Investments

Investment volume in the voestalpine Group in the past business year reached a new peak, as in 2015/16 a number of major future-oriented projects were either completed or were in the final implementation phase. In a year-to-year comparison, investments in 2015/16 were at EUR 1,310.9 million, 11.3% higher than in 2014/15 (EUR 1,177.8 million). The highest allocation of capital was to the Steel Division due to the construction of the direct reduction plant in Texas (USA), which is about to be commissioned. It is the largest-ever foreign investment made by the Group.

In addition to the investment in Texas, USA (see Chapter “Direct reduction plant in Texas, USA”), the Steel Division carried out a number of important projects during the business year 2015/16 at its production site in Linz, Austria. As a result, its investment expenditure rose compared with the previous year by 22.9% from EUR 570.6 million to EUR 701.1 million. The individual projects comprise both necessary maintenance and investment to optimize the division’s technology leadership position as well as its product portfolio.

The focus of maintenance activities was the scheduled major repair of blast furnace 5. The four-and-one-half-month reconditioning process began in mid-June 2015. The blast furnace was put back into operation by the end of October 2015. A major repair of the second of the two smaller blast furnaces (blast furnace 6) is planned for the business year 2016/17. The scope and duration of the repair will be similar to the one just completed in the past business year. As part of the investment project involving secondary metallurgy system 4, a new ladle furnace was put into operation in the fall of 2015 as well as an additional vacuum system. The entire facility has been fully available since January 2016.

Technology expansion at the steel plant in Linz is being finalized with the new continuous casting facility (CC8), for which ground was broken last July. As of the end of the past business year, masonry construction work had been largely completed. Once the new facility is put into operation, which is planned for the fall of 2017, combined with secondary metallurgy system 4, the capacity for vacuum-treated steel will be more than 4.5 million tons or more than 80% of the entire steel production capacity. In the Heavy Plate business segment, the replacement of the entire quarto rolling stand was undertaken between mid-October and mid-November 2015; this was a future-oriented investment, particularly since the new rolling stand was largely developed by voestalpine itself.

In the business year 2015/16, the Special Steel Division increased its investment in a year-to-year comparison by 14.1% from EUR 159.3 million to EUR 181.7 million. In the early part of the business year, an additional electro slag remelting (ESR) system was put into operation at the Hagfors location in Sweden in order to satisfy increasing demand for premium tool steel primarily from Asia. The majority of the division’s investment projects, however, were directed toward implementing the Special Steel Division’s key strategy of dramatically expanding its service offerings. For example, in the Value-Added Services business segment, the sites in Kattowitz, Poland, Shanghai, China, and Cleveland, Ohio, USA, were substantially expanded; the investment focus was on expansion of heat treatment and processing capacity.

An additional focus was the roll-out of the high-tech Eifeler coating technology, with new coating centers being built in both Cleveland and Pune, India. In Singapore, a new branch was opened in the past business year that will focus on the oil and natural gas industries. The establishment of a center for additive manufacturing of components (3-D printing) in Düsseldorf was new territory from a technology standpoint. While the concept of this technology has already become familiar, the technology itself is still at the very beginning of its broad-based market entry phase. An important pillar is the division’s metallurgical expertise in the production of high-quality powdered metal.

The investment expenditure of the Metal Engineering Division declined in a year-to-year comparison by 5.8% from EUR 269.0 million in the previous year to EUR 253.3 million. All of the division’s recent major investment projects were either already successfully completed in the past business year or are currently in the run-up phase. For example, in January 2016, the new walking beam furnace, the core piece of the rail rolling mill, was already put into operation after a construction period of only 19 months. This high-tech facility, which is unique worldwide, makes it possible to not only considerably lower energy consumption but to produce products with narrower profile tolerances. In March 2016, a new manufacturing facility was opened in Suzhou, China, which will offer high-quality wire solutions for sophisticated customer applications; this plant has two drawing units for cold extrusion wire.

The division’s current most significant project, both as far as investment volume and strategic importance are concerned, is the construction of a new, technologically extremely sophisticated wire rolling mill (including walking beam furnace) in Donawitz, Austria. The facility, which is currently in the run-up phase, will replace the current wire rolling mill, which was built in the 1980s, as soon as it has successfully completed the approval process. In the Seamless Tubes business segment, considerable investments were undertaken to expand and improve the quality of the product portfolio.

Investment activity in the Metal Forming Division in the business year 2015/16 showed a slight downward trend, with a decline by 1.4% from EUR 169.8 million to EUR 167.5 million. Investments, which were part of the comprehensive expansion and internationalization strategy, were focused primarily on the press-hardened steel segment (“phs-ultraform”), which is based on new technology. In the fall of 2015, the first such manufacturing facility outside of Europe was opened in Shenyang, China. In Cartersville, Georgia, USA, a facility of this type is currently in the start-up phase. This means that the Automotive Body Parts business segment has a total of eight “phs” lines for indirect hot forming of press-hardened steel in Europe, the USA, and China. In the past business year, direct hot forming of press-hardened steel based on “phs” technology also saw another future-oriented milestone with the construction of a pilot facility in Schwäbisch Gmünd, Germany. This first “phs” line for the direct process will begin operations in July 2016. On July 2, 2015, ground was broken for the second plant of voestalpine Europlatinen GmbH in Linz, Austria, as the existing plant has been close to reaching its capacity limits for some time. Construction took less than one year so that the new plant was able to recently begin operations earlier than scheduled. It produces laser-welded blanks that are used in the production of lightweight body components by the automotive industry.