CRU: Whyalla's A$700M Investment Justified by Power Security

The Whyalla steelworks is a 1.2 Mt/y integrated site located in South Australia. The site has been in operation since 1941 and has changed ownership several times over its 73 year operational history. The Whyalla site has made headlines in recent months after being acquired by the GFG alliance, a deal that saw GFG acquire the assets of the now defunct Arrium, with the steelmaking and manufacturing assets formed into Liberty Onesteel and the mining assets incorporated into SIMEC mining. In the months following the acquisiton of Whyalla, GFG also acquired ZenEnergy and quickly announced their "Gigawatt Program", with plans to build a suite of renewable generation assets including photovoltaic cells (PVCs), pumped hydro and battery storage that will ultimately tie into GFG CEO Sanjeev Gupta's "GREENSTEEL" vision.

In this insight, we look at the power requirements of the Whyalla steelworks and, using data from CRU's Steel Cost Model, estimate whether Gupta's ambitious energy project could have any significant impact to the underlying cost structure of the site.

The Whyalla site produces billet for Liberty's Australian East coast operations and heavy railway sections. When viewed on the global heavy sections cost curve, Whyalla is one of the highest-cost producers worldwide, sitting in the fourth quartile of the global cost curve, and we estimate that the cost of producing heavy sections was $604 /t in 2017. Therefore, for a site such as Whyalla to be competitive, it is crucial for the owners to understand the underlying cost structure – and target cost reductions where possible.

Read the full story: https://www.crugroup.com/knowledge-and-insights/insights/2018/whyalla-s-a-700m-investment-justified-by-power-security/ 

Read more about CRU: http://bit.ly/About_CRU 

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CRU offers unrivalled business intelligence on the global metals, mining and fertilizer industries through market analysis, price assessments, consultancy and events.

Since our foundation by Robert Perlman in 1969, we have consistently invested in primary research and robust methodologies, and developed expert teams in key locations worldwide, including in hard-to-reach markets such as China.

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