Brief business file

ZAPOROZHYE ALUMINUM SMELTER

Ivan BASTRYGA, Director-General and Chairman of the Board

Brief business file

Zaporozhye Aluminum Smelter was built and put into operation back in 1933. Originally, this industrial plant was named Dneprovsky Aluminum Smelter and since 1940 it has been renamed to Dneprovsky Aluminum Works. Electrolytic manufacture, alumina making, and production of coal and graphitized commodities were the main productive divisions.

Dnieper Hydroelectric Power Plant generated the necessary power to the Smelter.

Silicon production dates back to 1939.

Back in 1940 electrode making split from the Smelter into a separate company named Dneprovsky Electrode Plant (currently, open joint-stock company Ukrgraphit).

Smelter’s machinery and equipment was dismantled and evacuated to the Ural region and Siberia in 1941.

Electrolytic manufacture was renewed in 1944-1949, whereas alumina workshop that made use of the new Bayer-sintering bauxite-processing method (concurrent alternative) was phased in back in 1956. Two 6.9-MW silicon-making furnaces were put into operation in 1957 and aluminosilicate alloy shop that employed electrothermal reduction of raw aluminum-silicon materials was set going in 1964. The years 1978-1980 saw phasing in of two 16.5-MW silicon-producing furnaces.

The shop for electrothermal production of aluminosilicate alloy is the only one of its kind in the world.

In 1995-1996 a 6.9-MW silicon-making ore-smelting furnace using direct (rectified) current was reconstructed.

Making use of the USD 1,971,740 investments from Russia’s TECOM corp., the Smelter phased in 20 pilot electrolytic cells equipped with continuous alumina feed, automatic control, and dry gas cleaning in 1996.

In 1999, the Smelter, together with open JSC ZaporozhTransformator and LLC Firm TMM, built and launched the Aluminum Rod Plant that has been officially registered as closed joint-stock company with a 51.8% interest held by Zaporozhye Aluminum Smelter.

Glukhov quarry of Sumy region that mines quartzite (the silicon-making feedstock) was donated and annexed to the Smelter in 1978. Svetlovodsk-based Pridneprovye Production Office and Gorlovka-based Donbass Production Office, which fix metalmaking equipment and produce consumer goods, merged with the Smelter in 1994-1995.

The Smelter has its own heat-and-power plant that transmits the necessary heat and electricity to alumina shop (the primary consumer), to other manufacturing and auxiliary service divisions, as well as to open JSC Ukrgraphit, open JSC Zaporozhye Ferroalloy Works, and construction companies.

The following companies are among the Smelter’s subsidiaries:

1. Dneprovsky Aluminum Works, Zaporozhye city;

2. Construction and Assembly Office, Zaporozhye city;

3. Pridneprovye Production Office, Svetlovodsk town;

4. Donbass Production Office, Gorlovka town;

5. Glukhov Quartzite Quarry, Banichi village, Sumy region;

6. Kuibyshev Brickyard, Kuibyshev settlement, Zaporozhye region;

7. Aluminum Foil Plant, Zaporozhye city.

Save for Glukhov Quartzite Quarry that exports quartzite to Russia and Poland and is registered as a legal entity, all the Smelter’s subsidiaries do not hold the status of independent legal entities and do business pursuant to the Regulation on Structural Divisions of Zaporozhye Aluminum Smelter. All these subsidiaries self-finance their manufacturing activities.

The Smelter has mobile and well-organized divisions that maintain and repair metallurgical and power equipment, buildings, and structures, as well as the Construction and Assembly Office that runs capital construction.

Railways, highways, and waterways, namely, the Dnieper river, connect the Smelter with the outer world.

Product mix

The main products made by public joint-stock company Zaporozhye Aluminum Smelter are:

- aluminum and aluminum-based alloys;

- metallurgical-grade and non-metallurgical alumina;

- alumina hydrate;

- crystalline silicon;

- aluminum rods.

The quality of products meets the effective Ukrainian and international standards.

Within the framework of national image program Leaders of the 21st Century, the Assembly of Ukrainian Business Circles and the State Committee for Standardization of Ukraine have decided to award Zaporozhye Aluminum Smelter with the Quality Mark and the Excellent Hallmark prize for superb quality of its products.

Productive capacities amount to:

115,000 tonnes of aluminum and alloys;

245,000 tonnes of alumina;

22,500 tonnes of silicon;

25,000 tonnes of aluminum rods.

The Smelter has worked out an Investment Program for 2000-2010.

The principal measures scheduled in the Investment Program are the same as mentioned in the Complex Development Program for Ukrainian Nonferrous Metallurgy Until 2010 that was approved with the Cabinet’s regulation No.1917 dated October 18, 1998. Notably, these measures embrace establishment of aluminum foil manufacture and packing materials productions, as well as reconstruction of the electrolytic aluminum-making shop (electrolytic manufacture).

 

Establishment of aluminum foil manufacture

Feasibility study of this project has been completed and working blueprint drafts of structures due to be built in 2000 have been made.

Manufacturing equipment has been purchased from Italy’s FATA firm. Machinery purchase was financed with a USD 76,660,000 loan issued by the Italian government under guarantee of the Ukraine’s executive authorities. Engineered capacity of the foil manufacture equals to 25,632 tonnes, with sales estimated to yield UAH 51,944,240 and net profit coming to UAH 50,385,900.

The investment schedule has put down to expend UAH 64,910,200 on construction of the foil-making shop in 2000, that is 44.1% of the total project cost,.

Therefore, the company’s in-house funds are not enough to set the capacities going in the second quarter of 2001. Foreign investment amounting to UAH 50-60 million are needed, in particular, some UAH 30 to 35 million in 2000 and UAH 20-25 million in 2001.

Besides, some over UAH 60 million is required to give shape to current assets.

Hence, the Smelter estimates the required amount of foreign investments as:

Year ‘000 USD

Total, including: 20,400

2000 12,500

2001 7,900

Investment project can be set up as a joint venture, open or closed joint-stock company, or else upon proposal of the investing party.

The electrolytic aluminum-making workshop needs reconstruction because running costs are 20 to 26% greater than the international figures and the Smelter’s products show poor competitiveness on foreign markets. Besides, the reconstruction would slash pollution by 80-95%.

At the moment, the reconstruction project is going through technical and economic assessment, with US Kaiser Aluminium being the general contractor.

Project’s cost efficiency

Cost-efficiency assessments for all the reconstruction alternatives, which were carried out using the P86 Kaiser technology, have revealed that the project of switching electrolytic manufacture to the burnt anode technology would promote Zaporozhye Aluminum Smelter to the world standard of manufacturing efficiency, financial stability, environmental safety, and labor environment.

The reconstruction will:

- increase metal output by 60,000 tonnes per year;

- lower production costs by USD 200-210 per tonne;

- boost gross profit by more than USD 66 million;

- boost net profit by more than USD 28 million per year.

The amount of capital outlay for construction comes to USD 184,100,000 – 209,960,000, i.e. USD 3,920-3,690 per tonne of extra output. This is 25 to 30% less than is required to build a brand-new Greenfield mill.

Since a weighty portion of capital investment can be provided by the project itself (the self-financing ratio reaches 30%), the needed net investment is assessed at USD 130 to 147 million.

The payback period on investment is 4.3 years and will not go beyond the normative.

It will take 5 years for the project to be completed.

This project features great stability to a rather wide range of inauspicious changes of the market situation.

After reconstruction, the Smelter’s electrolytic manufacture will comply with environmental standards on solid and liquid wastes and detrimental emissions, which should serve as an environmental outcome of the project.

Keeping in mind the more than difficult environmental situation in Zaporozhye city, the Smelter chose the alternative of reconstruction that employs high-efficiency dry gas cleaning plants.

Though this added over USD 20 million to the project cost, this alternative does away with the environmental issues within the Smelter and in Zaporozhye city in the long run.

After switching to the burnt anode technology, pollution will be lowered as follows:

- rate of fluoride use would shrink by 65% to 0.022 kg per kilo of aluminum;

- overall fluorine refuse would be lowered by 93% to 0.6 kg per tonne of aluminum;

- suspended particle emissions would lose 97% and reach 0.7 kg per t of Al;

- tarry refuse would be reduced by 99% to 0.06 kg per t of Al.

Introduction of dry gas cleanup would help Zaporozhye Aluminum Smelter reach the world standards.

At this point of time, Zaporozhye Aluminum Smelter uses the horizontal-conduction Soderberg technology that has become obsolete, causes pollution, and fails to back the company’s stable profitable performance, which currently depends on the LME price behavior.

Obviously, there is a need in urgent reconstruction of the electrolytic manufacture to reach the world-standard technical, economic, and pollution control figures.

Due to insufficient in-house funds and troubles with attraction of investments owing to deficient laws and suffering Ukrainian economy, relatively low capital-intensive projects are the only feasible alternative for the enterprise.

The Smelter has chosen the base alternative of the Kaiser Aluminium technology that makes use of 150-kA electrolytic cells, dry gas cleaning, and in-house-made anodes.

The electrolytic reconstruction project proves high cost efficiency and environmental effectiveness of the decisions made, as well as demonstrates the firm economic standing of the Smelter, despite unfavorable changes in the market situation.

Сплавы алюминиевые литейные в чушках

Cast aluminum alloys in pigs

* Сумма примесей, % не более

Sum total inclusions (%, at most)

** Прочие, %

Other (%)

А – Al, К – Si, М – Cu, Мг – Mg, Мн – Mn, Ж – Fe, Н – Ni

ч – pure , пч – perfect-pure ,оч – extra-pure , эт – electrical

Aluminum

Crystalline silicon

Кр – Si