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Ukraine: Alchevsk Steel Mill
(The Netherlands European Carbon Facility)

Project Photo 1
The city of Alchevsk is a rayon center and one of the biggest industrial centers of the Luhansk oblast and Donbas region. It is situated in the northwest of the Luhansk oblast, 45 kilometers from the city of Luhansk itself. The city of Alchevsk was founded in 1896. It has a territory of 50 square kilometers and a population of 118 000 people.

In the city, there are two major industrial production facilities representing the metallurgy industry of Ukraine – OJSC Alchevsk Iron and Steel Works and OJSC Alchevsk Coke. In addition, there are a number of plants producing construction materials and units, concrete products, and other industrial products. The volume of production in Alchevsk comprises over 25% of the industrial output of the entire Luhansk oblast. Among the main products produced by the two metallurgical giants are cast iron, steel, rolled metal, coke, and sulphuric acid. Also operating in the city are a bread-baking plant, a garment factory, as well as a variety of commercial outlets, schools and hospitals.

Project Photo 2
OJSC Alchevsk Iron and Steel Works (AISW) is currently the 5th largest integrated iron and steel plant in Ukraine. It is part of the Industrial Union of Donbass (IUD), an industrial group that is a major shareholder in a number of metallurgical enterprises in Ukraine as well as in Poland and Hungary.

While one of the more modern integrated steel works in Ukraine, AISW was fairly typical of the Ukrainian iron and steel sector up to 2004 in terms of the vintage of technologies. The current facilities are mainly built in the 1950s and 1960s with the exception of new Open Hearth Furnace (TSU 1.2) commissioned in 2005. The plant has high energy intensity. AISW has a Sinter Plant, Lime Kilns, four Blast Furnaces, four old Open Hearth Furnaces and one recent Tandem Open Hearth Furnace, Ingot Casting, Blooming Mill and several other mills.

IUD is implementing a US$1.5 billion capital investment program to modernize operations in its two Ukrainian plants including AISW over the period of 2004 - 2010 with financing of currently committed components in part being supplied by IFC through a US$100 million direct loan and participation in a syndicated loan facility in the amount of US$250 million. The rest of the financing is being sourced from commercial banks.

Beginning in 2004 and now coming on stream, the modernization program at AISW has the integrated objectives of applying more efficient technology, improving environmental performance, increasing capacity and therefore competitiveness (reducing costs per ton of steel produced). This modernization program is planned to involve technology replacement or upgrade of all major components of the iron and steel making and finishing processes.

The program’s initial focus at AISW has been on steel production with the replacement of the old OHFs with two modern basic oxygen furnaces (Converters) integrated with continuous Slab Casters to replace the existing Blooming Mill utilizing Joint Implementation with the total investment costs of US$ 944. . Planned, but as yet uncommitted due to lack of financing and World Bank Group JI Facility – 2009 Annual Report, Business Plan and Budget 35 other impediments, are other upstream investments including replacement of the existing sinter machines and upgrading of Blast Furnaces on a progressive basis. These activities could be subject to additional JI projects. The overall capacity of the plant expressed as steel production will be increased approximately from 3.6 Mt/a to 6.9 Mt/a.

When the discussions concerning modernization and capacity increases at AISW were initiated in order to increase competitiveness, the business-as-usual choice would have been to base the project on the existing technology as occurred during a similar upgrade commissioned in 2005 as a result of an investment decision made in 2002. OHF technology was available, well known at the company and had considerably lower initial investment costs than other more efficient technologies. OHF, Ingot Casting, and Blooming Mills might not be state of art in some parts in the world, but it is still prevalent in Ukraine, i.e. competitiveness could have been increased with traditional technology.

Steel making process
Steel is a metal alloy whose major component is iron, with carbon content between 0.02% and 1.7% by weight. Carbon and other elements act as hardening agents. The first part of the process of producing steel is to combine the main ingredients of coal (coke), iron ore in the pelletized form of sinter and lime in Blast Furnaces to produce pig iron. Pig iron is the immediate product of smelting iron ore with coke and limestone in a blast furnace. It has a very high carbon content, typically 3.5%, which makes it very brittle and not useful directly as a material except for limited applications. In the basic oxygen process proposed in this project, molten pig iron and some scrap steel are placed in a ladle, and 99% pure oxygen are blown onto the steel and iron, causing the temperature to rise to about 1700°C. This melts the scrap, lowers the carbon content of the molten iron and helps remove unwanted chemical elements. Fluxes (like lime) are fed into the vessel to form slag which absorbs impurities of the steelmaking process. Steel is further refined in the Ladle Furnace and cast into slabs in a Continuous Caster.

AISW has used a traditional steel making technology - Open Hearth Furnaces (OHF), Ingot Casting, and Blooming Mills to produce semi-finished products. The pig iron, limestone and iron ore go into an Open Hearth Furnace which has a wide, saucer-shaped hearth and a low roof. It is heated to about 1600 °F (871 °C). The limestone and ore forms a slag that floats on the surface.

Impurities, including carbon, are oxidized and float out of the iron into the slag. The following generic diagram provides a simplistic overview the basic steel making process to be employed inthe project.


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