AMTPJ Project Info Memo - DEH - 9 Mar 2013
AMTPJ Project Info Memo - DEH - 9 Mar 2013
AMTPJ Project Info Memo - DEH - 9 Mar 2013
February 2013
0
Contents
Projects Overview
Strategic Partner Overview
Key Competitive Advantages
AMTPJ Market
Project Financials
The Opportunity
Photos from Site
Projects Overview
Projects Overview
Two-thirds of the mills capacity will be used to manufacture oil-country tubular goods (OCTG), for
which Saudi Aramco will be the main customer. OCTGs comprise pipe and tube products used in
the petroleum industry, such as drill pipes, pipe casings and oil pipes. The remaining capacity will
be used to manufacture line pipes in sizes ranging from 4-14 inches. The mill will be fed with billets
and slabs produced by ArcelorMittal steel plants located around the world.
Projects Overview
Project Description :
Location:
Plot Area:
Facilities
Input:
Output:
Grades:
Diameter Range
Wall Thickness
Heat Treatment Capacity
OCTG Finishing Capacity
Applications:
OCTG Casing for gas & oil, used as the outer protection in a well. (4/20)
OCTG Tubing for gas & oil, used as the inner in the well. (2/4)
Line Pipe, used for transmission of oil & gas in petrochemical plants (2/15)
Metallurgy Groups:
OCTG:
Pipes:
following the norms : B, X42, X 46, X52, X60, X65, X70
Projects Overview
Location
Projects Overview
Site Overview
Projects Overview
Process Flow
Projects Overview
Selection of Best Technology
Projects Overview
Projects Schedule
Milestone
SCHEDULE Target
Hot Mill
28-Mar-13
28-Apr-13
04-Sep-13
04-Dec-13
Projects Status
Activity
Progress as of 01
Dec 12
Comments
Engineering (CISDI)
99.95%
99.9%
Civil works
97.5%
76.5%
As of today, the Hot Mill Construction, the Pre-Finishing and the Finishing Schedules have been
finalized.
AMTPJ Overview
Flat sheets
Stainless steel and alloys
Long sheets
Wire products
Pipes and tubes
2 0 1 2 H e a lth a n d S a fe ty D a y a r o u n d th e th e m e S to p , th i n k a n d a c t s a fe l y
C o u ra g e o u s le a d e rs h i p s e t o f va l u e s : e v e ry o n e h a s t h e a u th o r it y, r e sp o n s ib i l ity a n d a cc o u n ta b il i ty to
co u r a g e o u s l y sp e a k u p w h e n s o m e o n e i s th o u g h t to b e a t ri sk
2 .4
1 .2
2 .0
1 .6
3. 1
0 .8
2. 5
1 .2
1. 9
0 .8
1 .6
1. 5
1. 4
1 .5
1 .2
1 .8
1. 4
1 .0
0 .4
0 .0
0 .4
0 .0
20 0 7
20 0 8
2 00 9
2 01 0
2 0 11
20 1 3
4Q 10
1Q 1 1
2Q 11
3Q 11
4Q 1 1
201 1
78. 0
94. 0
8.5
10. 1
3.6
4.9
2.9
2.3
85. 0
85. 8
90. 6
91. 9
48. 9
54. 1
7.0
8.3
O ve r 26 0 ,00 0 e mp lo yee s in mo re
th an 60 cou n tr ie s
Lead er in the m etals and mining sector with 63 blast furn aces and 49 electr ic arc fur naces
* S ucce ssfu l spin off of stain less s teel busin ess ( A pe ram ) f ollow in g sh ar eho der s ap pr ova l on Jan uar y 25 , 2 011 . A ccor din gly st ainle ss ste el r esult s ha ve b ee n sh ow n as
d is cont inue d o per at ions and all p erio ds r ep ort ed (re sults and op er ation al K P Is) ha ve b een r ecast .
* * O w n ir on or e an d c oal p ro duc tion exclu ding str ateg ic lon g- ter m co ntr acts.
143
374
192
149
21
Evraz
36
Metinvest
46
Anglo
48
F ortescue
ArcelorMittal
BHP
Rio
Vale
54
Diver sified steel busin ess (by pro duct and g eog raphy) wi th expan ding m inin g op er ati ons
* S ou rce : S B B 201 2
* * Inclu des no n-c onso lidat ed affiliat es
15
5
G eographical reach
M ar ke t po sit ion by r eg ion
Le a de r i n
N o rth A me ric a
N o 1 in
Eu ro p e
L ea d er
i n th e CI S
L e ad e r i n
L a ti n A me ri c a*
Ar c e lo r Mit ta l
O th e r s
Ind ustr ial and commercial n etwork focus on m ar ket sustainabili ty and gr owth oppo rtunity
* L atin Am er ica in clud es M exico .
16
6
W orldwi de no.1 sup pli er for au tom oti ve steels with a l eadi ng m ar k et sh are of around 18%.
W orldwi de i ndus tri al pre senc e v i a about 4 0 co ating lines i n E uro p e, Nor th A m er ic a, S outh
A m eri c a and A fr ic a.
Co nstr uction
Globall y, th e la rges t s ing le m ark et for st eel: a 715 m ill i on ton ne stee l c ons um pti on m a rk et c om pri s ed of
div er sifi ed pr oduc ts
E m ergi ng m a rk ets repr es ent m or e than 50% of the squ are m e ters c o ns truc ted ea ch y ear gl obal ly .
A rc elo rM i ttal is a w orl d l eader wi th ov er 2 6 m i ll io n tonnes of pr oduc ts deli v ered to the bui l din g and
cons tr uc tion sec tor in 2011
Packagin g
New p ack aging c onc epts c ons tantl y de si gned to ach iev e di ffer enti atio n by stee l s ol utio n
(bottl e c an, eas y open e nd...).
Com plem ent ary indus tri al networ k in E ur ope w ith p roduc ti on plants and s erv i c e cen tres near
cus tom e rs ' c an m ak i ng fac ili ties.
Adit ya M ittal
Mich el W urth
Go nzalo Urquijo
Davinder Ch ugh
Pet er Kukielski
R esp on si ble fo r Mi ni ng
Lou is Schorsch
App ointed by the Board of Directors, the GMB is responsible for strategic d irection
8
Energy
25 industrial units
in 12 countries
Mechanical
& Automotive
North America
Designed capacity
of 3 million tons
2011 revenues:
USD 2.3 billion
9,000+ global
employees
Mechanical
Automotive
Europe
&
Unicon
19
22%
Energy
2.0
29%
Mech. & Auto - North
America
1.5
1.0
14%
0.5
Unicon
2010
2011
35%
2012F
10.0
1.6
8.0
1.2
6.0
0.8
4.0
0.4
2.0
2010
2011
Shipments (million tonnes)
2012F
2010
2011
2012F
20
21
Completely integrated
metallurgical processing center
Process research
New product
development
Training &
technical
support
Definition and optimization of steel chemistry for all the target products (OCTG, Line pipe,
HPI, others)
Simulation of heating/quenching and tempering cycles on different grades to fine tune the
heat treatment process at Jubail mill
Sour service grades (T95, C110 and proprietary grades) especially used in the MENA
region
Proprietary OCTG premium connection technology
Support to Jubail laboratory (exchange of information on sour service testing and potential
training to Jubail lab staff)
Specific on-demand technical support
Sour Service OCTG is a critical application for the success of Jubail as it is a highly profitable product
ArcelorMittal has an R&D program for T95 and other proprietary sour service grades to support the
development of value added products for Jubail
AMTPJ Market
AMTPJ Market
Global growth of Pipes & Tubes is in line with the overall steel market but it offers
specific opportunities to AM
Breakdown of consumption of Pipes & Tubes*
Auto mo tive &
trucks
6%
Co nverting &
pro cessing
4%
Electrical
equipment
2%
M achinery &
industrial
equipment
11%
CA G R of 3-4%
120
100
80
60
40
20
Steel Service
Center &
distributo rs
14%
0
2005
Co nstructio n
23%
22
22
CIS
China
Latin
America
Middle East
Developed
World*
2006
2007
2008E
2009E
2010E
2015E
OCTG: The growth of the Oil Country Tubular Goods market and
specifically the high end market is expected to grow at strong rate
as oil reserves need to be replaced and drilling complexity
increases.
Africa, Latin America, Middle East and CIS regions: Strong growth
expected in those regions supported by high oil prices
AMTPJ Market
Seamless OCTG & Line pipe applications drive the demand in these regions
Middle East
Africa
USA
12%
14%
25%
88%
86%
75%
AMTP Jubail will be focused on serving the Oil & Gas industries along the upstream,
midstream and downstream activities
AMTPJ Market
AMTP Jubail natural markets
North Africa
Middle East
Egypt
Algeria
Libya
Tunisia
Sudan
Domestic market
Saudi Arabia
Iraq
Bahrain
Qatar
Yemen
Others Middle East
UAE
Kuwait
Oman
Syria
Syria
Tunisia
Iraq
Kuwait
Algeria
Libya
Qatar
Egypt
UAE
Saudi
Oman
Mauritania
Yemen
Senegal
Sudan
Nigeria
Sierra Leone
Ghana
Cte d'Ivoire
Equatorial Guinea
Gabon
Uganda
Kenya
Congo
West Africa
Mauritania
Senegal
Sierra Leone
Liberia
Cte d'Ivoire
Ghana
Somalia
Cameroon
Liberia
East Africa
Tanzania
Nigeria
Cameroon
Eq. Guinea
Gabon
Congo
Angola
Angola
Mozambique
Zimbabwe
Madagascar
South Africa
Somalia
Kenya
Uganda
Tanzania
Mozambique
Zimbabwe
Madagascar
AMTPJ Market
Geographic location & product range of AM Energy mills
Energy mills locations
OD Range size
Inches
1 3 4.5 6 7 10 12 14 16 18 20
Ostrava
275
Roman
4 5 3 20
3 00
Vereeniging
Annaba
10 0
50
Jubail*
60 0
Galati
50
Aktau
60
Seamless
Spiral
LSAW
* Joint venture.
32
56
AMTPJ Market
Leverage on ArcelorMittals existing business relations in the Region
Saudi
Aramco
KOC
ADCO
South Africa mill approved for LP & OCTG, Ostrava approved for OCTG
Local Jubail team in regular touch with Aramco- A special Aramco Day is planned soon
Premium connection team in regular contact with Drilling department
Have a strong relationship with KOC and major pipe line contractors since last 15years and are
regular supplier
Already given a brief to KOC regarding our upcoming mill in KSA
Have been a regular supplier for almost 6 years to ADCO and its related group companies .
Introductory Presentation has been made to ADCO of our new facility.
Petrofac Sharjah
Dodsal Dubai
CUEL Thailand
ENI / SAIPEM Italy
Fluor Corporation- USA
Network of Agents in
Kuwait, Abu Dhabi,
Qatar, Oman, Egypt,
Tunisia, Libya
AMTPJ Market
International capabilities beyond MENA
USA
South
America
Have a strong historical presence in India with supplies and strong relations with:
India
ONGC - OCTG
Oil India - OCTG
BHEL - Line & Alloy Carbon Steel Pipes
Reliance - Line Pipes & OCTG
New relationships has been developed with Subsea pipe laying companies in India and abroad:
L&T
Essar
SWIBER
Leighton Welspun
VM Gulf
Hyundai
PunjLlyod
AMTPJ Market
Sales & Marketing
ArcelorMittal Tubular Products Al Jubail (AMTPJ) signed a Sales & Marketing Agreement with ArcelorMittal, who through its distribution
network, has to market and sell each Product which is in excess of the AMTPJ Market requirements, in priority to the Middle East and North
Africa and any remaining surplus in other regions, all in the best interests of the Company and with a view to reach the full capacity of the
Companys plant;
One of only 2 seamless pipe production units (and the only one with a PQF Mill) in the whole of Middle
East North Africa (MENA) region which consumes an annual volume of approx 3M MT.
Cost of the project is very competitive when compared to competition (Tenaris Veracruz brownfield
expansion project ($850M), V & M Sumitomo Brazil greenfield project including 1M Mt of round
billet production for approx $3 BLN)
Low operating costs due to technology and prices of utilities & infrastructure
Low logistics cost for land and sea for the target markets due to plant location
Projects financing at SAIBOR + 450 bps (approx overall) at a debt-equity ratio of 75:25
Opportunity for further expansion investment in billet production for the pipe mill can further enhance
the margins at an attractive ROI for incremental investment
Other Advantages
AMTPJ has signed a long term raw material supply agreement with ArcelorMittal Ostrava.
AMTPJ signed a Sales & Marketing Agreement with ArcelorMittal who will, through its distribution
network, have to market and sell all products not sold in AMTPJs priority markets of MENA, in the
international market. The agreement is structured with a view to reach full capacity of the AMTPJs
plant.
Their projects are long term base and somehow benefited by the current economical situation
Saudi Aramco mentioned that short term volatility is nothing new in the Oil & Gas industry
Projects Financials
Projects Financials
Projects Cost
Total Project Cost is US $997.2M (including Financing Charges).
COMPARED TO RECENT COMPARABLE SEAMLESS MILL PROJECTS,
997.2
Projects Financials
Projects Cost
Total Project Cost is US $997.2M (including Financing Charges).
COMPARED TO RECENT COMPARABLE SEAMLESS MILL PROJECTS,
Projects Financials
Means of Finance
DESCRIPTION
MUSD
MSAR
907.2
90.0
997.2
3,402.0
337.5
3,739.5
[ 30 % ]
114.4
110.0
74.8
299.2
429.2
412.3
280.5
1,122.0
[ 70% ]
160.0
377.6
160.4
698.0
600.0
1,416.0
601.5
2,617.5
[ 100% ]
997.2
3,739.5
1. PROJECT COST
- Project Cost
- Financing Cost
TOTAL PROJECT COST
2. MEANS OF FINANCING
- Arcelor Mittal
- AlTanmiah
-New Investor
TOTAL EQUITY
- SIDF
- Bank Loan
- New Loan
TOTAL LOANS
TOTAL EQUITY + LOANS
(38.25%)
(36.75%)
(25.00%)
Projects Financials
Projects Key Performance (Full Production)
Gross Margin (%)
EBITDA Margin (%)
EBT (%)
Return on Capital - ROC (%)
Return on Investment - ROI (%)
Return on Equity - ROE (%)
Asset Turnover (%)
Return on Assets (%)
Projects IRR
35.97%
23.24%
14.65%
43.69%
14.16%
39.48%
87.10%
12.76%
12.53%
891,973
207,302
130,696
total Investment
Equity
Projects Financials
The Opportunity
The Opportunity
An opportunity to acquire a direct equity
stake in AMTPJ (25%), the biggest
Seamless Steel Pipes manufacturer in the
Middle East, developing a 600 Kilotons/year Seamless Steel Pipes (OCTG &
Line Pipes) manufacturing in Saudi Arabia.
AMTPJ
38.25%
36.75%
25%
New Investor
More than 84% of overall project
milestones have been achieved and
completed including receipt of gas supply
from the Saudi government, and
commercial production expected to
commence in Dec 2013.
Given its partnership with ArcelorMittal,
the project has many advantages. AMTPJ
also has multiple cost advantages which
provide it with pricing advantage
compared to international producers.
The Middle Eastern market for Seamless
pipes is currently being supplied almost
completely by imports. This provides a
regional manufacturer like AMTPJ with an
immense business opportunity.
(38.25%)
$114.6M
$109.8M
New Investor
: $ 74.8M
(25%)
Thank you
Feb 2013