Turning Around A Loss Making Steel Plant

Iron & Steel Company of Trinidad & Tobago (ISCOTT), a Steel plant belonging to the Govt. of Trinidad & Tobago, West Indies, had become Sick & was undergoing serious financial losses of almost US$100,000 a day, and the local govt. was eagerly looking forward to foreign entrepreneurs to take over the sick plant & operate it. Despite a consortium of German Companies who took over this plant, yet the operations of the Steel Plant (ISCOTT) could not be improved.

The local Electrical power supply company had imposed restrictions on the operation of the Electric Arc Furnaces, four hours in the morning peak period and four hours in the evening peak period. That means, effectively the Electric Arc Furnaces, which were the main steel producing units, were operating for 16 hours only/day. The major issue concerned was the restrictions imposed on the no. of operating hours on the main steel producing units, viz. Electric Arc furnaces, which had made the Steel Plant Sick.

At this point we need to look into why this restriction was imposed by the local electricity supply company.

ISCOTT’s Background

Early 1980’s the Govt. of Trinidad & Tobago, West Indies, had envisaged to build & operate a large steel complex in Trinidad, to convert Iron ore into finished steel products and export. In view of the local availability of natural gas, the facility envisaged, direct reduction of iron ore into pellets and subsequently converting pellets into steel through Electric Arc Furnaces route, and Rolling Mills into exportable finished products. The melt shop consisted of 2 Nos. 40 MW each Ultra High Power (UHP) Electric Arc Furnaces (EAF) with nominal melting capacity of 90 MT per heat with electrical power being supplied by the local utility company. UHP arc furnaces are large single power consuming loads for any power supply system. When a furnace trips during melting operations a large amount of active power, in this case 40 MW, is thrown ‘off’ from the grid resulting in power frequency variations. A similar phenomenon will occur during the initial boring stage of the scrap / DRI pellets when the arc power will be fluctuating rapidly. These fluctuations had serious impacts on the stability of the power system, more so during the peak periods.

Fig (1) shows the plant’s electrical layout. The available local electric power was from an isolated weak grid consisting of 365 MW generation capacity, which was not able to cater the envisaged steel plant’s power requirements. In view of the large steel complex coming up, the local utility company decided to double its capacity by an addition of 365 MW Gas Turbine Generators.

Operation of Large UHP Electric Arc furnaces call for a grid having a Short Circuit Current (SCC) level of at least 50 to 100 times the total MVA rating of the Electric Arc Furnaces in the plant. Unfortunately, despite doubling the capacity of the power generation, the available SCC on the grid was only around 10 times the furnace capacity, which was very low and the poor response of the gas turbines would not be able to cope up with the fast changing dynamic effects of the arc furnace loads, which would certainly affect other consumers hooked up onto the grid. One solution is to strengthen the SCC capacity of the grid by installing more generators, which calls for a huge capital investment, which the power company cannot justify. The other solution was to limit the operation of EAF’s in such a way that at any one point of time only one furnace can be in steel melting operation & another furnace used for only refining process in which case, it would severely affect the productivity of the Steel Plant. Hence, the utility company imposed certain stringent technical requirements to be met by the steel plant in terms of Reactive power demand, Flicker voltage, Power factor, permissible Real power variations, Frequency variations, harmonic Distortions and system unbalanced loads.

Steel plants similar to ISCOTT, are in operation all over the world and they have not encountered such severe restrictions, because these plants are getting power from relatively strong grids. Thus, ISCOTT has become a unique case in view of its weak power grid and had to provide proper compensating equipments to counter the following:

• Poor power factor,
• Unbalanced loading of the phases,
• Harmonics generation,
• Flicker production.
• System frequency variations

As far as the other consumers connected to the grid are concerned, Flicker is the most important disturbance. But utilities which are using Gas Turbines for power generation, large Active Power swings lead to system frequency changes as well as cause mechanical oscillations in the gas turbines. Rest of the problems like poor power factor, unbalanced loading, harmonics & flicker production which are the result of the reactive power interchanges between the furnace and the grid, are taken care of by the use of conventional static VAR equipments (SVC). ISCOTT installed 65 MVAr Static power compensation equipment (SVC) for each of the EAF. Fast acting thyristor switching used in the SVC is able to compensate within the same half cycle, the requirement of the continuously variable reactive power, thus minimising the generation of flicker voltage. Further the SVC provided were able to filter the 2nd, 3rd, 4th, 5th, & 7th harmonic generated during the furnace operation. Similar Steel plants all over the world use SVC as a standard compensating equipment to take care of the above disturbances.

The other critical requirement of the utility was to compensate the sudden shock loadings imposed on the grid, such as Active Power reduction caused by the tripping / switching ‘off’ of the arc furnaces,Electrode  breakages, scrap  collapse during  melting, emergency  switchings etc.,  which  cause  sudden  frequency  variations  beyond  the  prescribed limit of 0.24 Hz. Load  vs  Frequency  controls  or  the  governors provided  for  the  Generators, were  slow  in  response &   could  not handle  such rapid  Active Power  (Real)   fluctuations of  the  furnace  operation.  These sudden  real power changes of  the  furnaces had other  detrimental  effects  such as causing  unusual mechanical stresses on the alternator windings, gas turbine  blades and  gas turbine shafts etc., affecting  their  lives.  To  avoid  this  situation ISCOTT  had to  think  of  providing  a  specially  designed  control  system, which would  ensure  a  constant  Real Energy  flow of power from  the  generators   and  at  the  same  time    allow   normal  operations  of  the  furnaces with rapid   real power  fluctuations. This  is a  unique  requirement  faced  by ISCOTT, which  other  similar  steel  plants around  the world  are  not  facing (due to  their  strong utility grids  from  where they  get  the power).

Static Watt Compensation (SWC)

In order to meet the above requirement of the utility, ISCOTT had approached Siemens Germany, who supplied a specially designed Thyristor controlled “Static Watt Compensator (SWC)” consisting of total 30 MW Resistor Bank, (30MW comprised of ten nos. banks each having a resistor capacity of 3 MW), connected in parallel. (See Fig.1). The function of this static watt controller is to ensure a fairly constant active load on the generator, i.e., if there is a tripping or sudden decrease in the active load of the furnace in any instant, the differential active load required in order to maintain a constant active load on the generator bus bar, is drawn by the thyristor modulated resistor banks instantly, thus the generator bus bar would not see the decrease / sudden changes in the active loads demanded by the furnace. In the event of the furnace tripping, 40 MW of load suddenly goes out on the generator bus bar, which is not desired. At the instant of the furnace switching ‘off’, the entire 30 MW load in the form of resistor banks will automatically be switched ‘on’ to the bus instantaneously and over a period, resistor banks in steps of 3 MW each is taken out of the grid, thus ensuring that the load on the generators are gradually reduced without harming the generators or the system frequency.

If the max. real load on the grid is P and the instantaneous drawal of power by the furnace at any instant is say P(Fur) and the instantaneous compensatory power drawn by the resistance bank is, say P(Res), then

P = P(Fur) + P(Res) is the requirement to be met out by the Static Watt Controller (Fig.2). The Thyristor controlled Resistor bank is shown in Fig.3.

With the successful commissioning of the Static Watt Compensation (SWC) specially designed for ISCOTT as well as the Static VAR (SVC) Compensation equipments installed, the much apprehended problems of the weak electricity grid were all overcome and ISCOTT was allowed to operate round the clock.

This was the vital requisite, which LNM (Lakshmi. N. Mittal) was looking for, before deciding to take over this sick Steel Plant in 1989. This was his first acquisition of a sick steel plant.

The plant operating round the clock increased the productivity of the plant. Adopting innovative practices and cutting edge technology, LNM managed to turn ISCOTT into profitability in the very first year of its takeover. Turning around ISCOTT, a sick steel plant, in to profitability in the very first year, also became a turning point in the career of LNM. Looking at his success, the Mexican Govt. handed over its sick steel plant (Sicartsa II) in 1991.

Thereafter, series of acquisition of ‘Sick Steel Plants’ all over the world and adopting ‘Thinking out of the box’-strategy, coupled with business acumen and excellent financial management, supported by his own hand picked management team helped him in forging his own Steel Empire. LNM had a clear vision that building a new steel plant from green field would not only involve huge capital, but also the gestation period, which is around 7/8 years for the plant to stabilise, would also cost additionally. The govts of sick steel plants were eager to handover a ready plant with experienced manpower on a platter at prices sought by him. That is why LNM chose brown field strategy over green field strategy, and the results were spectacular. Today, he is the world’s largest steel producer.

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