BRICSIRON FOUNDRIES SURVEY

Dominic Mitchell March 2013

PRESENTATION CONTENT General overview Materials and their costs Power sources and usage Cost structure Training

BACKGROUND The survey was commissioned at the

end of 2012 by the National Foundry Technology Network and the SA Institute of Foundrymen

At last BRICS conference delegates expressed the need to create stronger focus areas for discussion

As iron foundries are significant by output volume, it was agreed to focus on them.

SURVEY OVERVIEW Conducted in South Africa, Brazil, India, China Russia recently had an extensive

benchmarking exercise with UNIDO Main purpose was to pick out trends and set a

context for comparison Challenges related to language, short time

frames for cleaning and checking of data, and countries responded with differing degrees of accuracy. Foundries too.

ACKNOWLEDGEMENTS Thanks are extended to:

The Brazilian Foundry Association UNIDO Russia the Indian Institute of Foundrymen The China Foundry Association The SA Institute of Foundrymen

NUMBER OF IRON FOUNDRIES

BRAZIL INDIA CHINA SOUTH AFRICA0

2000

4000

6000

8000

10000

12000

14000

16000

18000

521

4000

16000

78

OVERALL IRON PRODUCTION (VOLUME IN TONS)

BRAZIL INDIA CHINA SOUTH AFRICA0

5000000

10000000

15000000

20000000

25000000

30000000

2 360 680

9 100 000

26 000 000

300 000

OVERALL IRON PRODUCTION (VOLUME IN TONS) OF THE 3 LARGEST IRON FOUNDRIES IN THE COUNTRY

BRAZIL INDIA CHINA SOUTH AFRICA0

100000

200000

300000

400000

500000

600000

700000

800000688073

48100

700000

150000

TOTAL NUMBER OF DIRECT AND INDIRECT EMPLOYEES

BRAZIL INDIA CHINA SOUTH AFRICA

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

57600

450000

1200000

6618

TOTAL NUMBER OF EMPLOYEES IN IRON FOUNDRIES INDIRECTTOTAL NUMBER OF EMPLOYEES IN IRON FOUNDRIES DIRECT

NO. OF UNIVERSITIES OFFERING FOUNDRY RELATED DEGREES

BRAZIL CHINA SOUTH AFRICA0

50

100

150

200

250

12

205

6

JOBBING AND PRODUCTION RATIOS

BRAZIL RUSSIA INDIA CHINA SOUTH AFRICA

0102030405060708090

100

14

75

30

44

86

25

70

56

JOBBINGPRODUCTION

COMPARATIVE RATIOS OF IRON

BRAZIL INDIA CHINA SOUTH AFRICA

0

10

20

30

40

50

60

70

8070

6065

3225

3933

37

40 3 4

1.    Grey/flake cast iron2.    Ductile spheroidal graphite3.    Ductile pipe iron

AVERAGE IRON ACROSS COUNTRIES

1.    Grey/flake cast iron61%

2.    Ductile spheroidal graphite

36%

3.    Ductile pipe iron3%

MARKET SECTORS SERVED

BRAZIL INDIA CHINA SOUTH AFRICA

0

10

20

30

40

50

60

7062

36

27.821

16 19 20.524

84

11.3

20 0 2

33

   AutomotiveManufacturingInfrastructureConstructionMiningRailwaysAgricultureOther

AVERAGE AGE OF FURNACES

BRAZIL RUSSIA INDIA CHINA SOUTH AFRICA0

5

10

15

20

25

30

3530

11

6

25.5

MARKET SECTORS AVERAGED BRICS

   Automotive37%

Manufacturing20%

Infrastructure6%

Construction3%

Mining9%

Railways3% Agriculture

12%

Other11%

AVERAGE

DOMESTIC VS EXPORT MARKETS

BRAZIL INDIA CHINA SOUTH AFRICA0

10

20

30

40

50

60

70

80

90

100

87 84 85 88

13 16 15 12

DOMESTICEXPORT

IMPORT/EXPORT RATIOS BRICS AVERAGE

DOMESTIC 86%

EXPORT 14%

AVERAGE PRICE OF ALLOYS/TON

BRAZIL INDIA CHINA SOUTH AFRICA$0

$500

$1,000

$1,500

$2,000

$2,500

$2,025

$1,213

$1,588

$1,080

SCRAP AVERAGE COST PER TON

BRAZIL INDIA CHINA SOUTH AFRICA$0

$100

$200

$300

$400

$500

$600

$380

$462

$543

$481

RESINS: AVERAGE COST PER TON

BRAZIL INDIA CHINA SOUTH AFRICA$0

$500$1,000$1,500$2,000$2,500$3,000$3,500$4,000 BRAZIL;

$3,350

INDIA; $1,565

CHINA; $1,579

SOUTH AFRICA; $3,633

Resins: Average cost per ton ($)

SAND AVERAGE COST PER TON

BRAZIL INDIA CHINA SOUTH AFRICA$0

$10$20$30$40$50$60$70$80$90

$100

$20

$79

$48

$86

AVERAGE VALUE OF CASTINGS PER TON

BRAZIL INDIA CHINA SOUTH AFRICA$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$5,000

$1,533$1,017

$1,420

GOVERNMENT INCENTIVES This is a complex topic with many

layers Incentives range from export incentives

(SA) State/province/local government

investment incentives (Brazil) Sub-sector and equipment

development plans(China) Manufacturing and skills development

policy (India)

COST STRUCTURE

MATERIAL AS A % OF PRODUCTION COST

India South Africa Brazil China Russia0

10

20

30

40

50

60

70

80

50

28

37.5

72

45.2

Material

ENERGY AS A % OF PRODUCTION COST

India South Africa Brazil China Russia0

2

4

6

8

10

12

14

16

18

1516

11

8.5

13.4

Energy

LABOUR AS A % OF PRODUCTION COSTS

India South Africa Brazil China Russia0

5

10

15

20

25

30

35

40

12

33.5 32

8

21.4Labour

EQUIPMENT AS A % OF PRODUCTION COST

India South Africa Brazil China Russia0

2

4

6

8

10

12

14

16

8

14.5

9 8.57.2 Equipment

OVERHEADS AS A % OF PRODUCTION COST

India South Africa Brazil China Russia0

2

4

6

8

10

12

14

16 15

8

10.5

3

12.8

Overheads

COMBINED COST STRUCTURE %

India South Africa

Brazil China Russia0

20

40

60

80

100

120

5028 37.5

72

45.2

15

1611

8.5

13.4

1233.5 32

8

21.48 14.5 9

8.57.2

15 8 10.5 3 12.8

OverheadsEquipmentLabourEnergyMaterial

POWER SOURCE IN IRON FOUNDRIES

BRAZ

ILINDIA

CHINA

SOUTH

AFRICA

0

20

40

60

80

100

120

1.    Municipal electricity 2.    National grid elec-tricity

3.    Natural gas 4.    Coke/coal5.    Paraffin 6.    fuel oil/diesel own

generation DG set / windmill

7.    Other (specify)

POWER INCENTIVES/GOVT SUPPORT Brazil and India have differing tariffs for

different times of the day – trough and crest pricing (peace hours)

Brazil has a national cost reduction project

SA has a green energy efficiency fund with a rebate for energy efficient equipment, also differing pricing structure

CONSTRAINTS IN ELECTRICITY SUPPLY

BRAZIL INDIASOUTH

AFRICA CHINA

Long term supply Cost

Gap in Supply & demandHigh power tariff Supply not regular

 Generating capacity (infrastructure) Rapidly increasing costsQuality and reliability of supply

Power outages in South

ELECTRICITY COST PER KW/H

BRAZIL RUSSIA INDIA CHINA SOUTH AFRICA

$0.000$0.020$0.040$0.060$0.080$0.100$0.120$0.140$0.160$0.180$0.200

$0.165

$0.050

$0.160$0.172 $0.171

KW/H USED PER TON

BRAZIL RUSSIA INDIA CHINA SOUTH AFRICA

0500

10001500200025003000350040004500

600

4176

1250

639859

ELECTRICITY COST PER TON

BRAZIL RUSSIA INDIA CHINA SOUTH AFRICA

$0

$50

$100

$150

$200

$250

$99

$209 $200

$110

$147

DAYS PER ANNUM THAT FOUNDRIES OPERATE

BRAZIL INDIA CHINA SOUTH AFRICA0

50

100

150

200

250

300

350

250

302 300

242

PERSONNEL COSTS This section of the survey was not

completed by many foundries who felt that this was sensitive information

A consequence is also that labour productivity was not possible to calculate.

TRAINING SENIOR MANAGEMENT

BRAZIL INDIA SOUTH AFRICA0

102030405060708090

100 100 100

252716

24

Tertiary academic degree %Tertiary Technical cer-tificate %Apprentice-ship %On the job training %Secondary school %

TRAINING MIDDLE MANAGEMENT

BRAZIL INDIA SOUTH AFRICA0

102030405060708090

100

50

104

90

29

1525

Tertiary academic degree %Tertiary Technical cer-tificate %Apprentice-ship %On the job training %Secondary school %

TRAINING MOULDERS

BRAZIL INDIA SOUTH AFRICA0

102030405060708090

100 100

8

60

2620

51

20

100

Tertiary academic degree %Tertiary Technical cer-tificate %Apprentice-ship %On the job training %Secondary school %

TRAINING FETTLERS

BRAZIL INDIA SOUTH AFRICA0

102030405060708090

100 100

30

92

20

0

30

100

Tertiary academic degree %Tertiary Technical cer-tificate %Apprentice-ship %On the job training %Secondary school %

MAIN CERTIFICATION SYSTEMS

 BRAZIL  INDIA CHINASOUTH AFRICA

ISO 9000 ISO 14000 TS

QS 9000 TS 16949 ISO

ISO9001 ISO14000TS16949

ISO 9001 TS 16949VDA 6.1

THANK YOU