The advent of steel quality control in AngolaOctober 3, 2022
Luis Diogo, general manager of Fabrimetal, talks to The Energy Year about making the oil and gas sector’s supply of scrap to Angola’s steel industry more effective and the company’s main products and commercialisation strategy. Fabrimetal manufactures thermo-mechanically treated steel reinforcement bars, sourcing a majority of its scrap from the oil and gas sector.
What sort of variables affect the oil sector’s scrap supply to the steel industry in Angola?
The oil sector must be the biggest supplier of scrap because it is Angola’s largest industry and it provides high-quality material. When the oil sector increases its activity, normally, companies replace old structures. All of those pipes and metallic structures that get replaced are raw material for us. More investments in the oil sector mean more opportunities for us. Right now, Fabrimetal is increasing its production capacity, so we need to purchase more scrap.
As a steel manufacturer, we want Angolan oil companies to reach out to us when they have old structures that are at the end of their lifecycle, reducing the cost of our raw material which will provide benefits in our final production.
How can oil and gas companies channel the scrap supply in a more effective manner?
Oil and gas companies can contact steel plants, and analyse which of them have better conditions and procedures in place in terms of safety and the environment. We are nowadays receiving some scrap directly from oil companies, but this problem is something the country needs to tackle because there is global competition for raw materials and they need to be used by national producers.
In the past, no one in Angola traded steel scrap. Oil and gas companies sent it to a third party that in turn exported it because no one was using it. When steel manufacturing started, we fought a lot with local authorities to ban all exportation of scrap metal. Finally, it happened.
Fabrimetal needs around 600 tonnes a day. Without raw material, we cannot do anything. And I think this is good for the country because it’s a circular economy: the waste comes in, and with it, we make high-quality products. We recycle steel scrap into a valuable resource.
Are there any limitations on melting steel coming from oil and gas production?
Some products coming in from the oil industry have specifications such as a high level of chromium which make it difficult for us to stay in line with our standards. For example, our minimum carbon level is 0.24% and we cannot have more carbon in it, because otherwise, it would not qualify for the Angola Quality standard – NA 34:2016.
As part of our expansion, we will introduce new technologies in the melting process at our upcoming steel plant that will allow us to receive almost any kind of scrap and process it.
How is Fabrimetal planning to target markets beyond Africa?
Besides increasing our steel production capacity, we want to add more capabilities: we just finalised the purchase of eight acres where we will build one new steel plant which will be dedicated solely to the export market.
Although the moment is favourable, our production is not ready to reach European and other international markets, as we still need to adapt our structures to target it, especially in terms of standard size, when we sell billets. In Angola, we are producing with 100×100-section billets, while other markets receive 6-metre ones with 130×130-centimetre billets. Europe may take around 10 years to reactivate after the Ukraine war, and this is one opportunity. In the meantime, we want to export more to nearby countries such as the DRC, Namibia, Zambia and Mozambique, as well as Botswana, where we will start soon.
How has the steel sector performed in recent years?
Construction companies are our biggest customers. The performance of the construction market is the biggest indicator of how a country’s economy is doing. Until 2014, Angola had a monthly consumption of steel rebar of around 25,000 tonnes. Then, due to the financial crisis and later the pandemic, it decreased significantly.
Now, we are optimistic in terms of exports, and for 2022 we set a target of exporting 60,000 tonnes, with an average of 5,000 per month. In 2020, we exported around 20,000 tonnes of steel. In 2021, the market started picking up, leading to an increase in the local demand for steel. We are close to achieving 95% of our production capacity here in Angola! We have 15,000 tonnes a month of capacity.
What are the company’s main products and commercialisation channels?
We melt steel scrap and obtain billets as semi-finished products, which are our main export. We process billets: either rolling them to produce rebars – which are in high demand from construction companies – or producing angles, flat bars and beams. We have the capacity to provide clients with high-quality products, as well as frequency and consistency in supply, reducing the importation of these products.
We have three main channels: the big construction companies that can purchase directly from us and that have huge volumes; the re-sellers, that can place the product all around the country; and, last but not least, we have a small portion within the informal market. However, since 2016, 95% of our commercialisation has been in the formal market.
How important are certifications in order to target energy-related projects?
If you don’t have product certification, you will not be able to sell anything to the energy industry. In the past, there was no quality control, but the government’s new regulatory framework will force companies to produce steel products according to certain standards, giving them three years to comply – and if they don’t, it will not allow them to operate. This is the birth of steel quality control in Angola.
Our certifications allow us to, directly and indirectly, supply projects like the Barra do Dande Oceanic Terminal and the Cabinda Refinery. Our steel is in all the major projects in Angola. For this market, besides price being important, the key is the quality and the capacity to supply the projects, and Fabrimetal has all of this! Our customers know this.
What is your strategy for penetrating the renewable energy sector?
Solar panels are a huge opportunity for steel manufacturers. Currently, one big project is going on in the south of Angola. Steel is a fundamental part of solar panels’ structure and foundation.
We also see renewables as a key opportunity to increase and normalise our power supply. Our requirement is 30 MW, which we have in place, but we will increase capacity, so we need more.
How does Fabrimetal plan to reduce its carbon footprint?
We have a fully committed department only focused on HSE, and we have put into place many initiatives to be greener, starting by increasing our garden space. We invested a lot in a system that can reduce emissions by 85-90%, although we still get some waste in the form of dust and slag coming from our melting process. In other countries, this waste can be used for cement or concrete, but here nothing is being done. Thus, we invested in a machine to process this waste, aiming to recover 15% of it and melt it again.