbrück Dillenburg Richburg San Luis Potosí Integrated melt shop, hot and cold rolling Other mills Mine Service center 2017 sales 6 400 million euros 6/13/2 10141 professionals in over 30 countries 6 021
Outokumpu Tornio Operations The most integrated stainless steel plant in the world
Steps of steel from 1959 to 2013 - Tornio site and Kemi Mine 1950 Chrome ore deposit discovered in Kemi in 1959 1960 Kemi Mine and ferrochrome production begins in 1968 with a capacity of 28 000 tpa 1970 Stainless steel production starts in 1976 with a capacity of 50 000 tpa 1980 Kemi Mine expanded as the second Fe. Cr smelting furnace begins operations in 1985 Hot Rolling Mill starts in 1988 1990 Finishing Plant in the Netherlands opens in 1993 In 1995 ferrochrome converter begins operations, energy savings can be achieved by using smelted ferrochrome in the process Expansion of Cold Rolling Plant in 1997, capacity now exceeds 400 000 tpa 2000 In 2004 steel production expansion project finalised, stainless steel production capacity now 1, 2 million tpa Kemi Mine production moves underground in 2003, open pit exhausted in 2005 2010 The capacity of ferrochrome production doubled in 2013, total capacity 530 tpa Fe. Cr. 6/13/2021 8
The plant area and employment • The plant area of Tornio Site covers an area of 600 hectares. • • • We have approximately 2100 employees in the integrated production chain of Kemi Mine & Tornio Site. • • • More than 56 hectares of the plant area is covered with buildings. Inside the plant area, there are 50 kilometers of roads and 10 kilometers of pedestrian and bicycle routes. Some 300 employees of our contractors work at the plant area on a daily basis. In addition, the indirect employment within the whole region is estimated to be 7000 people. Part of Tornio operations is a unit in the Netherlands, which serves as a link to markets and as a logistic hub between Tornio and Central and Southern Europe. 6/13/2021 9 9
Safety is our number one priority in all operations Our principles Safety starts with me. Safety comes before volumes. No shortcuts. No repeats. Total recordable incident frequency target 2018: 4 Total recordable incident frequency 2017: 4, 4
Approaching our target – zero accidents Tornio Operations Lost time injuries 1/1000 hours Own personnel and contractors 25 20 15 10 5 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 6/13/2021 11 11
The cornerstones of competitiveness in industrial logistics Distance between main markets and raw material resources Delivery performance without interruptions Cost-efficiency Minimization of committed capital at producers and customers Environmental issues Responsibility and common constraints 6/13/2021 12
Many things are easier for our competitors • Our logistics costs to our main market area are higher than on our competitors • • Each saved euro is important, as additional costs cannot be included to prices • • On top of delivery costs, we must cover also the import of raw materials Cost-levels must be kept low Competitive advantage must be searched from other activities. • All resourcing must be optimized 6/13/2021 13
The most integrated stainless steel plant in the world • The only chromite mine in the EU area, on site • Stainless steel and ferrochrome production, on site • Harbour, on site. 6/13/2021 14 14
Integrated production chain from full downstream integration Raw Materials into finished products Kemi Mine Ferrochrome Works Ferrochrome Steel Melt Shop Hot Rolling Mill Black Hot Coils Cold Rolling Mill White Hot Products Cold Rolled Products in coils/sheets Finishing Plant, Holland Service Centers, End-users and Distributors Cold Rolling Mills, Germany Other Steel Mills 6/13/2021 15
Integrated production increases competitiveness • Ferrochrome production onsite with molten Ferrochrome charged directly • No need to crush or reheat, saving energy and minimizing transportation costs • Ability to use carbon monoxide from own processing to replace propane as energy source saves costs and CO 2 emissions • Short processing time and lower logistic costs • Cost savings from full downstream integration into finished products 6/13/2021 16
Industrial port of Tornio is an integral part of stainless steel logistics Traffic in 2017 ~3 Mton 486 vessels • • • Port of Tornio “Röyttä” is rented from Tornio town - investments, administration and maintenance on Outokumpu Operated by Outokumpu Shipping (agency, stevedoring) Draught 9 m, open all year, icebreakers keep the sea lane open during winter 6 vessels in time-chartering, operate between Tornio and Terneuzen on schedule Last year altogether 486 vessels calls • • Northbound • Most of the raw materials arrive by sea as bulk cargo • Raw material inventory is sufficient for one week’s undisturbed production. Southbound • 1/3 white semi coils to Holland, 1/3 black semi coils to Germany, 1/3 finished goods 6/13/2021 to customers 17
Our strategic plan VISION 2020: To be the best value creator in stainless steel by 2020 through customer orientation and efficiency. The best value in the industry for customers, shareholders and employees through: Safety High performing organization World class supply chain Manufacturing excellence Commercial excellence Americas 6/13/2021 18
The latest investments: Double the Ferrochrome • Ferrochrome production was doubled in 2013, becoming the largest smelter in the world • The investment of about 410 MEUR o Secured our own raw material needs o Made Outokumpu a significant ferrochrome vendor o 120 new permanent vacancies at Tornio plant and Kemi mine o 65 million euro was allocated to environmental improvements (eg. Minimise dust, circulation and cleaningn of water, energy savings, decreasing waste) 6/13/2021 19
The latest investments: LNG instead of propane • Outokumpu increases the competitiveness of Tornio stainless steel plant by switching from propane to LNG. • Total investments are around MEUR 25. • The investment (Manga LNG & Terminal Ltd, and Outokumpu’s infrastructure amendments in the plant area) will improve our long term cost efficiency based on more stable LNG price compared to propane. • Our aim is to cut our direct carbon dioxide emissions by 2020, and switching to LNG supports this target very well by reducing our CO 2 emissions by appr. 15%. Our nitrogen oxides emissions will reduce by 10%. • Manga. LNG will provide bunkering for LNG fuelled vessels. In the future, LNG may also be used in our liner vessels. 6/13/2021 20
The latest investments: Deepen the mine • Deep mine investment of 250 MEUR in Kemi • Will deepen from current 500 m depth to a new main level close to 1 kilometer in the beginning of 2020’s. • Outokumpu will build a new ore handling line with crushers, conveyors and silos, a new hoisting shaft from the surface, and a new main level accompanied with maintenance facilities and warehouses. • The drilling and excavations related to the hoisting shaft construction began in February–March 2018.
Competitiveness - Our strategic plan VISION 2020: To be the best value creator in stainless steel by 2020 through customer orientation and efficiency. The best value in the industry for customers, shareholders and employees through: Safety High performing organization World class supply chain Manufacturing excellence Commercial excellence Americas 6/13/2021 22
Competitiveness of Lapland's industry lean on operative, cost-efficient and environmentally sustainable solutions and logistics • We operate in the global markets, which determines the price levels. • National and EU-level regulation must be in line with international standards. • Constraints should be applied equally • Fairways at sea, on land, and in the air should be considered as basic infrastructure • It would be very important to finance them with public money 6/13/2021 23
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