TZMI.COM

IMPORTANCE OF SCRAP TO THE

METAL SUPPLY CHAIN

David McCoy

TZMI CONGRESS 2016 | IMPORTANCE OF SCRAP TO THE METAL SUPPLY CHAIN 2

What’s driving scrap production?

Industry is using more titanium

TZMI CONGRESS 2016 | IMPORTANCE OF SCRAP TO THE METAL SUPPLY CHAIN 3

Commercial aerospace the main driver of titanium demand

Titanium demand from ‘next gen’ aircraft

(buy weight tonnes)

Raw material spend US$ billion based on buy weight

Source: Arconic @ ITA Scottsdale 2016 Source: ICF International Scottsdale 2016

47.0% 44.0%

21.0%21.0%

11.0% 13.0%

10.0% 10.0%

6.0%5.0%

6.0%6.0%

80%

40%

0%

100%

60%

20%

Ti Alloys

2020

Other

Al Alloys

Steel Alloys

Super Alloys

Composites

2015

102

20

21

77

0 50 100 150 200

B767

Tonnes

410%

348%

+139%

B787

A350

A330

B777X 184

94

B777

TZMI CONGRESS 2016 | IMPORTANCE OF SCRAP TO THE METAL SUPPLY CHAIN 4

Typical aerospace supply chain

PCC30% shareDynametBoeing

TMX

ATI

Timet

VSMPO

Alcoa30% share

LISI15% share

Others

Boeing55% share

Airbus35% share

Others10% share

Distributors

Brokers

Direct buyers

Buy from

distributors

Directed buy

Various

Yield loss 30%

Yield loss 10%

Direct to OEM or tier

supplierDirect to OEMIngot direct

to wire / coil

/ bar

converter

Perryman

NF&M (VSMPO)

Sponge to

ingot & billet

Materials

procurementFastener OEMs

Wire / coil / bar

convertersDistributers Tier suppliers

Aerospace

OEMsFeedstock

Iluka

Rio Tinto

CIS

Other

TZMI CONGRESS 2016 | IMPORTANCE OF SCRAP TO THE METAL SUPPLY CHAIN 5

Typical CP ingot process

TZMI CONGRESS 2016 | IMPORTANCE OF SCRAP TO THE METAL SUPPLY CHAIN 6

Purpose of the melting process

• Combination of various metals to make analloy with certain properties

• Homogeneity

• Scrap can add “unwanted” impurities

TZMI CONGRESS 2016 | IMPORTANCE OF SCRAP TO THE METAL SUPPLY CHAIN 7

The big picture – how scrap fits into the alloy process

TZMI CONGRESS 2016 | IMPORTANCE OF SCRAP TO THE METAL SUPPLY CHAIN 8

Two major routes to make ingot/ slab

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Scrap – relationship with melt technologies

• Not all scrap can be remelted

– Form

– Cleanliness

– Certification/ control

• Vacuum Arc Remelt (VAR)

– Welding electrodes is time consuming and does not lend itself to small or odd shapes

– does not remove HDI contamination (ie tungsten-carbide from drill tools)

– very low use of turnings

• Non consumable furnaces – not electrode forming is required.

– Can use small solids and turn

– But sorting of small solids is expensive

TZMI CONGRESS 2016 | IMPORTANCE OF SCRAP TO THE METAL SUPPLY CHAIN 10

Scrap is difficult to manage on a large scale

• Intensive need of manual labour

– Manual piece-by-piece testing

• General exclusion of certain type of scrap

– Cracks, holes, etc

• Intensive processing needed for turnings

TZMI CONGRESS 2016 | IMPORTANCE OF SCRAP TO THE METAL SUPPLY CHAIN 11

Scrap management is complex & costly

Source : Goldman Titanium

TZMI CONGRESS 2016 | IMPORTANCE OF SCRAP TO THE METAL SUPPLY CHAIN 12

Bulk weldables

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Bulky scrap

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Typical “agglomerate” scrap

TZMI CONGRESS 2016 | IMPORTANCE OF SCRAP TO THE METAL SUPPLY CHAIN 15

Turnings

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Compacted and welded electrode

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Example of an aerospace scrap/ metal supply chain

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United States melters are the biggest users of scrap

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Scrap & the sponge industry

• Sponge is a very capital intensive.

– High cost – long-term investment decision (normally!)

– Long-term contracts for offtake – cost inputs like feedstock not necessarily the same.

– Offtake can be take-or-pay

• Scrap industry

– Price of titanium unit typically sits under the cost of sponge

– Price can spike if Ferro-titanium demand increases sharply

– Type of melt technology available can determine usage

TZMI CONGRESS 2016 | IMPORTANCE OF SCRAP TO THE METAL SUPPLY CHAIN 20

Take home points

• Scrap is a very important part of the metal supply chain.

• Not all scrap is the same

• Scrap flexibility is dependent on melt technology and other factors such ascertification of supply chain

• Control of the scrap lifecycle is becoming extremely important to aerospace OEM’s.

• Contaminated/ non usable scrap is mostly sent to the ferro-titanium market

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