Voestalpine Ag · VIE:VOE
Voestalpine — Investor Day (March 2018)
27 slides from Voestalpine's investor day presentation, Mar 12, 2018
Slide 1: Investors and Analysts Field Trip Texas 2018
INVESTORS AND ANALYSTS FIELD TRIP TEXAS 2018 Company name or Division 1 | March, 2018 | Investors and Analysts Field Trip Texas
Slide 2: Strategic Background
STRATEGIC BACKGROUND WOLFGANG EDER, CEO voestalpine AG voestalpine AG www.voestalpine.com
Slide 3: The voestalpine Group
THE voestalpine Group voestalpine is a technology and capital goods company as well as world leader in its business segments, with a unique combination of expertise in materials and processing. The company focuses on product and system solutions made from steel and other metals, in technology-intens
Slide 4: voestalpine's USP: Combination of Materials and Processing Expertise
voestalpine‘s USP: COMBINATION OF MATERIALS AND PROCESSING EXPERTISE Competitive advantage and increased customer benefits via… » Integrated innovation power across long value chains (e.g. additive manufacturing, press hardening steels, high ductility steels, automotive and aircraft components, bond
Slide 5: voestalpine's USP: Combination of Materials and Processing Expertise
voestalpine‘s USP: COMBINATION OF MATERIALS AND PROCESSING EXPERTISE Parts Components Modul / Systems Crude Raw materials Steel Material Processing (in k to) Steel Steel and other metals like Aluminum, Titanium, Composite Materials Steel Steel products: High quality steel sheet, heavy plates Divisio
Slide 6: Overview of Industries
OVERVIEW OF INDUSTRIES Automotive Aerospace Energy Building/Construction Railways White goods/Consumer goods Mechanical Engineering Other voestalpine AG 6 | March, 2018 | Investors and Analysts Field Trip Texas
Slide 7: Strategic Considerations HBI Plant
STRATEGIC CONSIDERATIONS HBI PLANT Performance optimization HBI is a prerequisite for all EAF-steel of existing plants and makers with a high quality steel improvement of marginal cost curve portfolio Group wide optimization and Optimization of energy- and growth option with environmental foot
Slide 8: voestalpine Specific Considerations HBI Plant
voestalpine SPECIFIC CONSIDERATIONS HBI PLANT » Specific burden optimization in Linz and Donawitz » Specific utilization optimization by debottlenecking of core facilities in the hot phase of the process » Immediate CO2 cost reduction in existing steelmaking process voestalpine AG 8 | March, 2018 |
Slide 9: Economic Considerations HBI Plant
ECONOMIC CONSIDERATIONS HBI PLANT » voestalpine internal use of HBI limited to 800,000 tons per year » Ideal economies of scale for HBI plant at a nominal capacity of 2 million tons of HBI production per year » Therefore sales of HBI to external customers important for economic viability of HBI plan
Slide 10: Long Term Estimation General Condition of HBI Usage
LONG TERM ESTIMATION GENERAL CONDITION OF HBI USAGE Iron ore Natural gas Scrap Worldwide good „Shale gas“-boom Rising percentage of availability (North America,…) EAF-based steel mills Established market Decoupling of gas and oil Limited availability of high price quality scrap D
Slide 11: Why Texas After Analyzing Possible Sites in Different Countries
WHY TEXAS AFTER ANALYZING 18 POSSIBLE SITES IN 7 DIFFERENT COUNTRIES Market Cost factor % of total cash costs FOB since 04/2010 Natural gas Logistics Iron ore 70 % Natural gas 14 % Logistics 6% Best Electricity 2% location Others 8% Legal and political stability Electricity voestalpine AG 11 | March
Slide 12: Logistic Inbound (Iron Ore) and Outbound (HBI)
LOGISTIC INBOUND (IRON ORE) AND OUTBOUND (HBI) » Optimization of logistics: HBI MARKET » Iron ore pellets and HBI are transported in a IRON ORE circular logistic route HBI MARKET » Reduction of freight cost due to better IRON ORE IRON ORE HBI utilization of freight capacity HBI MARKET » Basic possib
Slide 13: HBI Plant – An Integral Part of voestalpine Steel Division
HBI PLANT – AN INTEGRAL PART OF voestalpine STEEL DIVISION HERBERT EIBENSTEINER, HEAD OF STEEL DIVISION voestalpine AG Stahl GmbH www.voestalpine.com
Slide 14: Construction Phase Facts and Figures
CONSTRUCTION PHASE FACTS AND FIGURES » Groundbreaking: April 23, 2014 » First product: September 28, 2016 » Successful ramp-up phase; plant fully operational: April 1, 2017 » Final costs: USD 1.012 billion (initial budget USD 742 million) » Reasons for overrun: » Critical weather conditions » Cost i
Slide 15: Internal Use of HBI Main Drivers
INTERNAL USE OF HBI MAIN DRIVERS The HBI plant is a strategic asset tailor-made to address the unique set-up of voestalpine CO2 Savings Efficiency/Productivity Strategic Options voestalpine Stahl GmbH 15 | March, 2018 | Investors and Analysts Field Trip Texas
Slide 16: Internal Use of HBI Efficiency/Productivity Increase
INTERNAL USE OF HBI EFFICIENCY/PRODUCTIVTY INCREASE Blast Furnace » Bottleneck in Linz set-up: Hot metal production (Linz) » HBI is charged as additive to regular burden » HBI is used as » Iron source » Process performance booster » Reduction agent reducer » HBI allows for productivity increase and
Slide 17: Internal Use of HBI Efficiency/Productivity Increase
INTERNAL USE OF HBI EFFICIENCY/PRODUCTIVTY INCREASE Steel Shop » HBI is charged via scrap chutes (Linz and Donawitz) » HBI increases scrap load density reduced charging times, only one scrap chute per heat shorter tap to tap times » HBI has low and predictable sulphur and trace element levels
Slide 18: voestalpine HBI Plant
voestalpine HBI PLANT STEFAN EINFALT, CHAIRMAN OF voestalpine TEXAS LLC voestalpine Stahl GmbH www.voestalpine.com/stahl
Slide 19: What Is HBI and How Is It Used?
WHAT IS HBI AND HOW IS IT USED? » Premium metallic source based on iron ore pellets (direct reduction grade) » Process: Pellets are reduced in a shaft furnace by the means of natural gas instead of using coke in the blast furnace process » Fe content >90%, metallization 92-94% Effects of Blast Furna
Slide 20: Strategic Rationale for Use in EAF (External Customers)
STRATEGIC RATIONALE FOR USE IN EAF (EXTERNAL CUSTOMERS) Example: Required quality <0.10 Cu » Use in EAF primarily as a scrap supplement in order to HBI 0.01% produce most demanding steel grades with low residual levels Cu „B“ e.g. » Reduction of scrap price risk exposure • 30% E3/HMS1 • 30% E6 • 40%
Slide 21: A Steep Ramp-Up Curve…
A STEEP RAMP-UP CURVE… 169148 178050 166179 67480 178050 166180,5 169147,5 178050 » Performance test in February 200.000 2017 successfully passed 180.000 » Promising plant utilization ratio 160.000 for the first 12 months of 140.000 production: 75-80% (including production in mt per month hot commis
Slide 22: …But We Lived It All in Just One Year
…BUT WE LIVED IT ALL IN JUST ONE YEAR Consequences: “Harvey was the strongest landfall in this area, known as the Texas Coastal Bend, » Plant shutdown since Hurricane Carla, in September » Port closure 1961.” » Repairs at plant » Loss of production Aug./Sept. 2017 voestalpine Texas HBI plant Consequ
Slide 23: Sales Strategy Allocation of Quantities
SALES STRATEGY ALLOCATION OF QUANTITIES 2.0 Quantity Total production since start-up: >2.1 millions metric tons 1.2 External consumption Top 5 destinations: Mio. mt 1.0 BY 2018/19 » Austria » Mexico » USA 0.8 Internal consumption » Spain 2,000,000 mt » Italy voestalpine Stahl GmbH 23 | March, 2018 |
Slide 24: voestalpine HBI Is in Global Demand
voestalpine HBI IS IN GLOBAL DEMAND Netherlands Sweden China USA Germany Belgium Japan Turkey Portugal South Korea Marocco Kuwait Italy Mexico Spain Bangladesh Saudi Arabia Peru Algeria Egypt voestalpine Stahl GmbH 24 | March, 2018 | Investors and Analysts Field Trip Texas
Slide 25: Sales Strategy and USP
SALES STRATEGY AND USP Strategy USP » Focus on customers that use HBI as a scrap » Differentiation by product quality supplement, not a substitute » Reliability and best-in-class service (direct » Differentiate by product quality » Carbon content >1.5% increases yield deliveries – without traders in
Slide 26: Positive Market Outlook
POSITIVE MARKET OUTLOOK » Short-term » Positive market sentiment prevails over next view months » Demand currently exceeds supply – several customer inquiries cannot be fulfilled (e.g. Mexico, US, Southern Europe, MENA, South Korea) » Mid-term » President Trump’s section 232 measurements could furth
Slide 27: Investors and Analysts Field Trip Texas 2018
INVESTORS AND ANALYSTS FIELD TRIP TEXAS 2018 Company voestalpine name Stahl orGmbH Division 27 | March, 2018 | Investors and Analysts Field Trip Texas