inauguration of vsb
TRANSCRIPT
1
Brazil: VSB inauguration
Vallourec Press Pack 1 September 2011
2
CONTENTS Sheet number
Editorial 1
VSB – The new company 2
VSB – A responsible company 3
Other Vallourec entities in Brazil 4
V & M do BRASIL 5
Vallourec ‐ An integrated operation in Brazil 6
Vallourec – A commitment to sustainable development in Brazil 7
Vallourec and the Brazilian oil industry 8
Vallourec in brief 9
Group markets and strategy 10
Vallourec's recent history 11
3
1. EDITORIAL
"Brazil has, more than ever, a strategic position in Vallourec's organization. Through its subsidiary V & M do BRASIL, the Group has been operating in an industrial capacity in the state of Minas Gerais since 1952. Vallourec continues to pursue its development. In choosing to build VSB, its new very high‐performance seamless tube mill in Jeceaba, Vallourec will be able to capitalize on the excellent working relationship built up with the local authorities in Minas Gerais, and will continue to benefit from the region's numerous competitive strengths in terms of natural resources, infrastructure and the quality of the local workforce. When VSB is fully operational, Vallourec will employ in total more than 7,700 people in Brazil and have an annual production capacity of around 850,000 tonnes of tubes. In Brazil, Vallourec is serving the needs of both the local and international oil and gas markets, as well as providing a wide range of applications for the dynamic Brazilian economy. Vallourec tubes are used to equip oil and gas wells. Working in close partnership with Petrobras, the national oil company, we are developing solutions for the exploration and production of the most challenging offshore fields, including the pre‐salt discoveries. Our tubes are also used for a wide range of industrial applications, in the automotive, mechanical and construction industries. In 2010, Brazil generated 23% of Vallourec’s consolidated Group revenues. The Group's involvement in local life extends well beyond the economic sphere. The efforts being made by Vallourec's Brazilian operations are a reference for the Group as a whole in a range of areas, including environmental preservation and enhancing the well‐being of employees and their families. Vallourec has been a major player in the Brazilian economy for many years, firmly committed to a balanced model that does not overlook any of the social, environmental, cultural and societal aspects of development.”
Philippe Crouzet
Chairman of the Vallourec Management Board
4
2. VSB ‐ THE NEW COMPANY
In March 2007, Vallourec and Sumitomo Metals announced a joint‐venture agreement to form Vallourec & Sumitomo Tubos do Brasil (VSB), a new state‐of‐the‐art pipe mill, 56%‐owned by Vallourec and 44%‐owned by Sumitomo Metals and Sumitomo Corporation. The construction works which started in 2008 are now completed and the plant is in its ramp‐up phase. The plant will employ 1,600 people in the operational phase. By purchasing iron ore from V & M MINERAÇÃO and charcoal from V & M FLORESTAL, VSB will have a direct access to raw materials. Infrastructure
Covering an area of 250 hectares, VSB consists of an integrated steel mill, a pellet plant to supply the two blast furnaces that were designed to use both charcoal and coke, a state‐of‐the‐art tube mill as well as heat treatment and threading lines for OCTG (Oil Country Tubular Goods). The latter will allow the manufacturing of API and VAM premium connections. The mill benefits from the world’s most modern equipments which optimize energy consumption and reduce noise and particulates emissions. With rail and road access to the ports of Rio de Janeiro and Santos and Vitoria, VSB will also have a direct access to international markets.
Quality
The Company has received the recommendation of the certification standards API/Q1, API 5L, API 5ct, ISO/TS 29001 and ISO 9001 and the issuance of the official certificate is expected to happen in the next days.
5
VSB key figures
Total investment: BRL 5 billion (2011 estimate)
Direct employment (operational phase): 1,600 employees
Indirect employment: 2,000 people
Surface area: 250 ha
Steel production capacity (with two blast furnaces): 1 million tonnes of steel, including 300,000 for Vallourec’s own needs, outside VSB
Tube production capacity: 600,000 tonnes of tubes, including 300,000 for Vallourec
6
The main stages of construction
Ground preparation for the arrival of VSB lasted about 18 months. 20 million cubic meters of earth were displaced, a volume equivalent to seven Cheops pyramids in Egypt.
The buildings were constructed with Vallourec’s PREON® structure which makes use of high‐performance, lightweight structural tubes. VSB required
40,000 tonnes of tubular structure, the equivalent of four Eiffel Towers.
Location
VMB
VMMN
VMFL
New Plant
Dedicated Deep Sea Terminal
MRS Railway
Jeceaba
Access to raw materials VSB is located near two major subsidiaries of Vallourec, one specializing in the extraction of iron ore (V & M MINERAÇÃO at 70 kms), and one in forest management dedicated to the production of charcoal (V & M FLORESTAL). These two entities will then provide the mill of VSB with raw materials. VSB will also benefit from the proximity and experience of the existing plant of Vallourec in Brazil: V & M do BRASIL, created in 1952, is located at 150 kms. Access to international markets The plant is located near the town of Jeceaba in the state of Minas Gerais, enabling it to transport its tubes via a high‐quality road and rail network to the ports of Rio de Janeiro and Santos and Vitoria.
Applications This new, state‐of‐the‐art integrated plant will mainly produce premium tubes for the international oil & gas market. VSB will enable Vallourec to increase its tube production by more than 10%.
7
3. VSB – A RESPONSIBLE COMPANY
Environmental aspects The VSB plant was designed from the outset to have the lowest possible environmental footprint. Its manufacturing process will use biomass as its main source of energy for steel production. Vallourec’s eucalyptus plantations will supply charcoal to produce this energy. As the trees grow, they consume carbon dioxide and release oxygen. This “closed circuit” process results in a complete photosynthesis‐based energy production and consumption cycle that has a positive impact on the greenhouse effect. The new facility will use river water to produce the various grades of water required for its operation, adapting its internal systems and treatments to obtain a very high recirculation rate. The site will also be equipped with technologies that enhance energy efficiency by using gases produced by the industrial process, thereby saving the equivalent of 22% of VSB energy requirements. Energy released when motors are braked will also be recovered and reused. VSB will plant a green belt around the entire perimeter of the Industrial District of Jeceaba. The project not only covers the area of the plant, but also future undertakings. The planting will make possible the revegetation of a huge area in an already degraded location caused by existing rural exploitation. Employment VSB, which generated over 11,000 jobs during its construction phase, will employ more than 1,600 people when fully operational and create 2,000 indirect jobs. The company attaches special importance to the health and safety of its employees and develops an active policy to ensure their training and personal development. Social and corporate policy VSB implements a set of social and societal initiatives. With a special emphasis on enhancing social integration and driving revenue growth, the training policy focuses on developing professional skills and qualification of the workforce. The company also supports a large number of projects in many areas including education, culture, sports and environmental protection. These projects provide direct or indirect benefits to thousands of people living in the state of Minas Gerais.
8
A multicultural centre VSB has formed a plan to provide support to five municipalities, which are home to a total of around 20,000 people. This plan includes provisions for healthcare, teaching programmes for schools and cultural activities, craft training, support for neighbourhood security initiatives and information bulletins for local populations. For example, in São Brás do Suaçuí, a multicultural centre features a municipal library, a telecentre offers free internet access, and an archaeological museum houses items discovered at the site where the VSB plant is being built. Training programs “Vislumbrar” (“glimpse” in English) is the name given to a new project that has been under development since January 2009. This project aims to provide environmental training to the local community, schoolchildren and VSB employees in Brazil. The basic principle is to use the training as a springboard for encouraging environmental initiatives, both at the plant and in people’s private lives. Cultural activities Numerous cultural activities were organized as part of the “tempo Sustentavel” programme (literally: “it is time for sustainability”) in 2010, including theatrical productions and musical performances for children.
9
4. OTHER VALLOUREC ENTITIES IN BRAZIL
In 1952, Mannesmann created a production site in Belo Horizonte in the state of Minas Gerais, to supply seamless steel tubes to Brazil’s emerging oil industry. In 2000, Vallourec acquired Mannesmann’s Brazilian subsidiary and renamed it V & M do BRASIL (VMB). This integrated plant has a full range of production equipment including a steel mill, tube finishing lines and various hot‐rolling mills. The company produces seamless tubes for the oil & gas, automotive, petrochemicals, power generation and mechanical engineering industries (sheet 5). V & M do BRASIL has two major subsidiaries: V & M MINERAÇÃO, which specializes in iron ore extraction and V & M FLORESTAL, which manages eucalyptus plantations for charcoal production. These subsidiaries form a fully‐integrated iron production supply chain for the steel mill of V & M do BRASIL, and soon that of VSB (sheet 6). Conscious of the facility’s importance in the region, V & M do BRASIL takes great care to ensure that it complies with its economic, social and environmental responsibilities, which include projects that promote citizenship, the arts and human development, as well as the use of a renewable energy (sheet 7).
VALLOUREC IN BRAZIL Excluding VSB: 6,110 employees and a production capacity of 550,000 tonnes of tubes With VSB fully operational: more than 7,700 employees and a production capacity of
850,000 tonnes of tubes
Santos Basin
MINAS GERAIS
SÃO PAULO
Belo HorizonteVMB
VSB
VMFl
VMMn ESPÍRITO SANTO
RIO DE JANEIRO
VMFl : V & M FLORESTAL / VMMn : V & M MINERAÇÃO
10
5. V & M DO BRASIL
Belo Horizonte site, state of Minas Gerais, Brazil
2 blast furnaces,
1 steel mill,
2 hot‐rolling mills,
2 heat treatment units,
1 cold‐drawing shop,
1 OCTG finishing plant,
1 drill pipe production line,
1 forge,
1 R&D centre.
Founded by Mannesmann in 1952 to supply seamless steel tubes to Brazil’s emerging oil industry, V & M do BRASIL is one of the most modern integrated plants in the world, incorporating a full range of production facilities (see above). In addition, the plant has the particularity to use biomass as its main source of energy for steel output, which has earned its products the title of “green tubes”. The Belo Horizonte site, in the state of Minas Gerais, was chosen because of the existence of significant iron ore reserves and its proximity to the Group’s customers.
VMB key figures Creation of Mannesmann do Brasil: 1952
Acquisition by Vallourec: 2000
Number of employees: 6,100 (including subsidiaries, at 31 December 2010)
Plant surface area: 300 ha
Production capacity: 550,000 tonnes of seamless steel tubes
Share of energy from renewable sources (charcoal): 83%
98% of the water used in the steelmaking process is treated and reused
11
V & M do BRASIL – Markets and applications
V & M do BRASIL supplies both a domestic and a locally based international clientele. The company produces and markets seamless steel tubes for the oil and gas, manufacturing and automotive markets. Oil & Gas
V & M do BRASIL supplies its customers in the oil & gas industry with high quality steel tubes and VAM connections suitable for use in critical environments such as deep‐water offshore drilling. It also produces line pipes and, since April 2011, drill pipes. In particular, these tubes feature corrosion‐inhibiting treatments and thermal insulation.
Industry
The company supplies tubes for a wide range of industrial applications, including tubes for mechanical engineering, tubes for the power generation industry (conduits, heat exchangers, etc.) and structural tubes (for construction, footbridges and walkways, and for the rail industry).
Automotive
These tubes are intended for cars and motorbikes as well as heavy vehicles; agricultural and industrial plant machinery, railway wagons and construction equipment. They are used in the manufacture of suspension and transmission systems, steering columns (including power‐assisted steering systems), gearboxes, stabilizer bars and shock absorbers.
12
6. VALLOUREC – AN INTEGRATED OPERATION IN BRAZIL
V & M do BRASIL has two major subsidiaries, one of which specializes in iron ore extraction while the other manages eucalyptus plantations for charcoal production. These subsidiaries form a fully‐integrated iron production chain that supplies the steel mill of V & M do BRASIL, and soon, that of VSB.
V & M MINERAÇÃO
V & M MINERAÇÃO (founded in 1955) is a subsidiary of V & M do BRASIL that extracts and processes iron ore. It owns the Pau Branco mine in the Serra da Moeda, near the town of Brumadinho in the state of Minas Gerais. Thanks to the excellent quality of the ore from its mine, the company is not only able to fulfil the needs of the V & M do BRASIL plant, but also supplies raw materials to other steel mills, mining companies and iron and scrap producers. It now also supplies VSB. All V & M MINERAÇÃO businesses comply with the strictest health, safety and environmental standards of the mining industry.
V & M FLORESTAL
V & M FLORESTAL (founded in 1969) is a wholly‐owned subsidiary of V & M do BRASIL, with responsibility for planting and managing the 120,000 hectares of eucalyptus plantation which produces charcoal to feed the V & M do BRASIL blast furnaces. It now also supplies VSB and is developing its plantations to triple its production by 2016. As well as being a pioneer in the management of this type of plantation, the company is at the sector's technological cutting edge. V & M FLORESTAL has been awarded the Cerflor (Forestry Management Certificate) by Bureau Veritas, to attest its compliance with regulations, efforts to preserve biodiversity and commitment to serve the social and economic development of the region where V & M FLORESTAL grows its forests.
13
7. VALLOUREC ‐ A COMMITMENT TO SUSTAINABLE DEVELOPMENT IN BRAZIL
Reducing greenhouse gas emissions V & M do BRASIL uses plant biomass to produce the world's cleanest pig iron. The biomass‐based production cycle includes: A forest grown specifically for biomass: 120,000 hectares of eucalyptus have been planted in accordance with social and environmental best practices, preserving areas of natural vegetation and recycling the fertilizers produced by the process (wood vinegar and slag). As they grow, these trees consume carbon dioxide (CO2), which helps to reduce the greenhouse effect. Carbonization: Wood is transformed into charcoal, which in the blast furnace acts as a reducing agent and supplies energy to the pig iron production process. Iron manufacture: Carbon and charcoal effluents are used to turn iron ore into pig iron, which is in turn made into steel. Using charcoal rather than coke makes for a very good carbon assessment, because the quantity of carbon dioxide emitted during steel production is more than offset by the amount absorbed by the forest. Thus, Vallourec received the label "tubo verde" (green tube) for this process.
"Espaço Tubo‐Verde" – A dedicated environmental training centre This centre is dedicated to environmental training, with a methodology that stresses the importance of promoting an awareness of sustainable development among all employees, and explaining how everyone can play their part.
Diversified plant and wildlife Certain V & M do BRASIL activities have a direct link with biodiversity, and the group has been taking very practical steps in this area for a number of years. A good example is the case of V & M FLORESTAL (sheet 6), that cultivates eucalyptus plantations for V & M do BRASIL and VSB. Every effort is made to preserve biodiversity using simple methods such as maintaining ecological corridors between the native forest and plantations, to ensure that wildlife movements are not impeded, or scientific projects researching on forest insect predators. V & M FLORESTAL has set up programmes to monitor plant species and wildlife in the surrounding forests, in conjunction with the university of Minas Gerais and Lavras. It teamed up with several partners to carry out research on local birds: 400 different species were
14
reported, representing 40% of the total number of species listed as being present in the State of Minas Gerais. Research on bees revealed the possibility of a good adaptation. Last but not least, a few endangered species of mammals were identified by a mammal monitoring programme. Another Groups’s subsidiary, V & M MINERAÇÃO (sheet 6), operates a mining business based in the town of Brumadinho, around 50 km from the Belo Horizonte industrial complex. The company is deeply committed to environmental restoration in mining regions. Accordingly, in 2010, some 10 ha of mined surfaces were returned to nature after being planted with species of trees, grasses and leguminous plants native to the region. Over the years, the company has restored more than 170 ha of mining land and 84,850 seedlings were planted. Employment
V & M do BRASIL is the largest employer in Belo Horizonte, the capital city of what in economic terms is Brazil's third‐largest state. A total of 4,393 people are employed at the plant. When the other Vallourec Group companies (i.e. V & M FLORESTAL and V & M MINERAÇÃO) are included, the total number of direct jobs rises to 6,110.
Social and corporate policy
V & M do BRASIL attaches special importance to the health and safety of its employees and develops an active policy to ensure their training and personal development. Moreover, aware of the facilities’ importance to the local communities, the company has developed close and long‐term relationships with them, through numerous initiatives. Employee shareholding plan Since 2008, Vallourec expanded the scope of its employee shareholding plan "Value", to include employees of its Brazilian entities. These operations have been a resounding success year after year, reflecting the commitment of the Brazilian employees to their business and their confidence in the Group's strategy and future.
15
8. VALLOUREC AND THE BRAZILIAN OIL INDUSTRY
A longstanding relationship with Petrobras The cooperation between V & M do BRASIL and the national oil company Petrobras dates back to the earliest days of the Barreiro plant, which was inaugurated in 1954 to supply tubular goods to the emerging Brazilian oil industry. This long‐term relationship has led to a strong bond being forged between the two companies, with extensive cooperation. In this context, V & M do BRASIL develops new products to meet specific requirements for the most challenging fields in which Petrobras operates. In addition to its network of VAM licensees providing accessories threading, repair and inspection of VAM premium connections, V & M do BRASIL has set up storage facilities at several Petrobras exploration and production sites. Thanks to these facilities, Petrobras enjoys just‐in‐time deliveries that reduce its storage costs and procurement lead times. Substantial markets: the Lula (ex Tupi), Carioca, Jupiter and Corsa fields News of the discovery by Petrobras of several pre‐salt oil fields in an area located 250 km off the coast of Rio de Janeiro was a major event, due to the size of the estimated reserves. The most well‐known of these fields – Lula (ex Tupi) – is the world’s second largest discovery over the last twenty years, with estimated reserves of 5 to 8 billion barrels. In total, the pre‐salt fields represent a potential of 50 billion barrels, to be compared to Petrobras previously estimated reserves of 15 billion. The Brazilian company will require special‐purpose tubes in order to access hydrocarbons that lie under 1,500 to 3,000 m of water, 2,000 m of sand and rock and 2,000 m of salt. Such an environment presents an increased risk of tubes becoming crushed, in addition to the usual pressure, temperature and corrosion issues involved with deep offshore drilling. Working closely with Petrobras, Vallourec has set up an R&D team to develop innovative solutions to cope with these extreme conditions. Thus, the research centre located in Belo Horizonte, Brazil, devotes significant human and technical resources to the development and industrialization of high‐specification steel grades and new VAM connections. A branch of this Centre is being installed in the research complex of Petrobras in Rio de Janeiro.
16
9. VALLOUREC IN BRIEF
Vallourec is a world leader in the production of seamless steel tubes designed primarily for the oil & gas, power generation and petrochemical sectors, as well as other industrial applications.
Specializing in the most complex and demanding industrial applications, Vallourec is a
world leader in the buoyant energy markets (oil & gas, power generation and petrochemicals), which represented 78% of its 2010 sales.
Specializing in high‐end products, the Group is today a supplier of reference
throughout the world, generating 74% of sales outside the European Union. Vallourec’s main customers are:
Oil & Gas Companies Aramco Petrobras Sonatrach Total
Oil & Gas Distributors Champions Pipe Pipeco Services Premier Pipe Pyramid
Trading Açotubo Buhlmann Salzgitter ThyssenKrupp
Power Generation Alstom Areva BHR Group Dongfang
Vallourec has more than 50 production units in more than 20 countries.
Vallourec employs over 20,000 staff worldwide.
2010 sales: € 4.5 billion
Production volume: 1.89 million tonnes in 2010
The Group is upstream integrated, producing enough steel in‐house to satisfy more
than 80% of its requirements. Vallourec is listed on the Euronext Paris Eurolist (section A) and is included in the CAC
40 index. Vallourec is a French limited liability company (société anonyme) with a Management
Board and a Supervisory Board whose registered office is in Boulogne‐Billancourt, France.
17
10. GROUP MARKETS AND STRATEGY
Markets
Vallourec designs and develops tubes and special joints (VAM product line) for the Oil & Gas industry; these products are used for drilling operations and to equip oil and gas wells. Vallourec is the worldwide specialist in products for deep, difficult, corrosive and deviated offshore wells.
Vallourec is also the world leader in the production of tubes for both coal‐fired and nuclear power plants.
Vallourec occupies a leading position worldwide in many applications for the
mechanical engineering sector (lifting equipment, machine tools, etc.). The Group also offers a wide range of tubes for petrochemicals installations,
particularly refineries, as well as tubular products for the automotive, mechanical, construction and other industries.
Strategy Growing Energy focus through a global offer of premium tubular solutions:
o 78% of 2010 sales dedicated to Energy o Growing demand for premium solutions due to increasing complexity and
growing quality and safety requirements
Global footprint o Sales generated outside Europe grew from 31% in 1999 to 74% in 2010 o More local presence in fast growing markets (latest developments : new
integrated mill in Brazil, OCTG finishing operations in Nigeria and Indonesia, drill pipes manufacturing in the United Arab Emirates, new projects in China, acquisition of Zamil Pipes in Saudi Arabia)
Innovation
o Vallourec has 5 corporate R&D centres and invests more than €70m per year in R&D
o Strong R&D partnerships with Sumitomo of Japan, Tubacex of Spain, Universities and customers around the world
18
11. VALLOUREC’S RECENT HISTORY
The Group has changed profoundly since 1997, the date of the merger with Mannesmann which resulted in the formation of the world leader in seamless tubes. The ensuing developments, particularly in Brazil, strengthened the Group’s international base, enabling it to obtain key positions, notably in high‐growth Energy markets.
1997: creation of V & M Tubes by merging the seamless tube businesses of Vallourec (55%) and Mannesmann (45%) in a joint venture.
2000: acquisition of Mannesmann’s Brazilian business, renamed V & M do BRASIL.
2002: acquisition of North Star Steel, renamed V & M Star, in the United States.
2005: purchase from Mannesmann of the 45% stake not then owned in V & M TUBES.
2006: creation of VAM Drilling following the acquisition of the American company Omsco and the purchase of SMFI in France. Vallourec became the world number two in drill pipes.
2007: development of Vallourec’s operations in China, with the construction of a finishing unit for power plant tubes and an OCTG threading unit.
2007: decision to invest in a new integrated plant in Brazil (VSB).
2008: acquisition of three premium OCTG companies in the United States.
2009: increase in Vallourec’s participating interest in PT Citra Tubindo, the leader in premium OCTG threading in Indonesia.
2009: development in the Middle East, via acquisitions of drill pipe businesses (DPAL and then Protools).
2010: announced construction of an OCTG threading unit in Saudi Arabia.
2010: decision to invest in a new pipe mill in the United States, to support the development of unconventional gas drilling.
2010: acquisition of Serimax (France), a specialist of welding solutions for offshore line pipe.
2010: new developments in China, including an expansion in capacity at V & M Changzhou, a new Valinox Nucléaire investment project in Nansha and the acquisition of 19.5% of Tianda Oil Pipe.
2011: announced acquisition of Zamil Pipes, the first processing company of seamless OCTG in Saudi Arabia.
19
For further information, please contact:
Press Relations Caroline Philips
Vallourec Tel: +33 (0)1 41 03 77 50
E‐mail: [email protected]
www.vallourec.com