Investment Plan for Europe

«New Opportunities for the EU

Industry modernisation»

Arvedi Modernisation Programme

presented by Federico Mazzolari, Arvedi Group

30th November 2015

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Organisation

The ARVEDI GROUP was founded in 1963 by Giovanni Arvedi whose family
has worked in metal trading and processing since the early 1700s.

Carbon steel Stainless steel

Siderurgica Triestina

only the manufacturing companies are shown

The companies outlined in red are the object of the Investment Plan

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Organisation

The Arvedi Group produces over 3.5 million tpy of steel products, has a turnover of
about € 2.2 billion and over 3000 employees.
The steelmaking assets are composed of six manufacturing companies:

Hot rolled pickled and galvanized

and painted steel coils

Black, galvanized and coated

carbon steel welded tubes

Cold drawn carbon steel tubes

Welded and cold drawn carbon

steel tubes

Pig iron and cold rolled special

SiderurgicaTriestina steel products (activity in
progress)

Stainless steel welded tubes

Cold rolling of stainless steel

precision strip

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Organisation

Thanks to its development strategies and investment policies, aimed at

product quality, the Group at a technological level is one of the most significant
in Europe with:

• works with modern plants (in some cases unique in Europe);

• avant-garde technologies;

• specific know-how and patents;

• quality trade marks and homologations.

The companies hold solid market positions in the sectors in which they
operate and significant shares of production are exported – on average 50%
with peaks of up to 85%.

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 Acciaieria Arvedi Cremona works

9
10
3 8

1 2 4

1 – Melt shop no. 1

2 – I.S.P. Line
6
3 – Melt shop no. 2 (CONSTEEL®)
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4 – E.S.P. Line
7 5 – Pickling Line no.1
6 – Pickling Line no.2 (Push-Pull)
7 – Hot dip galvanizing no.1
8 – Pickling Line no. 3 with Tandem
cold rolling mill

Total area : 750,000 m2 9 – Hot dip galvanizing no. 2

Covered area : 150,000 m2 10 – Pre-painting line

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 Acciaieria Arvedi

Acciaieria Arvedi is the world’s first endless mini-mill to produce hot rolled, pickled,
galvanized and painted steel coils.

- Production capacity: 3.5 million tpy

- Annual turnover: € 1.6 billion
- 1400 employees
- Surface area: 750,000 m2

The wide production range includes:

- Advanced high strength steels (multi-phase

steels)
- thin gauges
- close tolerances
- short time-to-market

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 Acciaieria Arvedi

ARVEDI ESP – Endless Strip Production (2010)

Inductive Equalization
Furnace

Downcoilers
High-Reduction Mill
Finishing Mill
Plate Pusher
Casting Platform And Piler
High-Speed
Crop Flying Shear
Shear
Thin-Slab Pendulum High-
Cooling Line
Caster Shear Pressure
Descaler

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 Acciaieria Arvedi
ENERGY CONSUMPTION COMPARISON
FROM LIQUID STEEL TO 1-mm HOT ROLLED COIL
ESP vs. Conventional Process

Total Total
Casting and rolling 1
(3-mm HRC) Pickling 1-mm HRC 1.0 mm 1.0 mm
ESP KOE KOE KOE KOE
KWh/tonne 130 24.3 20 4 3.7 36 2 6.7 186 34,7
m3CH4 0 2.5 2.1 0 2.05 2,1
Total KWh 130 24.3 44 5.8 36 6.7 210 36,8

∆ 38% ∆ 58%

Cold rolling +
annealing
CONVENTIONAL
KWh/tonne 95 17.8 10 1.9 80 15.0 185 34,7
m3CH4 26 3 21.3 2.05 1.7 35 28.7 63,1 51,7

Total KWh 345 39.1 34 3.6 416 43.7 795 86,4

1 m3CH4 = KWh 9.6
1) Average consumption for 3-mm HRC (80 mm at 6 m/min) 1 KWh electr. = 0,187 KOE
2) Additional consumption to produce 1-mm HRC 1 m3 of CH4 = 0,82 KOE
3) 100% charge at 600°C
4) Pickling and skinpass

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 Acciaieria Arvedi
ENERGY SAVING
Calculated average KEP per tonne for a typical ESP product mix
of which 45% in thin gauges (from 1.0 to 1.5 mm)
KEP/tonne

On a production of 2 million tpy, compared to conventional plants ESP saves:

60,000 TEP (tonnes of petroleum equivalent - 430,000 barrels)

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 Acciaieria Arvedi

TECHNOLOGY COMPATIBLE WITH THE ENVIRONMENT

• Considerable energy savings are obtained – up to 58% - by fully

exploiting the energy of the liquid steel, simplifying or eliminating
the rolling and annealing relative to the cold rolling process

• The impact on the environment is lower thanks to lower energy

consumption, smaller works and fewer emissions of greenhouse
gases

• The new ESP process technology meets the requirements

expressed in the Kyoto protocol

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 Acciaieria Arvedi

ESP ENVIRONMENTAL PERFORMANCE

Strictly linked to low energy consumption are:
Lower direct and indirect emissions of greenhouse and noxious
gases (NOx and CO), amounting to:
- 40-50% on normal gauges
- 65-70% on thin gauges
Fully respecting the objectives of the Kyoto protocol
Lower water consumption: reduced to 50% of the best conventional
mills.
The considerable descaling of the production works with
dimensions up to 10 times smaller than those of traditional
steelmaking centres
renders
Arvedi ISP ESP steelmaking activity compatible with all social and
environmental contexts
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Siderurgica Triestina

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 Siderurgica Triestina

Origins and current reality of the Servola site

The Servola works, built at the end of the 1800s, had a significant role in the
panorama of Italian steelmaking as a manufacturer of foundry pig iron.
Purchased towards the end of the 1990s by the company Servola SpA, 80%
owned by the Brescian Lucchini Group, the works operated until 2012, the
year in which it was placed under the extraordinary administration of a
Commissioner appointed by the Ministry of Economic Development.
The industrial area of Trieste was officially recognized as an area of complex
industrial crisis.
An initial Programme Agreement has been stipulated disciplining the
interventions relative to the requalification of the industrial and port activities
and environmental clean-up of the area. The project will follow two lines of
intervention:
•an integrated project for making safe and re-industrializing the Servola site;
•interventions for the conversion and requalification of industrial production in
this area of crisis.

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 Siderurgica Triestina

Current assets
AREA

•about 200,000 m2 of the area is company-owned;

•it holds a state-owned concession of another approx. 320,000 m2 attached
to which is a functionally autonomous port dock.

EXISTING PRODUCTION PLANTS

•Coking plant for the production of carbon coke (production capacity about
420,000 tpy)
•2 blast furnaces each with a volume of 630 m3 – of which 1 in stand-by
(production capacity of each blast furnace is about 450,000 tpy)
•1 iron ore sintering plant
•1 pig iron ingot casting plant
•17 km of internal rail track
•1 rail connection with RFI (Italian railway network)
•1 x 350-m dock (depth about 12 m) good for Panamax size vessels
•3 industrial buildings (about 28,000 m2)
•150,000 m2 of external areas destined for logistics and storage

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 Siderurgica Triestina

ARVEDI MODERNISATION PROGRAMME

The project comprises investment in two Arvedi production sites - Acciaieria

Arvedi in Cremona and Siderurgica Triestina in Trieste – for the
modernisation, improvement in energy efficiency and downstream extension
of the production processes with the introduction of new steel products and
research and development (R&D) activities.

Trieste Cremona

COKING BLAST
New EAF HOT ROLLING
PLANT FURNACE
Coal Coke Pig iron

COLD ROLLING
COMPLEX

Cold rolled Deep drawing

strip Special automotive
Coke gas + Blast furnace gas
Electrical sheet INTEGRATION
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 Siderurgica Triestina SpA

ARVEDI MODERNISATION PROGRAMME

The project will be developed as follows:

Trieste
-Important environmental clean-up operations and improvements
-Production of carbon coke and use of the same in the blast furnace for the production of pig
iron
-Cold rolling of coils and relative finishing
-Development of a logistics centre serving operations

Cremona
-Substitution of the current EAF 1 furnace (installed in 1991) with a more efficient one
-Use of pig iron (from Trieste) and ferrous scrap for the production of quality steel
-Subsequent production of hot rolled thin gauges using the existing ISP and ESP plants, in
part destined for re-rolling in Trieste
-Energy recovery of the fumes coming from the melting process to generate steam

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 Siderurgica Triestina

Strategic objectives

‰ Integrate the Servola works into the lines of production of Acciaieria

Arvedi Spa, Cremona, with the supply of about 450,000 tpy of pig iron, in
this way guaranteeing independence for the steelworks on the raw
materials procurements market, characterized by being highly volatile with
supply concentrated among a few close manufacturers positioned in
unstable geographical areas of industrial risk (Ukraine, Russia).
‰ Build a cold metallurgical complex for the processing and finishing of hot
rolled coils produced by Acciaieria Arvedi Spa, Cremona, into high added
value cold rolled and galvanized products such as special and general
application steels destined for the automotive sector and the
electromechanical industry.
‰ Build a logistics centre exploiting the strategic value of the Servola works
which can offer a valid sea outlet and a logistical platform for managing the
Group’s sea transports.

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 Siderurgica Triestina

COLD ROLLING INDUSTRIAL CONVERSION

Siderurgica Triestina will process hot rolled coils mainly produced by Acciaieria Arvedi and
transported by railway from Cremona to Servola. The metallurgical complex at full operating
conditions will have a production capacity of about 1.5 Mtonnes, of which 900,000 tpy of
finished products.

PHASE 1
Foreseen production: 900,000 tpy of:
• cold rolled strip for general purposes
• cold rolled strip for cold and hot pressing for the automotive industry and
electromechanical applications
Foreseen production lines :
•Tandem cold rolling mill
•Bell furnaces for static annealing followed by skinpass stand for surface finishing
•Continuous annealing line for special steels
•Longitudinal slitting line

PHASE 2 – development
•Mainly aimed at increasing cold rolling production
•Capacity improvements
•Finishing lines development aimed at a covering full cold rolling capacity

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 Siderurgica Triestina
NEW COLD ROLLING TANDEM MILL FEATURES
•hydraulic roll load cylinders on all stands
•stands no. 1-4: four-high mill stands with positive and negative work roll bending
•stand no. 5: four-high mill stand with positive and negative work roll bending. CVC technology
(SMS license) and multi-zone cooling
•single wedge adjustment for automatic pass-line adjustment (constant pass-line)
•quick work roll changing devices for work roll change with strip in the mill
•four X-ray gauges, four laser speedmeters and two shapemeter rolls for optimised control loops
•rotary shear in tandem mill exit for continuous strip cross-cutting during rolling
•two tension reels with filler-type mandrels

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 Siderurgica Triestina

BATCH ANNEALING

The bell annealing furnace has a total capacity of

400,000 tonnes/year

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 Siderurgica Triestina
SKIN PASS MILL AND TENSION LEVELER FEATURES
• Coil preparation station and coil core removal
•Tension reels with filler-type mandrels
•Pay-off reel and tension leveller line shiftable
•Hydraulic roll load cylinders
•Four-high mill stand with positive and negative work roll bending
•Single wedge adjustment for automatic pass-line adjustment (constant pass-line)
•Quick work roll changing device
•X-ray gauge and shapemeter roll for flatness and thickness control
•Wet and dry skin-passing equipment in addition to met skin-passing equipment

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 Siderurgica Triestina

Continuous Annealing Line (CAL)

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 Siderurgica Triestina

Equipping of port dock and unloading pontoon

Description

• Equipping of the dock making the site an intermodal centre with a dual function :

• Procurement of raw materials, such as scrap, pig iron and DRI (HBI);

• Shipment by sea of the products to Mediterranean and Middle East countries.

• The new logistical platform will also allow optimization of the use of the railway,
which will transport the hot rolled coils produced by Acciaieria Arvedi from
Cremona to Servola, and in the opposite direction the raw materials which have
arrived by sea. Overall handling will amount to about 600-800,000 tpy of coils
from Cremona to Servola, and a similar amount of 600-800,000 tpy of raw
materials in the opposite direction.

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 Acciaieria Arvedi

ACCIAIERIA ARVEDI – replacement of EAF no. 1

The programme foresees the replacement of EAF no. 1, even

though its production performance is still good.
The new furnace will be able to raise production by about 40%,
supporting in this way the plan whereby part of hot rolled coil
production will be sent for cold finishing at the Siderurgica Triestina
works.
The recently-ordered new furnace will contain state-of-the-art
technology applied to new-generation electric furnaces
guaranteeing:
-higher production performances;
-substantial improvements in energy consumption;
-lower emissions.

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 Acciaieria Arvedi

The new Electric Arc Furnace for Line 1

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 Acciaieria Arvedi

Acciaieria Arvedi EAF

EAF1 New EAF

Type of EAF AC-EBT AC-EBT

Year of installation 1991 2016
N° Buckets 2 1
Heat size EAF1 ton 118 135
TTT Time min 48 42
Power ON min 33 35
Heats per day 30 33

Trafo MVA 155 155

Electrodes Diam. mm 600 600

Number of Trafo Taps 21 21

target savings

E. Energy Consumption KWh/ton -18%

Electrodes Kg/ton -10%
Oxygen m^3/ton -10%
Natural Gas m^3/ton -40%

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MILESTONES IN THE ARVEDI MODERNISATION PROGRAMME

22/09/2014 Initial contact with EIB management to start the

programme
17/11/2014 Answers to European investment Bank’s queries sent.
19/01/2015 Application Form for EIB Individual Project Loan sent.
2-3/03/2015 Due Diligence. Visit by EIB delegation to Cremona and
Trieste to view the works object of the programme and
to examine in greater detail the information sent.
19/03/2015 Documents completing the Due Diligence sent.
26/03/2015 Further information requested sent.
11/05/2015 Loan amounting to €100 million approved.

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 Financing conditions
The total cost of the Project, as estimated by the EIB, is Euro 227 million and the
Arvedi Group, as the Obligors, has stated that they intend to finance the Project
as follows:
Source Amount (€)
Credit from the Bank 100,000,000
Other funding sources 127,000,000
TOTAL 227,000,000
In order to fulfil the above financing plan, the Group has requested from the EIB a
credit of €100 million.
The EIB, considering that the financing of the Project falls within the scope of its
functions, and having regard to the statements and facts cited, has decided to
give effect to the above request providing a credit in an amount of
€100 million, provided that the amount of the EIB loan shall not, in any case,
exceed 50% of the total cost of the Project in question.
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BREAKDOWN OF THE PROJECT COST (€/m)
1 Cremona: new EAF 55
2 Trieste: Cold Rolling Mill 124
3 Trieste: Upgrade of stockpile area 17
4 Research and Development 3
5 Implementation supervision 3
6 Technical contingencies 15
7 Base cost (04/2015) 217
8 Price increase provision 2
9 Interest during construction 2
10 Working Capital Change 6
11 Total Investment (12/2018) 227

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