The applicant, Salzgitter Flachstahl GmbH, is an affiliated company of the publicly traded holding Salzgitter AG and produces flat-rolled strip steel mainly for customers operating in the European automotive industry. The holding Salzgitter AG is one of the leading producers of steel and technology products in the European Union (EU) with consolidated external sales revenues of more than EUR 9 billion and more than 25,000 employees in 2018. The applying legal entity, Salzgitter Flachstahl GmbH, holds important key competencies of the corporation and thus represents central production processes.
In terms of the organizational structure, Salzgitter Flachstahl GmbH is linked to the strip steel business unit (see Figure 4). In addition, the holding maintains four other business units as well as a division dealing with various industrial contribution networks and consolidated business analysis. These other business units carry out complementary operations in the field of plate and section steel production, tubes, trading and technology for specialized solutions. However, those business areas that exist besides the strip steel business unit are outside the scope of this AfA.
Subject to the application is specifically the production of strip steel by Salzgitter Flachstahl GmbH (see Figure 4). The applying legal entity employed more than xxxxxxx (>5,000) people in 2018 (end of year) and generated external revenues of approximately EUR xxx (1-5) billion in the sale of around xxxx (1-5) million tons of strip steel
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26 Figure 4: Structure of Salzgitter AG
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27
3.1.1 Production affected by REACH Authorisation
Salzgitter Flachstahl GmbH (in this report also referred to as Salzgitter) produces more than 250 different high-quality grades of steel for various sophisticated applications. With 67 different production procedures, Salzgitter supplies custom-made solutions and thus customer-specific production of hot-rolled and cold-rolled coils, galvanized and coated sheet, laser-welded tailored blanks, corrugated sheets, coffers, sandwich and acoustic elements. Based on approximately 100 production relevant parameters, the number of possible product variations is extremely high.
Figure 5: Depiction of strip steel production output of Salzgitter Flachstahl GmbH
As shown in an overview of Salzgitter’s production process in Figure 6, the portion of Cr(VI)-dependent production processes is related to cold-rolled products (see the green box in Figure 6). This is because the rolls used for cold rolling require functional plating with chromium trioxide to achieve highly specific surface properties of the roll.
There are two types of rolls that require chrome plating and according to these two types of rolls there are also two uses of chromium trioxide covered in Salzgitter’s AfA. Both uses are interconnected in the process of cold rolling as the two types of rolls are used complementarily in nearly 100% of the Cr(VI)-dependent strip steel production. In a first step, cold rolling with smooth chrome plated rolls (i.e. related to use 1) is performed before the treated strip steel is passed on to a further rolling step involving structured rolls with surface topography (i.e. Pretex® plated rolls related to use 2).
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28 Figure 6: Overview of the production process
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29 Overall, the share of production output in tons that is dependent on Salzgitter’s uses of chromium trioxide adds up to approximately XX % (26-50%) based on 2018 data (see orange product shares in Figure 7 in comparison to the green box in Figure 6.
Figure 7: Production output by product type with Cr(VI)-dependent production in orange shades, 2018
A more detailed analysis of the corresponding financial figures for use 1 and use 2 of the applicant and the market in general is presented in sections 3.3 and 3.2, respectively.
Prior to this, the following sections will provide an overview of the manufacturing facilities and the supply chain for better understanding of Salzgitter’s value adding activities.
3.1.2 Relevant production facilities
It is important to understand the connection of Cr(VI)-dependent cold-rolling activities with a wide range of other processes implemented at the same production site. Salzgitter’s production plant located near the city of Salzgitter in Germany indeed exerts a wide variety of processing competences integrated in one large compound of steel works.
The production of steel requires several energy-intensive steps to convert raw material such as iron ore and coking coal to liquid raw iron (also called pig iron) and then raw iron to crude steel, which will be treated further to achieve desired quality grades before being casted and rolled. As indicated in Figure 6, the different steps of crude steel production from raw materials represent one important activity of the manufacturing site in Salzgitter.
This substantial extend of manufacturing processes is further complemented by the attached facilities for casting and rolling (incl. cold-rolling) of steel. As part of its integrated structure, the plant also operates an own power plant generating energy for its operations and water works used in the cooling process (see Figure 8).
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30 Figure 8: Characteristics of integrated steel production
Carefully planned circulation and recycling processes of electricity, water, gas, steam and materials contribute to making Salzgitter an awarded forerunner in the field of energy efficiency while also enhancing resource conservation. Salzgitter has accomplished great achievements in minimizing CO2 emissions and maintaining emission levels significantly below those of global competitors. This has been implemented through continuous investments in modern process engineering.
At the same time, the plant’s installation engineering provides key competencies that allow to achieve smallest tolerances in metallurgic analysis and measurement so that highest quality grades of steel can be produced. As mentioned before, such assets allow the applicant to supply a multitude of customers with different kinds of strip steel intended for sophisticated applications.
The following aerial view of the plant further illustrates the complementary organization of the production compound and reports annual facility capacities.
Figure 9: Aerial view of steel production in Salzgitter
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31 Figure 9 shows that the cold-rolling mill is located in the north-east of the compound. As explained before, this facility is relevant to this AfA as chrome plated rolls find their application in the cold rolling of manufactured steel. Due to the onsite integration of a chrome plating facility not far from the cold-rolling mill, the maintenance of rolls can benefit from local energy generation while also eliminating the need for road transports of large instruments (i.e. the rolls) to off-site providers of hard chrome plating services. In addition, the inhouse-implementation of quality control is deemed an important strength of the plating process due to high internal technical expertise. The plating facility is equipped to implement both kinds of plating processes (use 1 and use 2) in the same plating reactors.
In order to maintain the functional properties of the rolling process, rolls need to be refurbished on a regular basis, for which the roll will be deinstalled, sent to the roll grinding facility and subsequently to the plating facility. For cost-efficient production, a number of rolls rotate through a use-maintenance cycle so that a freshly plated (spare) roll will always be ready to replace the deinstalled roll that is being sent to refurbishment. Table 5 shows the number of rotating rolls and plating processes per month Both uses of chromium trioxide, use 1 and use 2, are administered by the same group of XX (10-20) employees, corresponding to XX (1-10) full-time equivalent (FTE) employment positions per use.
Table 5: Figures related to cold-rolling equipment maintenance
Facility figures
corresponding to XXXX (10-20) FTE FTE employment per use XX (1-10) FTE XX (1-10) FTE
The following section will describe in more detail the upstream and downstream supply chain that is relevant to the scope of this application.
3.1.3 Supply chain
The analysis of the supply chain that is directly or indirectly dependent on uses of chromium trioxide indicates which actors could be affected by a potential loss of a substance use permission.
3.1.3.1 Upstream supply chain
Salzgitter’s upstream supply chain is strongly characterized by the company’s activities of steel production on site. Related suppliers of raw materials and other inputs are mainly based in the EU. Table 6 provides an overview of the different inputs and the corresponding share of goods sourced from within the EU.
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32 Table 6: Sourcing of input material in the EEA and globally
Input material No. of suppliers No. of EU suppliers
Share of order volume in EUR placed within EU
Iron ore/pellets XX XX Xxx% (26-75%)
Coal XX XX Xxx% (1-50%)
Scrap XX XX Xxx% (51-100%)
Alloy XX XX Xxx% (51-100%)
Aggregates (limestone, dunnite, dolomite,
etc.)
XX XX Xxx% (51-100%)
Chromium trioxide XX XX Xxx% (51-100%)
In addition, xxxx % of the chromium trioxide supply xxxxxxxxxxxxxxxxx is sourced from EEA-based agents.
This data shows that Salzgitter creates significant demand for goods and services at local and regional scale. Consequently, the upstream supply chain of the analyzed production processes in this AfA is to a high degree relevant to the EU economy and EU economic performance.
3.1.3.2 Downstream supply chain
The downstream supply chain of the applicant distributes authorization-relevant strip steel products to customers in different use sectors.
Figure 10: Downstream supply chain of Salzgitter Flachstahl GmbH
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33 Based on revenue data of 2018, it can be shown that the main share amounting to XX % (76-100%) of Salzgitter’s production output was supplied to customers in EU countries.
xxxxxxx % (1-25%) was dispatched to third countries worldwide.
One important receiving sector is the automotive sector which accounted for XX % (60-90%) of sales revenue in 2018. Related customers include not only vehicle manufacturers but also automotive suppliers, secondary cold rollers and steel service centers (i.e.
traders). Additionally, approximately XX % (1-25%) of sales in 2018 were generated in the industry, for example, related to household appliances. Other customers, including manufacturers of pipes and construction steel, accounted for around XX % (1-25%).
With regard to the distribution channel, the majority of XX % (51-75%) of shipments was carried out via railway transport in 2018. Another important mean of transportation was road traffic, accounting for CC % (26-50%), while the residual amount of transport processes was implemented via sea shipping.
Based on the presented figures it can be concluded that strip steel manufactured by Salzgitter is supplied to a variety of customers in important economic sectors, with a large share of production output being delivered within the EU.