Operational Transformation Post COVID – How Can the ASEAN Steel Industry be more Competitive through Operational Transformation?
Posted on 05 August 2021
It has been a month since the hype and vibes of the 50th Anniversary SEAISI e-Conference & Exhibition ended. Nevertheless, there is no end to the discussion on the value of insights and experiences gained from the event. One of the highlighted sessions is the plenary session on ‘Operational Transformation Post COVID - How Can the ASEAN Steel Industry be More Competitive through Operational Transformation?’ Known as the essence of the technical session, this particular session is unique because it is the only session whose panellists comprise senior people from across reputable Iron and Steel Industry Supply Chain e.g. Steel Plant/Mill Builder – Steel Producer – Consultant such as:
- Mr. Joseph Yong, Director at GCT Asia, Past SEAISI Technical Committee Member and Environmental & Safety Committee Member for Singapore (The Moderator)
- Dr. Jitendra Patel, Director at International Metallurgy Ltd, United Kingdom, and Consultant at CBMM
- Dr. Alexander Fleischanderl, Technology Officer & Head of ECO Solutions at Primetals Technologies
- Mr. Wu Kai-Yu, Assistant General Manager at Tung Ho Steel Enterprise Corporation, Technical Committee Member from Taiwan
The Need for Digitalisation – Industry 4.0 for the ASEAN Steel Industry and New Capabilities for Steel Industry Personnel in the New Paradigm
Dr. Alexander opened the discussion by asking the delegates about the target to be achieved with digitalization. It needs to be defined in advance by stakeholders whether
the main focus is productivity, flexibility, yield, raw material utilization, safety, etc. It’s also important to understand its know-how and processes before taking a further decision. The Steel Industry is a highly capital-intensive industry, therefore it is required to implement reliable and proven, (with a minimum deviation) technology. Digitalization is not just to automate processes, but also to integrate them into a single big data for further improvement.
Agreeing with Dr. Alexander, Dr. Patel emphasized that management should have a clear roadmap, because different steel enterprises may have different definitions and needs for digitalization. From his point of view, digitalization is value creation in collecting, processing, and interpreting steel production data, involving a holistic steel supply chain from raw material to steel producer and eventually to steel user. Digitalization forces the industry to override manual intervention by changing to a real-time data approach. He is also concerned, apart from the benefits gathered, that the Steel Industry will also have to embrace cybersecurity issues as robustly as possible.
Mr. Wu’s view is on those mechanisms called Industry 4.0 that are supposed to make the steel industry more efficient, productive, and accurate in producing steel. He also encouraged the ASEAN steel industry to upgrade their personnel’s expertise to boost digitalization efforts. Digitalization in the steel industry is considered to be at another level of digitization due to complexity, especially in the Integrated Steel Plant where chemical processes dominate iron and steelmaking areas, whereas physical processes are on the rolling mill side. He suggested that the
ASEAN Steel Industry needs to adequately prepare the organization, its planning, and infrastructure before moving towards digitalization.
The Maturity of Robotics, AI, and Big Data Analytics in the Steel Mill Environment. Are they Worthwhile Investments?
Dr. Alexander pointed out that the requirements of digitalization are beyond putting information into a cloud. It requires the combination of emerging technology, systems, and equipment such as smart sensors, robots, AI, etc. On top of that, a well-planned production management system is needed before investing in those equipment. He also said that the other equipment that needs to be highlighted is for additive manufacturing which covers smart spare parts that can be produced on a demand basis.
On the robotic and AI, Dr. Alexander, acknowledges that those technologies for use in the steel industry has potential and the gains could be substantial. In terms of feasibility, the automotive industry has been implementing these technologies for some time and they are still able to see some benefits. Therefore, he believes that the steel industry will gain similar benefits as well. Those technologies will be beneficial in areas that require a high mandatory level of safety, reliability, and quality such as taking liquid steel samples, identifying steel temperature, exchanging work-roll / other critical maintenance, quality control/assurance, etc.
Dr. Patel brought the other interesting statement that despite the equipment being mature enough, the ASEAN steel industry personnel needs to question whether they are ready to adopt a new behaviour after implementing the equipment of Industry 4.0. If the answer is no, he suggested using a third-party service that has had experience or has the credibility in performing and managing data and real-time analytics instead. While doing that, steel industry personnel is encouraged to learn and upgrade during the process.
The Decarbonisation Programme for the ASEAN Steel Industry
Dr. Alexander mentioned that apart from digitalization efforts, the net-zero emission programme (Decarbonisation) is the 2nd most-highlighted issue among steel producers, regulators, and other stakeholders. He suggested taking stepwise approaches to campaign for the programme i.e.:
- The 1st phase is to drive the ASEAN steel industry to improve their respective facilities in terms of efficiency, reliability, and to move towards being environmentally friendly. The other important consideration is to implement a Circular Economy mindset (Reuse – Recycle – Remanufacture – Reduce).
- The 2nd phase is the transformation process. He shared that Direct Reduction Technology in the Ironmaking process will be more popular in the near future. The current technology is able to utilize low-grade iron ore material with Natural Gas or Hydrogen based as the reductor with a reasonable production cost. Nowadays, Carbon Capture and Storage (CCS) / Carbon Capture and Utilization (CCU), and Hydrogen Ironmaking – Steelmaking are worthy investments to be considered.
Dr. Patel added that he was able to see the development of this path in the ASEAN Steel Industry, especially in Indonesia, Malaysia, and Vietnam, where the technologies are brought in by the Chinese Steel Investors. He also noticed that ASEAN Governments are considering imposing Carbon Tax which is currently happening in Europe. Major European and North American Steel Producers have committed to achieving net-zero carbon emissions in 2050, such as ThyssenKrupp and ArcelorMittal who will be producing 0.5-0.6 million tons of steel this year, using Green Technology.
Decarbonisation is a global issue, and therefore Dr. Patel’s concern is about what the ASEAN Steel Industry and its stakeholders have to prepare to face this issue. No doubt, the Decarbonisation programme requires support from the other stakeholders as well, especially the government who should set up a proper policy that should include considerations that take into account, business, financial, environmental concerns, etc. Some of the major financial institutions have set their policies towards investing in green energy which targets high capital intensive industries such as oil & gas, cement, petrochemical, and steel industries.
Mr. Wu commented that in the beginning, most of the Taiwan Steel Producers were not interested in Decarbonisation. However, this situation has changed dramatically because the Taiwan Government started imposing new Decarbonisation policies for their Industries.
Along with that, he also shared that the Taiwan EPA (Environmental Protection Agency) has proposed the Greenhouse Reduction Programme to the Government. This proposal also includes the mechanism of Carbon Tax which is classified as Greenhouse Gas Management with the rate of USD 6.6/ton of CO2 equivalent.
This proposal has been welcomed positively by the Government and they even asked to revise the levy tax to be USD 36/ton of CO2 instead, in line with the international standards. Mr Wu addressed that the policy will be implemented in 2023, leaving no choice for Taiwan Steel Producers but to follow the regulation and to start preparing the technology roadmap to support the Decarbonisation programme.
He pointed out that the Taiwan economy relies on international trade whose steel products are listed in the EU Carbon Border Adjustment Mechanism (CBAM) that puts additional pressure on Taiwan Steel Producers. This new trend cannot be ignored. Furthermore, the Taiwan Steel Producers have committed to support the programme.
At the end of the discussion, the panellists unanimously agreed that the COVID-19 Pandemic will not disrupt the transformation in the iron and steel industry. The pandemic even acts as the catalyst to boost its transformation. Therefore, the Panellists encouraged all ASEAN Iron and Steel Industry personnel to step up and upgrade themselves with the current knowledge and demands of the transformation.
SEAISI would like to express its sincere appreciation to the distinguished Panellists: Mr. Joseph Yong for chairing the session fruitfully and Dr. Jitendra Patel, Dr. Alexander Fleischanderl, Mr. Wu Kai-Yu for the insights and experiences.
Please stay tuned for other updates from SEAISI Technical Committee (TechCo) and stay healthy wherever you are.
On behalf of the SEAISI Technical Committee
Reza J. WardhanaSource : SEAISI