Erdemir CEO explained raw material strategies
Erdemir's CEO and Board member Kerim Dervisoglu addressed the IISI members on the second day of the 38th Annual meeting in Istanbul.
Mr Dervisoglu started his address by giving some brief information about the Turkish steel industry, and underlined that
Turkey has still a long way to go for industrialization, as per capita steel
consumption is still around only 189 kgs in
Turkey which is far below the average per capita
consumption; i.e. 350-400 kgs, of industrialized countries. He continued his speech during the raw materials session of the meetings, mentioning that
Erdemir is aiming to produce 2.9 million tons of hot metal from 2004 onwards, increasing the
iron ore requirements of the plant to 4.7 million tons. As
Erdemir has taken over Isdemir works, the group's total raw material requirement is understood to be almost 8 million tons in 2004, which will rise up to 8.7 million tons by 2006.
Mr. Dervisoglu stated that domestic
iron ore production is very low in
Turkey compared to world
production and far from being able to meet the demand of local mills for a long time. He said that the Turkish steel industry is facing an
iron ore shortage of approximately 6 million tons per year when the requirement of the third integrated steel works of
Turkey, namely Kardemir, is also taken into consideration.
In addition to the shortage problem, the quality of domestic
iron ore emerges as another critical issue for
Erdemir. Mr Dervisoglu explained that they have to use best quality and low cost
iron ore in order to reach their goal of producing at maximum capacity.
Erdemir is also obliged to use more of imported, high Fe content
iron ore rather than low Fe content domestic
iron ore, due to the modernization projects undertaken at the steel works.
Erdemir imports
iron ore from several countries but mainly from
Brazil,
Australia,
India, South
Africa,
Russia,
Sweden and
Canada. The
coking coal supply shortage in
Turkey, reaching up to 3.8 million tons per year, was another important issue emphasized during the speech.
Continuing his address, Mr Dervisoglu stated that
Erdemir has decided to use domestic resources of raw materials more efficiently and acquired Divrigi Pelletizing Facilities and 14
iron ore beds in
Turkey. Divrigi plant was quickly modernized and pellet
production increased to 100'000 mt from the level of 60'000 mt, and extraction was doubled.
Mr Dervisoglu also explained that, as per
Erdemir's raw material strategies, feasibility studies are going on for DRI
production from local low grade
iron ore. DRI could then be used for Sivas Iron and Steel plant which is idle for the time being. If the results are successful, DRI may also emerge as an alternative to ferrous
scrap for the Turkish EAF steel mills, one of the major importers of
scrap in the world.
Another project carried out by
Erdemir is the "Train Ferry Project" which will connect
Erdemir to the national railway network, reducing raw materials transportation costs significantly. Kardemir is also expected to benefit. On the other hand
Erdemir Group is very much interested in Zonguldak and Armutcuk coal facilities too, due to their
coking coal and PCI requirements.
Mr Dervisoglu said that
Erdemir is searching for ownership or partnership possibilities with international
iron ore suppliers and miners likewise many other steel makers in the world, in order to be able to secure their iron requirements for long term. He also suggested that low capacity steel producers of the world must come together and form an alliance and then cooperate with
iron ore suppliers to avoid crisis.