This document is solely for the internal use of ArcelorMittal.

Saldanha Works Achieving Energy Savings through a holistic focused management approach A Case Study

ICUE PresentationReinet van ZylAug 2012

Framework

• AMSA Background information

• Summary Background on Saldanha Plant and Process

• Electricity Price and Cost impact

• Saldanha Approach for Sustainable Energy savings

• Implementation Time line

• Performance Review

• Project Detail as examples

• 2012 Focus and Target

• Conclusions

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ArcelorMittal South Africa

Overview of Operations

• Flat Steel Products

• Vanderbijlpark Works – 3.2 Mtpa*

• Saldanha Works – 1.2 Mtpa*

• Long Steel Products

• Newcastle Works – 1.5 Mtpa*

• Vereeniging Works – 0.4 Mtpa*

• Iron ore supply

• 6.25 Mtpa from Sishen

• 2.5 Mtpa from Thabazimbi

• Coke & Chemicals

• Coke - 597 000 tpa*

• Tar - 133 000 tpa*

VereenigingJohannesburg

NewcastleSishen mine

Vanderbijlpark

Thabazimbi mines

DurbanSouth Africa

Saldanha

Cape Town

* Based on 2006 actual final product sales

Steel plants in close proximity of key markets

COREXDR-PlantSteel shop

Mills

RHF

Statistical information

• Electricity consumption: 160 MW

• Daily water consumption: 8 000 kilo liters (world best for an integrated steel plant)

• Manpower: 548 permanent employees

• Sales output: 1,2 million ton HRC/annum

Budget 2012 Allocation

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• Energy related components is 46% of total cost structure.• However, in the steel industry coal and coke it is strictly speaking a raw material.• Coal and Coke is required for the Boudouard chemical reaction. (On this basis the AMSA

CO2 tax calculation was reduced to the current R125 mil).

Labour, 3%

Refractories, 2%

Alloys, 3%

Fluxes, 3%

PM Maintenance, 4%

Consumables , 5%

Overheads other, 5%

Ore, 11%

Pellets, 14%

Energy, 45.5%

Other, 45.5%

Coal : 20%

Coke : 7 %

Electricity: 14.7 %

LPG: 3.6%

Other : 0.2%

This document is solely for the internal use of ArcelorMittal.

Achieving Energy Savings

Energy Review 2011 - Saldanha

WHAT WENT WELL WHAT WENT WRONG

1. Good Progress on Strategy Implementation

2. 7.7 MW av. Electricity demand saved (from expected 145.3 MW)

• 5.3% saving on baseline

• Electricity Saving value : R28.3m

• Actual Average Demand : 137.6 MW

• (2012 demand saving YTD 4 MW)

3. LPG Saved : 5798 t (compared to 2010)

• LPG saving 26% with value R52m

• (2012 YTD saving R35m)

4. $12.8/t Savings for Dec ’11 ($21/t Saving for Jun’12)

5. Three Project Engineers appointed

6. Energy Matrix Structure in place

7. Thirteen projects completed (mostly quick wins and efficiency related with some awareness focused projects).

8. Good progress on visibility and reporting of energy related information

9. EnMS implementation – good progress

1. EnMS require more system knowledge for proper integration. Some more work required to integrate into current ISO system.

2. Capital funding was cut

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Energy Management Sustainability

WCM (World Class Manufacturing)Reliability centred focus

Saldanha Approach

Management Infrastructure

Step 1 : WCM (World class Manufacturing focusing on Autonomous Maintenance (TPM)

Roll Out

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Step 2 : Energy Management

Awareness and training

Performance Measure and Control : Improved Metering and Reporting

WCM : Autonomous Maintenance

Appoint Energy Manager

H1 2010

WCM : Professional Maintenance

Energy Strategy

Energy Audit

H2 2010 H1 2011 H2 2011 H1 2012 H2 2012 2013-2016

Energy Management SystemISO 50001

Energy Projects : prioritised implementation and tracking

WCM : People Development and other 5 pillars

WCM: Cost Deployment WCM: Cost Deployment

WCM : Focused Improvement

Appoint 3Team members

Step 3 : Management Infrastructure

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Actions contributing to improved performanceEnergy Strategy

•An Energy Manager was appointed 1 May 2010.

•An energy audit was initiated to identify potential opportunities and expand the list of opportunities already identified.

•The team was later increased by a further 3 people focusing on project implementation to fast track potential savings.

•25% of capital allocated to Energy Projects.

WCM (World Class Manufacturing)

•The plant volunteered to be a pilot for the roll out of WCM within the AMSA group.

•The program is very much focused on equipment reliability and a “clean to inspect” approach

•Bronze status reached after 18 months (usual plan 3 years to reach)

IEE Program and Energy Management System (based on ISO 50001)

•Pilot plant for the expert training in Energy Management, Electrical Motors and Pumps.

•Ensure sustainability of any energy savings made.

•Training of personnel in other IEE programs (20 people)

Management Infrastructure (MI) – doing things more efficiently

•Implementation of a MI program in Feb 2012.

•Optimally utilizing the resources currently available within the plant.

•Improve the effectiveness of the organization and address deficiencies in current practices with standards and visual management.

Energy Projects Completed 2011

Nr Opportunity Detail kWh Saving

R 1000’s saving pa

Cost(Rm)

1 De-dusting fan2.2 MW

Switch off during standing time > 2 hr.

623,624 263 0

2 System 1 Maintain water temp @ summer Temps (28 33 degC)

1,419,500 686 0

3 Compressed Air Repair Leaks & prevent misuse 2,350,400

1,207 0

4 Ladle Heating Prevent unnecessary utilisation and LPG use

250

5 Power Optimiser

Installed in main Building :10% V drop, 7% kWh saving

55,091 120 0.5

6 Low Production Periods

Focus and awareness – switch off what is not required (Jun/Aug/Sep)

31,687,198

13,308 0

7 Load Shedding Utilising Chemical energy during Winter Peak tariff (2% moved to outside peak)

5,000(R20,000

planned 2012)

0

8 LPG Reduce LPG cons. by 30% by changing operating philosophy

50,000 0

Energy Projects Completed 2011 (cont.)

Nr Opportunity Detail kWh Saving

R 1000’s saving pa

Cost(Rm)

9 Conarc Foamy slag, Transformer operation & DRI Quality

42,180,000 17,715 0

10 Mill Ancillary Switch off

Switch off possible systems during standing

876,000 464 0

11 VSD System 11 Installed Variable Speed drive 6,464,880 3,500 3.16

EnMS helps you reach your targets and sustain performance!

Nr Awareness Projects Detail

12 Solar Street Lights

13 Solar Geysers

3b Compressed Air Fixing leaks and Awareness Training

Performance YTD

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Performance YTD

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1.9%

3.0%

4.2%4.5% 4.6%

4.8%

4.5%

6.0% 5.9%

4.6%4.6%

4.9%

5.7% 5.8%

5.1% 5.3%5.8%

6.8%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

Jan'

11

Fe

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Ma

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Apr

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Jun'

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Jul'1

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Aug

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Sep

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Oct

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No

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De

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Electricity Savings Tracking

Actual MWh Saving Planned MWh saving % Improvement (Mov Av) from baseline

Project Detail : LPG Reduction

Project Statistics Actions and detailLPG Reduced Consumption

Trigger : Cost and shortage of LPG

Approach : Review operational assumptions and change operational principles and philosophy.

Implementation : Q4 of 2011

Value of Saving :

26% or R 52 million for 2011

A further 30% saving for 2012

Preparation : •Restore Corex basic conditions with Tap hole repair and WCM program. This ensures stable operations and high availability of DR gas.  Change in practice :•Enrichment of DR gas •No significant detrimental impact on throughput could be observed in the Midrex. •The Midrex was one of the largest LPG consumers using LPG for cooling and increasing Carbon content •The Midrex decreased the LPG consumption considerably and countered potential negative impact on quality without significant loss in production volumes or tempo..  Results :•Midrex :  LPG consumption was reduced at the from 18kg/t DRI to less than 14 kg/t DRI. •RHF consumption was reduced from 9kg/t to less than 2 kg/t hot rolled coil.  

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5.13 4.46 4.35 4.21 4.10 4.2 4.0 3.9 3.8 3.7

1.33 1.30 0.91 0.66 0.64 0.66 0.56 0.06 0.06 0.06

17.0 19.3 17.2 17.5 16.4 16.4 16

1513.5 13

3.6 3.1

2.6 3.1 3.1 3

2.82.6

3.1 3.1

27.128.2

25.1 25.424.2 24.1 23.3

22.1 21.0 20.4

0

5

10

15

20

25

30

Biogas GJ/t LS

Anthracites GJ/tLSCoke GJ/t LS

Coal GJ/t LS

LPG GJ/t LS

Energy Contribution by Source

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2012 Targets :Electricity 1199 kWh/t or 4.2 GJ/t LPG : 0.66 GJ/tCoal & Coke : 19.4 GJ/t

Energy Focus Areas 2012

Focus 2012 Risks1. Projects – high value

• Targets : 1.1MW saving on electrical demand baseline (YTD on 4 MW in 2012)

• R28m saving through energy projects

• (YTD additional or R34m)

2. EnMS (ISO50001) full implementation and integration on SEU’s with external audit.

3. Improved reporting and visibility to operator level for SEU’s to assist with proactive energy management.

4. LPG supply contract – put system in place with minimal day-to-day interface required.

5. Customer Service to Plants

6. Awareness and Training

1. Lack of Capital

2. Technology injection required for significant further progress

3. Carbon Tax

4. Electricity price increase

5. Electricity winter pricing – not viable to produce during peak hours. Impacts on viability.

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Conclusion

• Stability and reliability is a prerequisite for optimisation efforts.

• Management Commitment and Resource allocation essential.

• Energy Management System ensure sustainable energy improvements.

• Energy Management System allows a structured approach looking at all aspects (not just technical)

• Focus on Energy and Energy opportunities and savings will realise.

• Measuring and reporting important for both identifying opportunities and changing behaviour.

• The more you investigate potential opportunities the more opportunities are found.

• Awareness and education is a critical part for sustained savings.

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Questions?

Thank You