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Baowu ponders more investment in EAF steelmaking

China Baowu Steel Group Co (Baowu), China’s largest steel producer, is actioning a plan to advance electric arc furnace (EAF) steelmaking, with many EAF steel projects currently under study at its subsidiaries nationwide, a Baowu official confirmed.

The Baowu official declined to provide more details, but a Shanghai-based source that is close to Baowu indicated that it will establish ten “smart” EAF production bases, each with over 1 million tonnes/year of upstream capacity. Exactly what the company is planning remains unclear for now, but it is likely the steelmaker envisages integrating new EAF upstream capacity in existing meltshops at some works while elsewhere, having EAFs as the steelmaking technology of choice in greenfield projects, Mysteel notes.  

The behemoth has steel works dotted across much of China – both its own and those of subsidiaries it controls – in Shanghai, in Anhui and Zhejiang in East China, in Hubei in Central China, Xinjiang in Northwest China and in Guangdong in South China. Its total steel capacity reached 90 million t/y this June after it acquired Magang (Group) Holding in Anhui, Mysteel Global understands.

Projects that are under planning include an EAF-based meltshop complex with an estimated capacity of 1.5 million t/y at a new works being built by Baowu’s Echeng Iron & Steel Co (Echeng) in Dangyang city of Hubei province, according to a recent report of China Metallurgical News, the official media of China Iron & Steel Association.

Echeng will invest Yuan 2.1 billion ($296.2 million) for this project, where construction is scheduled to commence in May 2020 and be completed by April 2021, the post said.  An Echeng official confirmed that the steelmaker is considering such a plan but could not provide details.

Building of these small EAF mills is a key part of Baowu’s ambitious plan revealed last April to reach 100 million t/y capacity by 2021, though all of those projects will have to go through China’s capacity swap plan, meaning that the construction of EAFs must be accompanied by the elimination of capacity of the same volume, Mysteel Global understands.

China is encouraging domestic steel producers to shift from blast furnace and converter to EAF production as the latter is considered more environmentally friendly. Using steel scrap to produce one tonne of steel can eliminate the use of around 1.6 tonnes of iron ore and 0.35 tonne of coking coal, thus reducing carbon dioxide emissions by 1.6 tonnes, as Mysteel Global reported.

China aims to increase the proportion of EAF-produced steel in total crude steel production to 20% by 2025 from the current 9%, as reported.

Baowu has long been preparing strategically for developing EAF steelmaking, Mysteel Global noted. In December 2017, it invested in a so-called carbon industrial park in Wuhai city, North China’s Inner Mongolia Autonomous Region, buying into a plant to produce 50,000 tonnes/year of needle coke and 500 t/y of carbon fibers, as Mysteel Global reported.

In April 2018, it cooperated with Fangda Carbon New Material Co to co-invest in a 100,000 t/y ultra-high power graphite electrode production line in Lanzhou city, Northwest China’s Gansu province.

Written by Olivia Zhang, zhangwd@mysteel.com

Edited by Russ McCulloch, russ.mcculloch@mysteel.com