Metal matters: why companies must innovate or perish

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While steelmaking may have stabilised, there could be more pain in store for aluminium. Materials processing specialist and Swinburne Pro-Vice Chancellor (Future Manufacturing) Geoffrey Brooks shares a few observations with Brent Balinski.

If you spend your professional life thinking about a subject, you’ll notice esoteric connections it has to various patterns in the world.

Geoffrey Brooks leads the High Temperature Processing group at Swinburne, where he has been a Professor of Engineering since 2006. One of his specialisations is steelmaking.

In recent years he has pointed out the link between steel production and economic and political might. He has even applied mathematical modelling to get an understanding of planetary formation through the cooling habits of molten steel.

Another relationship he has noticed is that between a successful country and a healthy steel industry.

“If you look at countries that we admire, countries that we respect for being clever and nice places to live, with good environments, wealthy etc. – they invariably have strong steel industries,” he told Manufacturers’ Monthly at an event hosted by the University of Wollongong’s Global Challenges Program this week.

“A lot of Northern European countries are in that category,” he noted, conceding that the relationship isn’t exact, but is apparent.

“[Regarding] some of the Asian Tiger countries, of course – South Korea and Japan – there's a strong link between having a healthy steel industry and a successful society.”

The biggest contributor to the world’s steel output is China, which contributed 779 megatonnes (Mt) to the 1,606 Mt produced last year, according to the World Steel Association. Global production has grown steadily since 1970 (595 Mt) and last year the overall increase was 3.6 per cent.

Australia’s contribution is a modest one, ranking 30th with 4.7 Mt. The difficulties faced by the country’s base metal manufacturers are well-known, with the inflated dollar due to the commodities boom buffeting the industry in recent years.

After a disastrous period (which saw the country’s major steel company, BlueScope Steel, announce billion-dollar back-to-back losses in 2011 and 2012)  Brooks believes things have stabilised.

According to the Professor, the country’s steel future is in high-value, innovative products.

“I think what BlueScope is doing more of now is smart… they're trying to get into specialised architectural products,” he said.

“And I particularly like what they're trying to do at the moment with integrating solar photovoltaic energy and roof panels for thermal energy recovery.

“If we can make that occur, if you could make that commercial that would be a special product that not that many people in the world could make.”

He also singles out the success the Arrium has had in grinding media, a specialised product that saw great demand during the mining boom. Again: a specialised, high-value, non-stock standard product. Being “smart” or “clever” is a constant theme when asked his opinion on what metal companies need to do to be successful.

“There are some promising signs of companies – Arrium is getting into some new grades of rail steel, and I hear BlueScope investing in new flat products and new coatings on their steels,” he added.

“So that's promising.”

Brooks’s was awarded the prestigious Association for Iron and Steel Technology’s John F Elliott lectureship last year, presenting his Steelmaking at the Speed of Sound address at five universities worldwide.

When asked for global examples worth learning from, he points to the commitment of South Korea’s Posco to R&D (its CEO Park Tae-joon founded the tech-focussed Postech University), Nucor’s transformation under former president Ken Iverson, and Belgium’s Umicore.

Metals processing is sometimes seen as old-fashioned, unsophisticated and environmentally damaging. Umicore – which rebranded 2001 and formed as Union Miniere in 1989 after a union of of four mining and smelting companies – puts itself forward as the opposite of those things.

“Can you imagine anything less fashionable than being a lead smelter?” asked Brooks.

The company now has businesses including in precious metals management and battery recycling, and reclaims material from industrial residues to e-waste sourced “from a truly global supply base”.

There is a lesson in Umicore’s transformation, from something simple and stooped in another era to a modern, technologically advanced company.

“They become a world-leader in the recovery of valuable metals from waste electronics,” said Brooks.

“And they decided also to make their plant a showcase. A place you show off about. So it's still a lead smelter, but they show schoolkids around it and show how they're using all this clever science and technology.

“And they have a fashionable shop in Antwerp where they show mobile phones and all the things they've recovered and made from them, and they sell them back to the public. So it's turned the issue on its head.”

An area where there has been little in the way of innovation, according to Brooks, is in Australia’s aluminium industry.

While some in steel are moving to a more sustainable future, there is little progress in aluminium.

The Professor has been pointing out for a long time that the aluminium industry making low-grade products is not a formula for success.

Australia’s aluminium industry has been ranked the fifth-biggest in the world, and exported nearly $4 billion worth of products in 2012.

However, it has seen a great deal of pain lately, with the energy-hungry (it takes nearly ten times the amount of energy to make a tonne of aluminium compared to steel) industry to see the Point Henry smelter to close in August. This will leave five smelters operating.  

Brooks believes that the aluminium sector is destined for further bad news. One of the major problems, he believes, is the production of stock standard products.

“There is definitely a lack of innovation in the Australian aluminium industry,” he said.

“Fundamentally, how is that going to be sustainable? I think we need to put pressure on those owners and in most cases aluminium smelters get a deal on energy – a special deal with the local electricity supplier, often state-owned or pseudo state-owned. So we should be trying to make sure that they are investing in innovation.

“It's in our long-term interest that they move to more sustainable products… I don’t see them being very responsive. And of course it's complicated by a lot of the smelters being overseas-owned, so the priorities of a company aren't necessarily the priorities of Australia.”

 

For more about the University of Wollongong's Global Challenges Program – including upcoming events – click here.

Images: http://www.steel.org; Swinburne University of Technology