Investments and Restructuralisation

Restructuralisation can be generally characterised rather as a modernisation stage of steelmaking because the phase of adaptation of production volume to the sales possibilities has predominantly been realised for the time being. This step was provoked by rapid drop in steel demand. It may be said that this was the first signal and command to restructuring; it touched, however, the production volume more than the production capacities, especially their liquidation. Nevertheless, improvement of the structure of production technologies for the benefit of modern and competitive technologies occurred, especially in continuous steel casting and open-hearth process liquidation. Share of the open-hearth process in steel production dropped from 17.89 % in 1989 down to 4.57 % in 1995 and will soon be fully liquidated. The share of steel continuous casting increased in 1996 to 47 % and in 1998 will attain 60.87 %; the target volume after 2000 is more than 80 %. Steel production in electric arc furnaces of 13.11 % does not correspond to the high share of long products. Modernisation actions in rolling mills proceed similarly. The biggest modernisation action is the erection of the so-called minimill in Nová hut, which will make strip steel production more effective. A ladle furnace, continuous casting of thin slab and band mill will be installed. This investment reflects the need to increase quality and efficiency of production rather than the intention to extend it.

The following table documents the trend of investment growth in Czech metallurgy and its share in investments in total.

Material investments in the Czech Republic (mil CZK)

Development of the Czech steelmaking industry proceeds in two parallels:

a) limitation and shut-down of obsolete production capacities, respectively

Limitation and shut-down of obsolete capacities, respectively, proceeds, for the time being, more quickly in steel production: its capacity will be cut down approx. to 8.8 mil t in 1997. Liquidation of production using obsolete equipment in 1996 came to:

• the shut-down of 2 tandem furnaces and most of the open-hearth furnaces
• in the case of semi-finishing rolling mills, shut-down of obsolete mills is successively expected with change-over of the steel works to 100 % continuous steel casting, in the case of finishing mills successively in dependence on modernisation of chosen rolling mills or on construction of new capacities.

b) modernisation and restructuralisation

• A separate integrated unit named "Vysoké pece Ostrava, a.s." founded by the companies Nová hut, a.s. and VÍTKOVICE, a.s. has been constituted since January 1, 1997.
• As to continuous casting, it is presumed that 100 % of continuously cast steel will be attained until the end of 2000 in Nová hut, a.s., and in Trinecké zelezárny, a.s. at the end of 1998.
• In the section of flat steel production, the zero stage of the minimill complex for production of hot-rolled coils having capacity 1 mil tons as a replacement for obsolete technology is being implemented in Nová hut, a.s. The 3.5 four-high rolling mill incl. all subsequent finishing equipments will be modernised in VÍTKOVICE, a.s.
• In production of long products, modernisation of the main capacities for production of wire rod, rails (long-term program) and ranges of middle and fine sections is being realised.

Total volume of financial means that must be invested in ecology (into the structures for environmental protection) is estimated at 14 billion CZK. A further 5-10 billion CZK is necessary for a removal of ecological loads having origin in the previous activities. In addition, the enterprises must pay environmental pollution fees. Considerably higher strictness as to the ecological requirements will obviously occur in the mid-1998 when the new Prevention Air Act will come into force. This fact also promoted an agreement between both pig iron producers in Ostrava whose target should be total placement of pig iron production outside VÍTKOVICE, a.s.

Regarding some actions:

Within the development of the production base, the following implementations were made:

• In 1993, continuous casting of blooms having capacity 1.1 mil tons has been put into operation in Nová hut.
• In the second half of 1995, two sets of equipment for continuous steel casting have been put into test operation - continuous casting of slabs in the company VÍTKOVICE, a.s. - with a capacity of 720,000 t/year and of billets in Trinecké zelezárny having capacity 1200,000 t/year.
• In 1996, Trinecké zelezárny, a.s. launched wire production using split-rolling process and prepared production of reinforcing bars using the same technology. Top measuring and control equipment for detection of internal and surface defects of rails has been put into operation.
• In 1996, a project of modernisation of the hot section of the four-high rolling mill has been adopted in VÍTKOVICE, a.s.; its realisation should last 48 months in the period between 1996 and 2000. Production of plates having widths up to 3300 mm will be possible with reduced tolerances and improved parameters of plates. The production range will be extended to high-strength and microalloyed steels.
• In the first quarter of 1996, a splitting line for processing steel and zinc-coated strips with thickness from 0.4 to 4 mm and width 200-1500 mm, stainless steel strips having width 400-1050 mm, and weight of coils up to 24 t, has been put into operation in Válcovny plechu, a.s.
• In 1996, Nová hut, a.s. started the so-called zero stage of the minimill with the aim to consume investments amounting to 1.3 billion CZK in that year. The whole minimill shall cost 6.5 to 8 billion CZK. In the first stage, a modern strip mill having capacity of 1 mil t should be linked up to the steel plant. Complete modernisation of Nová hut, a.s. shall cost approx. 17.5 billion CZK.
• In 1997, the first stage of revamping and modernisation of the continuous rod mill has been made in Trinecké zelezárny, a.s. for increasing the quality of the produced wire rod.
• Production in the first part of the joint venture of N.V. BEKAERT and ZDB Bohumín has been launched at January 15, 1998. 10,000 t concrete reinforcing wire DRAMIX and 35,860 t galvanised wire with diameter of 1.6 to 4 mm should be produced in 1998. In 1999, already 60,000 t wire and wire products should be produced. Price of the investment was 50,000,000 DM. The second part is under construction; it should be put into operation till the end of 1998.
• Within the scope of modernisation of hot-rolled strip production, an equipment for continuous casting of steel with capacity of 1,000,000 tpy has been put into operation in December 1997 in Nová hut, a.s. At present, also the rolling section of the minimill complex is being erected which should be put into operation in 1999.
• In September 1998, pig iron production was stopped after 150 years in the company VÍTKOVICE, a.s. Ostrava. This will be delivered from the company Vysoké pece Ostrava, a.s. having been founded by Vítkovice, a.s. in common with Nová hut, a.s. This means liquidation of three blast furnaces, sintering plant and coke-oven plant. Concentration of pig iron production in a common plant will bring, in addition to ecological effects for town of Ostrava, also higher utilization of blast furnaces and improvement in production economy.
• Construction of a new plant for production of packaging sheet with output of 120,000 tons per year is being prepared. The planned investment should be implemented within two years. The investment costs should be 3.6 billion CZK. Válcovny plechu, a.s. preparing the construction negotiates with Nová hut, a.s. about common construction of the pickling plant.
• In production of long products, modernisation of the main capacities for production of wire rod, rails (long-term programme of Trinecké Zelezárny, a.s.) and a range of middle and fine sections is being realised.
• The first real and successful steps in revitalisation of POLDI are taken. It’s made by the Czech companies Trinecké Zelezárny, a.s. (non- alloyed steel) and Zelezárny Hrádek, a.s. (alloyed steel).