Severstal North America
Severstal North America is the fourth largest integrated steel producer in the United States and is strategically located adjacent to Ford’s stamping and assembly operations and close to major North American automotive customers. With a 5 percent market share of flat rolled US steel production and an 8 percent market share of US automotive steel supply, Severstal North America has a liquid steel capacity of 3.037 million tonnes per year, a flat hot rolling capacity of 3.6 million tonnes per year, a cold rolling capacity of 1.8 million tonnes per year and a galvanising capacity of 0.8 million tonnes per year. In 2005, Severstal North America’s total steel production was approximately 2.7 million tonnes of crude steel and 2.9 million tonnes of finished steel.
Severstal North America’s plant is located in Dearborn, Michigan. This location gives Severstal North America strategic proximity to the Great Lakes waterways and three of the largest railroads in North America, providing logistically favourable access to raw materials, a significant portion of which is delivered directly to its plant by ship, and to customers.
Severstal North America’s product line includes hot-rolled, cold-rolled and galvanised steel. Severstal North America’s products – and in particular its value-added products such as high strength, high-carbon and low-alloy steel – are sold primarily to customers in the automotive industry. Double Eagle, Severstal North America’s joint venture with US Steel, is the world’s largest electro-galvanised line, with a capacity of 800,000 tonnes per year.
Strategy
Severstal North America’s strategies include the following:
- focus on value-added niches;
- target new customers; and
- invest in cold mill to develop production of high-end, high-strength steel products.
Facilities
Severstal North America is focused primarily on high-quality flat products, with a production capacity of 3.037 million tonnes of crude steel per year. The facility is fully integrated and is located in Dearborn on an industrial site adjacent to Ford’s stamping, engine, frame, paint and assembly plants. The facility comprises blast furnaces and steel making, casting, hot and cold rolling facilities, as well as two downstream galvanising joint ventures to produce high-quality, flat-rolled carbon steel products consisting of hot-rolled, cold-rolled and galvanised steel.
Severstal North America’s primary operations consist of two operating blast furnaces, two BOF vessels, two ladle refining facilities, one vacuum degassing facility and two continuous casters. The finishing operations include a hot-strip mill, three pickle lines, a tandem mill, one temper mill, a hot dip galvanising line and an electrogalvanising line.
Blast furnace facilities. Blast furnace “C” has a working volume of 1,500 cubic metres. The furnace was relined in 1991 and is scheduled to be modernised and expanded in 2007. It is expected that the furnace will be shut down for 105 days, during which time Severstal North America will have decreased hot metal and slab production and will rely more heavily on purchased slabs. Severstal North America currently plans to source its increased slab needs during the shutdown of blast furnace “C” through increased purchase of slabs from Lucchini, Russian Steel and Metalware and/or other external sources.
Blast furnace “B” has a working volume of 794 cubic metres. It was relined in 1997 and its campaign is capable of extending into 2010.
Steel making facilities. The BOF has two 235 tonne converters. There are two slab continuous casting machines. One is a twin strand, curved mould machine with a metallurgical length of 26.5 metres, and the other is a single strand, curved mould machine with a metallurgical length of 23.5 metres.
Rolling facilities. The hot strip mill has three walking beam furnaces, four roughing stands and seven finishing stands. It has a capacity of 3.3 million tonnes per year.
Severstal North America has three pickle lines, two of which have maximum line speeds of 305 metres per minute and a maximum coil weight of 22.7 tonnes. The third line has a maximum line speed of 762 metres per minute and a maximum coil weight of 25.0 tonnes. The total capacity of the pickle lines is 1.5 million tonnes per year.
The tandem cold mill is a four stand by four high mill. The maximum line speed is 975 metres per minute and the maximum coil weight is 27.2 tonnes. It has a capacity of 1.6 million tonnes per year.
Severstal North America’s temper mill is one stand four high design. The maximum rolling speed is 858 metres per minute and the maximum coil weight is 27.2 tonnes. The temper mill has a capacity of 0.8 million tonnes per year.
Severstal North America has two annealing processes: hydrogen batch annealing and hydrogen-nitrogen, or HN, batch annealing. The hydrogen batch annealing facility consists of 26 bases with 17 furnaces and a stacking height of 5.28 metres. The HN batch annealing facility has 86 bases with 34 furnaces and a stacking height of 3.95 metres. The primary fuel used for both annealing processes is natural gas.
Galvanising facilities. Severstal North America owns 50 percent of a electrogalvanising line, or Double Eagle, through a joint venture with US Steel. Double Eagle is the world’s largest electrogalvanised line, with a capacity of 800,000 tonnes per year, approximately one-half of which is dedicated to Severstal North America. This facility has 42 plating cells and can coat on one or two sides at a thickness of 0 to 100 grams per square metre. The facility can coat the substrate with either pure zinc or a zinc-iron alloy.
Severstal also owns 48 percent of a hot dip galvanising line Spartan through a joint venture with Worthington Steel of Michigan. Spartan produces hot dip galvanised sheet steel sold to unexposed automotive and service centre customers and has a capacity of 410,000 tonnes per year, approximately 330,000 tonnes of which are dedicated to Severstal North America. It can coat at a thickness of 30 to 150 grams per square metre. Severstal North America supplies 100 percent of the substrate to Spartan.
Production Process
The steelmaking process at Severstal North America begins with iron ore pellets and coke being fed into the blast furnaces, which operate continuously. During the blast furnace process, the charge is converted into pig iron. The pig iron sinks to the bottom of the blast furnace and is tapped off for further processing. Liquid slag, which remains after smelting, is also removed from the blast furnaces.
Once cooled, slag is sold to a slag processing facility to be used for a variety of products, including railroad track ballast, roadway base and bulk concrete additive. Gas produced by the blast furnaces is captured and sold to DIG, a cogeneration power plant and affiliate of CMS Energy Corporation. Molten pig iron, which is a component of the metal charge used in the production of steel in Severstal North America’s BOF, is transported to the BOF in 145 tonne railway torpedo cars. The pig iron is poured into charging ladles and then into the BOF vessel. In addition to pig iron, the metal charge consists of scrap metal in various forms (loose and packaged purchased scrap and internally generated scrap).
The molten steel is then fed from the BOF into the continuous casting machines to produce slabs that are then rolled at the hot strip mill into coils. The continuous caster facility is equipped with two radial-curved continuous casting machines. Severstal North America’s hot strip mill is able to produce coiled sheet of a thickness ranging from 1.9 to 9.6 millimetres with a coil weight of up to 27 tonnes. Part of the hot strip mill production is sent to Severstal North America’s cold rolling mills. These mills produce coiled sheet of a thickness ranging from 0.5 to 2.3 millimetres. Additional processing methods related to cold-rolling may be used to further improve the surface characteristics of the steel, including pickling, annealing and sheet-tempering.
Some of the cold-rolled sheets are galvanised at Spartan or Double Eagle facilities.
Quality Control. Severstal North America has implemented the TS16949 quality management system and received certification to this internationally recognised technical specification in July 2004. Certification to this specification is required to directly supply the automotive industry. The goal of the TS16949 specification is to achieve customer satisfaction through continual improvement. The past twelve-month rolling average shows a 14 percent reduction in internal quality rejections, and Severstal North America has demonstrated proactive customer relationships as a requirement of the certification. Further, the TS16949 certification identifies Severstal North America’s on-site laboratory as being qualified to perform product testing and certifications as it pursues A2LA Laboratory Accreditation. Severstal North America has successfully completed four surveillance audits since 2004 to maintain certification and the benefits of the TS16949 technical specification.
Products
Crude steel products. Severstal North America produced 2.7 million tonnes of crude steel in 2005, or approximately 90 percent utilisation.
|
Year |
Severstal North America |
|
|
(thousands of metric tonnes) |
|
2003(1) |
2,512 |
|
2004(1) |
2,481 |
|
2005 |
2,753 |
Note:
(1) Severstal acquired Severstal North America on 30 January 2004. Information presented includes output of Severstal North America’s predecessor.
Finished steel products. Most of Severstal North America’s crude steel production is further processed into finished steel products, which include flat and galvanised products. Flat products include hot-rolled and cold-rolled sheet, plates and coils. Galvanised products include automotive and non-automotive parts.
|
|
Year ended 31 December |
|
Product |
2003(1) |
2004(1) |
2005 |
|
Hot‑rolled sheet |
1,188 |
1,090 |
1,470 |
|
Cold‑rolled sheet |
749 |
759 |
811 |
|
Electrogalvanised |
317 |
297 |
304 |
|
Hot dip galvanised |
324 |
336 |
348 |
Note:
(1) Severstal acquired Severstal North America on 30 January 2004. Information presented includes output of Severstal North America’s predecessor.
Hot-rolled sheet. Hot-rolled flat products include heavy-gauge and light-gauge hot-rolled sheet produced from ordinary and high-quality carbon-steel and low-alloy strengthened steel. Severstal North America produces hot-rolled sheet with a maximum thickness of 9.6 millimetres and width of 1,560 millimetres. Heavy-gauge sheet steel is used to manufacture wheels, suspension arms, roof decking and guard rails. Light-gauge hot-rolled sheet has a minimum thickness of 1.9 millimetres and is used for welded pipe and tubing, white goods and automotive parts.
Cold-rolled sheet. Severstal North America produces cold-rolled coils with a thickness of 0.5 to 2.3 millimetres and a width up to 1,524 millimetres. Cold-rolled sheet, which has a greater elasticity and a better surface quality than hot-rolled sheet, has various uses, including the manufacture of automotive parts, lighting fixtures, room dividers and doors. In addition, cold-rolled products serve as a substrate for Severstal North America’s galvanised products.
Coated/galvanised products. Through its Double Eagle and Spartan joint ventures, Severstal North America produces galvanised products, which are used for exposed and unexposed automotive parts, as well as non-automotive products such as residential and commercial doors, roofing, ductwork and grain bins, and steel utility poles.
Supply Chain
The principal raw materials used by Severstal North America to produce steel include iron ore pellets, coke, limestone and dolomite, non-ferrous metal and ferro-alloys and metal scrap. Severstal North America does not maintain a minimum reserve of raw materials with the exception of iron ore pellets, which are delivered by ship. The Great Lakes shipping channels are typically closed during the January through March period, and accordingly Severstal North America accumulates a three months’ supply of iron ore pellets by the end of each year to sustain production during the winter months.
Iron ore concentrates and pellets. Iron ore is purchased exclusively from Cleveland-Cliffs pursuant to a long-term contract expiring at the end of 2012. Severstal North America has committed to purchase all of its iron ore requirements from Cleveland-Cliffs through this period, including a minimum volume of 4.6 million tonnes during 2008. Severstal North America consumes approximately 3.7 million tonnes per year.
Coke. In 2006, Severstal North America expects to receive approximately 350,000 tonnes of coke from Mountain State in West Virginia, its 50-50 joint venture with WPSC. After modernisation of Mountain State’s largest battery, which is currently planned for the first quarter of 2007, Severstal North America believes that two thirds of its metallurgical coke needs will be met by its Mountain State joint venture with WPSC. Severstal North America is currently considering several domestic and foreign options for sourcing the balance of its coke requirements.
Severstal North America purchases most of its remaining coke requirements pursuant to short-term (one year or less) fixed price contracts. In 2005, Severstal North America imported most of its coke requirements from selected Chinese producers at close to spot market prices. Additional coke was purchased from Japan, Russia, Poland, Canada and US suppliers.
Scrap. Scrap is purchased from companies that collect scrap metal and is generated internally from Severstal North America production processes. Approximately 30 percent of the BOF vessel charge is scrap and the remaining 70 percent is liquid iron. Severstal North America also uses scrap-processing services, which allows Severstal North America to process a wide range of sizes and quality of steel scrap. Such services include special cutting and packaging lines for processing the scrap so that it is ready for use in the smelting process. Although there have been sharp increases in market prices of steel scrap in both the US and international markets in recent years, Severstal North America believes that its strategic location in a region with significant sources of prime automotive scrap brings it an advantage in transport costs.
Energy. Severstal North America’s electricity requirements total approximately 0.6 million megawatt-hours per year.
Severstal North America purchases electricity and steam from CMS ERM LLC, an affiliate of DIG, under a 15-year contract. Prices are fixed for each year during the contract term in accordance with a negotiated schedule and are lower than market prices. Under this contract, DIG is required to purchase 100 percent of Severstal North America’s available blast furnace gas. The contract extends through 2015 with an option to renew for an additional 15 years.
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