Rafting for three

Companies from Kazakhstan, South Korea and Switzerland will build ferroalloy plants

The National Center for Integrated Processing of Mineral Raw Materials of the Republic of Kazakhstan, ICMD Holding (Switzerland) and Posco M-Tech (South Korea) signed an agreement. According to the document, ferrosilicon aluminum production plants will be built in Kyrgyzstan and Kazakhstan. The total investment is about $1 billion, and the design capacity of both plants is 500,000 tons per year.

On Tuesday, September 6, a trilateral agreement was signed on the construction of ferrosilicon aluminum production plants in Kyrgyzstan and Kazakhstan (for more information about the alloy, see the reference). The agreement was signed by Abdurasul Zharmenov, General Director of the National Center for Integrated Processing of Mineral Raw Materials of the Republic of Kazakhstan (NC KPMS of the Republic of Kazakhstan), Kim Yong Yu, General Director of Posco M-Tech, and Jurgen Hein, President of ICMD Holding. "The project is under the personal control of the President of Kazakhstan, Nursultan Nazarbayev. It freezes 20-year research costs. And it will be beneficial for everyone if it starts working as soon as possible," Abdurasul Zharmenov said at the signing ceremony.

Earlier this year, NC KPMS RK sold a patent for the production of ferrosilicoaluminium to a company registered in Switzerland (its name was not disclosed). After the sale of the patent, the management of the Swiss company, as well as ThyssenKrupp AG (a German steel and machine-building company) and its partners decided to create ICMD holding, which will organize and build factories in Kyrgyzstan, Kazakhstan and other European countries. Which ones are currently being clarified. The total amount of investments is about $1 billion. Within five years, the capacity of both plants should reach 500 thousand tons of products per year.

The first production facility will be established in Kyrgyzstan. The construction of the enterprise in this country was worked out in advance by the National Center. In addition, economic factors have worked in favor of the Kyrgyz Republic.

The fact is that the main cost item in the production of ferroalloys is electricity (60-70% of the cost). "The Kyrgyz government has given guarantees that energy resources will be supplied to the enterprise at a price of 1 cent per 1 kW. There are no such prices anywhere else in the world. From an economic point of view, this is the most interesting project for us. The cost of production will be in the range of $500 per ton," explained Jurgen Hein. According to his estimates, the payback period for the project at existing prices ($1200-1800 per ton, depending on the cost of the initial components) will be about 3 years.

Construction work is already underway at the facility. The estimated deadline for its completion is the beginning of 2013. At the initial stage, the plant will produce 50 thousand tons of ferroalloy, approximately 1.5–2 years after launch, its capacity will be increased to 200 thousand tons.

As Jackshenbek Chambaev, CEO of Avinien LLC (Kyrgyz Ferroalloy Plant), explained to K, 90% of the company belongs to NC KPMS of the Republic of Kazakhstan, and 10% to foreign investors.

Besides ICMD, Posco M-Tech will participate in the project. The fact is that the South Korean steel giant (K is the 4th largest steel producer in the world) is building a magnesia plant in South Korea. "...In the production of magnesia, ferroalloys account for 50% of the cost. The new plant alone requires 100,000 tons of ferroalloys per year. In addition, we need ferrosilicon aluminum for steel production," explained the CEO of Posco M-Tech. Mr. Kim Yong-yoo also said that the South Korean company has a stake in the project (he did not specify which one), as well as agreements on the supply of products.

In addition, in May of this year, a memorandum on the construction of a plant in Kazakhstan was signed with the Ministry of Industry and New Technologies of the Republic of Kazakhstan. In June, it was decided to locate production facilities in the Karaganda region. Pre-design works are currently underway at the facility, the planned design capacity of the enterprise is 250 thousand tons per year.

The only buyer of the products of both plants is ThyssenKrupp AG, with which an exclusive supply agreement has been signed. "They have gained a lot of experience in this area, so the issue has been resolved with the implementation," Mr. Hein explained.

Help: Ferrosilicoaluminium Market

Ferrosilicoaluminium (Aluminum Ferrosilicon) is a ferroalloy developed by NC KPMS RK. It was first obtained experimentally in the city of Ekibastuz from coal waste. It contains strong Si and Al deoxidizers, is used in steel production as a deoxidizer, but can be used in ferroalloy production as a complex reducing agent of difficult-to-recover metals. The projected demand for this product only from CIS enterprises is up to 200 thousand tons per year. The high demand for ferrosilicon aluminum is explained by the fact that it completely surpasses and replaces traditional alloys — ferrosilicon and aluminum — in the production of ordinary steel grades at metallurgical plants. The universal deoxidizer replaces all other ingredients in the alloy steel smelting process. According to experts, when using the alloy, savings on steel production reach $3 per ton of products.

Source: www.kursiv.kz