AM ZENICA

FEATURE ARTICLE – MAY 2018

Commodities Steel
State Zenica - Doboj
Country Bosnia & Herzegovina
Location Zenica
Project Status Production
Start-up Year 1892
Ownership ArcelorMittal S.A. 92.00%, Bosnia & Herzegovina
(Government) 8.00%
Operator ArcelorMittal S.A.

Appraisal
ArcelorMittal has spent over US$210m reviving Zenica. With ageing infrastructure and a small nameplate capacity of
870ktpa the plant is unable to achieve economies of scale and relies on its secure low-cost iron ore from its adjacent mine.
ArcelorMittal has slated some US$50m to overhaul and sustain operations into 2030. ArcelorMittal resurrected ironmaking
facilities in 2008, after 17 years of lying dormant due to civil war. As an integrated plant, it holds a cost advantage over
EAF operations which would typically supply similar products to the market. However, with one blast furnace and two 100t
BOFs, Zenica is unable to reach the high outputs of its integrated European peers. Due to the operation’s proximity to
townships, over US$60m has been invested in ensuring environmental performance and compliance with European
standards.

AM Zenica at a Glance

2018 Summary Metrics 2018 Financial Snapshot

Pig Iron Production (Mt) 0.81 Revenue (US$m) 384.0
Crude Steel Production (Mt) 0.75 Raw Material Costs (US$m) 198.7
Crude Steel Capacity (Mtpa) 0.87 Crude Steel Cash Cost (US$/t) 365.1
Finished Steel Production (Mt) 0.72 NPV (US$m) 491.7

Introduction
ArcelorMittal Zenica owns and operates an integrated steel plant located in Bosnia and Herzegovina, covering an area of
2.9km². It is a subsidiary of the ArcelorMittal Group and is the only steel plant in Bosnia and Herzegovina. The plant
utilises the basic oxygen furnace (BOF) steelmaking process and has a crude steel production capacity of 870ktpa.
ArcelorMittal Zenica produces long and forged products mainly for the engineering and construction industrial sectors.

Processing
ArcelorMittal Zenica's principal ironmaking facilities include 630ktpa coke oven plant, 1.9Mtpa sinter plant, and a blast
furnace (BF) with 1.1Mtpa of pig iron capacity. The steelmaking shop has a crude steel capacity of 870ktpa and houses
two 100t basic oxygen furnaces (BOFs), a ladle furnace and a vacuum degasser, along with a billet and bloom continuous
casting machine. The plant also has a 100t electric arc furnace with a capacity of 800ktpa that is currently idled. Finishing
facilities include a 330ktpa bar rolling mill and a 450ktpa wire rod rolling mill. The site also accommodates a forge shop
and a power plant.
 AM ZENICA
FEATURE ARTICLE – MAY 2018

Production Summary Graph (Mt)

Product Quality
ArcelorMittal Zenica's products include wire rod and bar, rebar, mesh, lattice girder and classic construction armature.
Wire rod and rebar diameters range from 5.5-12mm and 6-32mm, respectively. The vacuum degasser allows the plant to
produce higher quality steel grades.

Logistics and Administration

ArcelorMittal Zenica uses coal, iron ore and scrap as raw materials. Iron ore and coal are mainly supplied from
ArcelorMittal’s mining divisions such as the Prijedor Omarska mine and the Ljubija mine. Scrap steels are sourced from
the domestic market. The plant utilises rail as the main method of raw material and product delivery and is approximately
77km away from Sarajevo, Bosnia and Herzegovina's capital city.

Operating Expenditure (US$m) Revenue (US$m)

Key Risks and Opportunities

Pollution and emissions remain a challenge for the site’s aged infrastructure which was not originally designed with
secondary dedusting systems. ArcelorMittal remain committed to the plant, spending more than EUR50m (US$ 61m) on
emission reduction projects. The company has also signed a EUR20m (US$24m) contract which will extend the life of the
blast furnace for 15 years. Once environmental issues are resolved there exists an opportunity for expansion of
downstream facilities whose capacity is currently surpassed by upstream ironmaking capacity. This could be achieved by
restarting the idled 100t EAF to receive a pig iron and scrap charge blend and constructing an additional casting machine
for increased liquid steel volumes.
 AM ZENICA
FEATURE ARTICLE – MAY 2018

Cost Curve

2018 Cash Cost Curve (US$/t)

Source: AME

Margin Curve

2018 Cash Margin Curve (US$/t)

Source: AME
ABOUT US

AME is a bridge between the complexity of on-site

engineering and commercial reality.
Gain real, actionable insight with our engineering and
financial models, valuations and market analysis.

Site Reviews
For operational improvement, financial assessment of
your asset or simply to achieve a better understanding
as an investor, you must have an engineering and
financial model.
Find out more

Strategic Market Study

Insightful analysis on infrastructure developments, supply
and demand mechanisms, price forecasts, product
specifications, premiums and discounts.
Find out more

Industry Production & Cost Study

Make better decisions with our detailed cost and
production data. Includes detailed analysis of historical
data, plus up to 15-year site-focussed forecasts.
Find out more

Find out how we can help fuel your strategic

decision making by visiting www.amegroup.com