Cru ferroalloys europe 2015 zurich

1. Dipl. Eng. Lou Parous
MsC. Dipl. Eng. Valdiney Domingos
Dipl. Eng. Gabriel Esteves
Dipl. Eng. Luciano Biazutti
Moltekestrasse 2-4
78467 Konstanz
Germany
www.viridis-iq.de
lou.parous@viridis-iq.de
Registered Office: Konstanz
Register Court Freiburg/ Commercial Register Number: HRB
708759
Management Board:
Dipl. Eng. Louis Parous
Dr. Wolfgang Herbst
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The Power of Electricity
The impacts of electricity price on the ferroalloy
and silicon industry

2. 2© Viridis.iQ CRU Ryan’s Notes – Ferroalloy Europe 2015, June 8-9, 2015
Content
 Brief company introduction
 Comparison of Brasil (mgSi) and Republic of South Africa (FeCr)
 Case study of Brazilian mgSi Industry
 Conclusions

3. 3© Viridis.iQ CRU Ryan’s Notes – Ferroalloy Europe 2015, June 8-9, 2015
Brief Introduction
Corporate Focus
Recycling Technology PV Systems
Silicon Manufacturing Solar Manufacturing

4. 4© Viridis.iQ CRU Ryan’s Notes – Ferroalloy Europe 2015, June 8-9, 2015
• Process Engineering
• Knowhow Transfer
• Technology Development
• Technology Audits
• Ramp Up/Start Up
• Interim Operations Teams
• Management Teams
• Learning Curve Support
• Markets and Strategy
• 6 Sigma Optimization
• Personnel Training
• Financial and Investment
• Manufacturing Consulting
Aluminum
Chemicals
Engineering & Consulting:
PV Engineering & Consulting
 Intersection of Silicon and the PV industry
 Manufacturing, Design and Engineering for Ferroalloys
 Interdisciplinary: technical & commercial
 Independent: unbiased and neutral advice
Brief Introduction
Corporate Focus

5. 5© Viridis.iQ CRU Ryan’s Notes – Ferroalloy Europe 2015, June 8-9, 2015
Brief Introduction
Publications and Appearances

6. 6© Viridis.iQ CRU Ryan’s Notes – Ferroalloy Europe 2015, June 8-9, 2015
Chemicals
 Silicones for plastics, paints,medical
applications, cookware, and insulation
 Silicon is consumed in the chemical process and
derivitives of silicon are further processed
 Wells established industry that is expanding in
the emerging markets as consumer goods
consumption rises
 Approx 2 kgs of silicon are needed for 1 kg of
Silicones
Aluminium
 Used as an alloying element to alumium for
improved properties
 Used in both primary and secondard alumium
industry
 Increasing use of alumimum – silicon alloys is
pushing higher demand of silicon
 Typically up to 12% silicon is used in cast
aluminum alloys
.
Electronics and Photovoltaics
 Key raw material for production of polysilicon
 Consumed in process
 1.2 to 1.4 kgs are needed for 1 kg of
polysilicon
 Large cost componant of polysilicon
production
 High consistancy in quality requirements
Sectors and Drivers
End Markets for mgSilicon
Metallurgical Silicon is used in a diverse number of industries. As an feedstock, its is normally
consumed in the process of making other industrial end products or consumer goods.

7. 7© Viridis.iQ CRU Ryan’s Notes – Ferroalloy Europe 2015, June 8-9, 2015
Content
 Brief company introduction
 Comparison of Brasil (mgSi) and Republic of South Africa (FeCr)
 Case study of Brazilian mgSi Industry
 Conclusions

8. 8© Viridis.iQ CRU Ryan’s Notes – Ferroalloy Europe 2015, June 8-9, 2015
Optimization?
New Markets?
Ferroalloy industry in Brasil and RSA
Decisions have to be made….but how?

9. 9© Viridis.iQ CRU Ryan’s Notes – Ferroalloy Europe 2015, June 8-9, 2015
• Electricity Prices escalation…
• Increase of external market competition…
• Furnace shut downs…
• Scarcity of raw materials…
• Environmental issues…
• Currency battles…
• Internal economic and political issues…
Ferroalloy industry in Brasil and RSA
Convergence and divergence
FeCrSilicon

10. 10© Viridis.iQ CRU Ryan’s Notes – Ferroalloy Europe 2015, June 8-9, 2015
1 Viridis.iQ GmbH, ANEEL, Dept. of Energy RSA
Electricity prices
Effect on OPEX in FeCr and Silicon
29%

11. 11© Viridis.iQ CRU Ryan’s Notes – Ferroalloy Europe 2015, June 8-9, 2015
Currency devaluation
Brasil vs RSA

12. 12© Viridis.iQ CRU Ryan’s Notes – Ferroalloy Europe 2015, June 8-9, 2015
Electricity prices
Effect on OPEX in FeCr and Silicon

13. 13© Viridis.iQ CRU Ryan’s Notes – Ferroalloy Europe 2015, June 8-9, 2015
Global Markets
Contribution of RSA/Brasil on world markets

14. 14© Viridis.iQ CRU Ryan’s Notes – Ferroalloy Europe 2015, June 8-9, 2015
RSA Ferrochrome sector
Production and utilization
Production(tonsFeCr/year)
Utilization(%)

15. 15© Viridis.iQ CRU Ryan’s Notes – Ferroalloy Europe 2015, June 8-9, 2015
Brasil Ferrochrome sector
Production and utilization

16. 16© Viridis.iQ CRU Ryan’s Notes – Ferroalloy Europe 2015, June 8-9, 2015
RSA BRASIL
Strong increase Electricity Prices Strong increase
Constant, significant (55%)* Currency devalued Volatile, significant (65%)*
FeCr High (+90%) Utilization Rates mgSi Low (48%)
FeCr High (29%) Global Market Impact mgSi Low (5%)
FeCr Moderate (17%) Power Costs vs OPEX mgSi High (42%)**
Coal Energy Matrix Hydro
Overview
RSA vs Brasil
• 5 year period
• ** current average for most producers

17. 17© Viridis.iQ CRU Ryan’s Notes – Ferroalloy Europe 2015, June 8-9, 2015
Content
 Brief company introduction
 Comparison of Brasil (mgSi) and Republic of South Africa (FeCr)
 Case study of Brazilian mgSi Industry
 Conclusions

18. 18© Viridis.iQ CRU Ryan’s Notes – Ferroalloy Europe 2015, June 8-9, 2015
Dow Corning PA (4 x 15MW)
LIASA (2 x 17MW and
2 x 22MW)
Dow Corning MG (2 x 21MW, 2 x
15MW and 1 x 13MW)
RIMA CAP (2 x 26MW)
MINAS LIGAS (4 X 15MW)
RIMA VZP (3 x 13MW)
Italmagnesio (1 x 17MW)
1 Viridis.iQ GmbH
Brasil mgSilicon Operations
Capacity and current utilization

19. 19© Viridis.iQ CRU Ryan’s Notes – Ferroalloy Europe 2015, June 8-9, 2015
1 Viridis.iQ GmbH
Brasil mgSilicon capacity
Decades of growth
Operational Capacity in Brasil
Installed
Capacity
Utilization

20. 20© Viridis.iQ CRU Ryan’s Notes – Ferroalloy Europe 2015, June 8-9, 2015
Brasil mgSilicon capacity
Furnace revamp, conversions and optimizations

21. 21© Viridis.iQ CRU Ryan’s Notes – Ferroalloy Europe 2015, June 8-9, 2015
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Dow Corning RIMA Minas Ligas Liasa Italmagnesio
Electricity prices
at record highs,
but, why are
some companies
are still operating
at high utilization
rates?
Legal action by
some producers
might change
production profile
Source: Viridis.iQ GmbH
Brasilian mgSilicon Sector
Electricity prices versus utilization
100% 43% 25% 0% 0%

22. 22© Viridis.iQ CRU Ryan’s Notes – Ferroalloy Europe 2015, June 8-9, 2015
MgSilicon production costs
2013 Impact of electricity versus production costs

23. 23© Viridis.iQ CRU Ryan’s Notes – Ferroalloy Europe 2015, June 8-9, 2015
MgSilicon production costs
2015 Impact of electricity versus utilization (simulation)

24. 24© Viridis.iQ CRU Ryan’s Notes – Ferroalloy Europe 2015, June 8-9, 2015
MgSilicon production costs
Case study of Dow Corning Brasil

25. 25© Viridis.iQ CRU Ryan’s Notes – Ferroalloy Europe 2015, June 8-9, 2015
MgSilicon production costs
Case study of Dow Corning Brasil

26. 26© Viridis.iQ CRU Ryan’s Notes – Ferroalloy Europe 2015, June 8-9, 2015
mgSilicon Greenfield Growth
How will Brasil compete?

27. 27© Viridis.iQ CRU Ryan’s Notes – Ferroalloy Europe 2015, June 8-9, 2015
Content
 Brief company introduction
 Comparison of Brasil (mgSi) and Republic of South Africa (FeCr)
 Case study of Brazilian mgSi Industry
 Conclusions

28. CRU Ryan´s Note Ferroalloys Europe 2015 – Zurich, Switzereland© Viridis.iQ GmbH
 RSA and Brazil are in similar electricity crisis ... What might be expected in RSA?
 Current electricity prices in RSA and Brazil (~USD 60 and ~USD 100 /MWh) make them not
competitive with countries like US, Iceland and Middle East (~ USD 30 - 40 per MWh)
 Electricity prices are the driving force behind furnace shut downs in Brazil where the utilization rate
for 2015 is expected to be only 35% and power prices are 40% of costs
 Contract limitations: No sell off options
 Successful strategy example: Vertical integration
 Dow Corning operating with 100% of capacity
 Best electricity prices due to the unique contract negotiation
 Lowest OPEX for the plants in operation
 Vertical Integration factor that gives them the most flexibility in the make or buy decision
 The South African FeCr industry could have the same future
Impact of Electricity Prices
Conclusions

29. Dipl. Eng. Lou Parous
MsC. Dipl. Eng. Valdiney Domingos
Dipl. Eng. Gabriel Esteves
Dipl. Eng. Luciano Biazutti
Moltekestrasse 2-4
78467 Konstanz
Germany
www.viridis-iq.de
lou.parous@viridis-iq.de
Registered Office: Konstanz
Register Court Freiburg/ Commercial Register Number: HRB
708759
Management Board:
Dipl. Eng. Louis Parous
Dr. Wolfgang Herbst
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