Thread: ALCOA CLOSING

Originally Posted by frantic

The brickette plant was an avg design built by the cheapest contractor and closed by OHS issues when it killed a worker. BHP actually had a site in WA for a real steel plant as they expected the govt to legislate a certain level of ore be processed to slab here. The gov't never did it. This still could create massive employment here and benefit the global environment at the same time.
As to breaching trade rules there are numerous ways to implement a policy that other gov'ts already use. Go tell us the cost of getting raw materials out of China? Certain raw rare materials they will not allow to export at all!
Instead we are heading towards "the recession we did not need to have" . With other world economies picking up we are being forced down.

Yes - agree that the HBI was poorly designed and constructed. I actually knew the man who was killed in that explosion. He was a maintenance contractor working for Simon Engineering (which went on to become Abi Group, Bilfinger Berger and now Lend Lease) - I worked for the same group of companies at the time. Two others were also seriously injured in the blast - it was very fortunate that there were not more fatalities on that occasion.

However, I don't believe that it was OHS issues that resulted in the eventual decision to scrap the plant. The process never worked properly from the start - BHP spent many millions in trying to modify the plant to correct both process design and OH&S issues. In the end, the plant was simply too expensive to operate - and the world steel market changed at the same time with new steelworks coming on line in Asia which could accept "fines" iron ore.

At the time the HBI was built, the main demand of the Asian steel mills was for "lump" iron ore (usually between 12mm and 32mm). Very few steel mills could accept iron ore "fines" (less than 12mm) as it would simply disappear "up the spout" if you introduced it directly into a blast furnace. In those days, it was seen as "value adding" if you could convert your "fines" into a "lump" product - hence the HBI plant (there was one in South America somewhere too) and the "pig iron" foundry at Wundowie in WA amongst others.

The Korean steelmakers and subsequently the Chinese have since developed electric arc steel mills with the ability to accept an iron ore "fines" feed without the need for an intermediate process to convert the fines to a lump feed - and now iron ore "fines" brings the same price as the previously more rewarding "lump", to the point that most of the newer iron ore mines either produce both a "lump" and a "fines" product, or in many cases, "fines" only. It is actually cheaper for the miners in most cases to simply crush all of the ore to a "fines" specification rather than having to separate lump and fines by screening, and then have dual materials handling circuits to cater for both products.

All of the iron ore projects that I have been working with for the past few years produce "fines" only - and a couple of major new projects / prospects that I'm working on now are also targeting "fines" production only. I wish that there were more new projects targeting lump production, as it would make my job much easier (and the plants I design would be simpler and cheaper) - but the downstream processes and costs involved mean that this is no longer the case.

In this environment, a large and very expensive process like the HBI at Port Hedland was never going to be viable. The directors of BHP at the time made a very bad decision - and it cost many of them their jobs. It cost the shareholders of BHP (you and I through our Super funds etc) a hell of a lot more.

As you can probably tell - I'm no fan of the senior management of BHP and other large companies in the mining game.