Economic conditions for development of ironworks

Plan

1. Introduction. Iron and steel industry and its purpose

The metal production complex comprises mining, metal smelting, production of ferrous alloys and rolled metal products. It is the basis for the development of engineering.

The complex is made up of the mining industry, iron and steel industry and non-ferrous metal industry. The iron and steel industry deals with smelting cast iron and steel and rolling related products (rolled metal products).

The iron and steel industry is an important branch of the heavy industry, one of the major components of the country’s economy.

Hardly can there be found an enterprise that does not use products of this industry. Being the major consumer of fuel, electricity and water, the iron and steel industry has a great impact on all branches of economy. This industry includes extraction, beneficiation and sintering of ferrous, manganese and chromite ores; cast iron and steel production; rolling metal products, pipes; producing iron and manganese ore concentrates, electro ferrous alloys, pellets, fluxing limestone, refractory materials, and coke as the main type of fuel.

Not only does the iron and steel industry influences all branches of economy in Ukraine, but is an important industry that provides perfect export opportunities and, to a great extent, determines the export potential of our country (the iron and steel industry products account for over 40% of Ukraine’s export).

Ukraine has a number of large iron and steel plants, due to which the country ranks high among world’s ferrous metals manufacturers. All in all, the 2009 results showed that Ukraine took the 6^th place in cast iron production leaving the USA behind and the 8^th place in steel smelting.

The iron and steel industry comprises 200 enterprises, including 19 ironworks and plants, 12 pipe plants, 13 metal ware companies, 12 coke plants, 10 refractory plants, 12 ferrous metal enterprises and over a hundred specialised metal scrap and waste companies.

2. History of the iron and steel industry development

Our ancestors are known to have discovered the secret of smelting metal in the ancient times ((VII – V BC).

For example: near the former village of Hliupachi in Kyiv region archaeologists found the remains of a casting furnace for smelting iron, shares and coulters for ploughs, axes and scythes, swords and spearheads and arrows made from local white ore.

The outbreak of metal production is usually referred to 5-4 BC.

At the times of Kievan Rus the metal production and metal work reached quite a high level. Run-of-mine iron ore extraction was well-developed in Polesia, Galychyna and the Carpathian Ukraine in 14-18 AD.

In 1740 – 1750 there were nearly 50 mines in the Left-bank Ukraine. They produced 25 – 35 poods (1 pood equals to approximately 16.38kg) of iron per year.

In the Right-bank Ukraine blast-furnace manufactures appeared at the end of the XVIII century.

In XIV – XVIII centuries the iron production in hearths and small blast furnaces was spread on the territory of Ukraine in Polesia, Galychyna and in Poltava and Kharkov regions. In 1830 the number of artisan enterprises that melted local bog iron ore with charcoal in order to produce cast iron.

The first industrial blast furnace was blown in at Luhansk iron and steel works in1799.

Polesia saw the advent of the first blast furnaces at the end of XVIII. They were of small size and allowed people to smelt iron for castings from local bog ore on charcoal. However, at the turn of XX century all blast furnaces were closed centuries due to the depletion of mineral resources.

In the late 18th century there were attempts made to develop the ferrous metallurgy in the Donets Basin using local ores and anthracite coal, however they did not bring about the desired outcomes in spite of the fact that a number of ironworks were built, for example, Luhansk metal factory (1795-1796) Peter’s iron and steel works (now in Yenakiieve (1858-1861)), Lysychansk ironworks (1869-1870) and others.

The development of steel industry in Donbas was beset with many technological difficulties in smelting cast iron with anthracite coal and hindered by general economic underdevelopment and lack of labour force.

The 1861 reform changed the conditions for development of ferrous metallurgy in Ukraine and it became crucial to create the iron and steel industry that would use coking coal. Still using the behind-the-time equipment, the metallurgy of Ural could not satisfy existing economic needs of the Russian Empire, which urged the start of building the steel industry in the South, particularly in Ukraine. In the first half of the XIX century the iron ore deposits were found near Kerch. Due to this finding, in 1845 the government decided to build the Kerch Metallurgical Plant.

The Blast furnace at the Kerch Plant was erected in 1850 by engineer A.F. Mevius (the first professor of iron and steel making) who greatly contributed to solving issues relating to the possibility of smelting iron from local ores using some mineral fuel. It is in this plant where they researched the smelting using Donetsk anthracite coal.

However, this enterprise turned out to be economically inefficient because coal was delivered in the wheel transport which was very expensive. The Kerch Metallurgical Plant was destroyed during the Crimean War.

As was mentioned, the commercial steel manufacturing started to develop fast in Ukraine in the last 30 years of the XIX century with the industrial development of coal deposits in the Donets Basin and iron ore in the Kryvyi Rig and Kerch basins. In 1872 large iron and steel plants were built in Yuzivka and Sulina. These plants still used the local ores of Donbas. At the end of 1870 huge deposits of high quality iron ore were found in Kryvorizhzhia, later a railway line was laid to connect Donbas with Kryvorizhzhia, Nikopol and ports of the Black and Azov Seas. At the same time the iron and steel industry got off the ground in Ukraine, new plants were constructed: Alexander’s plant in Katerynoslav (1887), Dniprovskyi metal factory in Kamjansky (1889), Peter’s iron and steel plant in Yenakiieve (1897), pipe mill in Katerynoslav (1896), Mariupol (1897), Makiivka (1899) and others.

In 1900 Ukraine could pride itself on having 15 large works with annual production of about 1.5 million tonnes of metal. The iron and steel industry was developing rapidly in Ukraine and accounted for:

• 2.4 % of the total production of the Russian Empire in 1870;
• 27.3 % in 1890;
• 47.8 % in 1900.

The first iron and steel works appeared in Donbas that is near coal deposits. Later, when iron smelting technology improved, the steel production mainly shifted to the areas of iron ore deposits (in Kryvorizhzhia) and between the Kryvyi Rih and Donets Basin: in Katerynoslav, Olexandrivsk, Nikopol and other places.

In Ukraine, after a great surge in 1890, the ferrous metallurgy began to decline in the early 20th century. At the time of the global economic crisis in 1900-1903 many businesses went bankrupt, as the steel industry in Ukraine was nearly entirely financed by the foreign capital whose inflow was suspended to some extent due to the crisis. It was the time when the process of capital concentration began. There appeared a large industrial syndicate "Prodamet" which brought together 12 major enterprises engaged in ferrous metallurgy and accounted for almost 80% of steel sales. However, despite some slowdown in the growth and repeated economic crises, the ferrous metallurgy in Ukraine was gathering pace. New better railway lines linked Donbas and Kryvbas, the raw materials supplies were rapidly developing; the iron ore deposits in Kryvorizhzhia, coking coal in Donbas, manganese ore in Nikopol, limestone and dolomite in Donbas and the Dnieper region were increasingly exploited.

In 1913 Ukraine had 21 large iron and steel plants which operated 42 blast furnace, 72 open hearth furnaces, 28 converters and nearly 70 rolling and tube mills. In the late 19^th - early 20^th century Russia created a large metallurgical base in Ukraine. The level of the iron and steel industry of the Southern region was greater than that of the Urals industry in terms of production volumes, concentration and technical equipment.

In 1913 the South produced 69% of cast iron and 57% of steel in pre-revolutionary Russia.

During the First World War the better part of ferrous metallurgy enterprises in Ukraine were destroyed. So 1920 witnessed only 0.5% of iron and 1.7% of steel produced and 1.8% of rolled products as compared to 1917. The pre-war level was reached only in 1928-1929.

When introducing five-year plans, the Soviet authorities attached a great importance to the ferrous metallurgy as a major base for the entire industry. The USSR state plan put top priority to developing metallurgical base in the Eastern regions of the USSR (the Magnitogorsk, Kuznetsk complexes) at the expense of development of ferrous metallurgy in Ukraine. The Ukrainian state plan and some Ukrainian economists (including Dimenshteyn and others) stood against such decisions. The discussion ended with some compromise providing for both strengthening the development of steel industry in Ukraine, and at the same time building Russian metallurgy centres faster.

Pursuant to this plan, construction of several major companies—such as “Zaporizhstal” in Zaporizhzhia, “Azovstal Iron and Steel Works” in Mariupol, “Kryvorizhstal” and others—was began during the first five-year term, they were put into operation at the start of the second five-year term. Some of the existing plants—Dniprovskiy Metallurgical Plant, Makiivka Metallurgical Plant and others—were reconstructed, and Khartsyzsk and Nikopol Pipe Plants were built.

In 1928-1940 28 blast furnaces, 42 open hearth furnaces, 12 electric furnaces, 6 converters and 32 pipe mills were put into operation.

In 1940 Ukraine smelted 64.7% of iron, 48.6% of steel, and rolled 49.6% of mill products in the USSR employing 153,000 workers.

As a result, the production volumes increased by 3.5-5 times for the period 1928-40.

During World War II the iron and steel industry was mostly destroyed in Ukraine. Most of the equipment was moved out to the East, the rest of it was destroyed by the Soviet and German troops. After the war the steel industry was recovering slowly in Ukraine (6 years), thus the pre-war production level was only partially achieved in 1950. During the first post-war five-year terms the ferrous metallurgy in Ukraine enjoyed a fairly significant investment, which made it possible to renovate some of the older companies on a new technical basis and to erect new plants.

Thus, in 1945-50 10 powerful blast furnaces, 27 open hearth furnaces were put into operation; 30-40-tonne capacity furnaces were replaced by new more powerful furnaces of 150-200, even 300 tonne capacity. In 1950-1970 the Ukrainian ferrous metallurgy received 30% of all-Union financing. In the course of these years, 6 blast furnaces were put into operation (4 of which were of 2000m³ volume and 2 of 2300m³ and 2700m³ volume respectively), 36 open hearth furnaces (including 11 of 650-tonne capacity and of 900-tonne capacity), 18 oxygen converters, 53 machinery of all types; their productivity was considerably increased by improving the heating of the metal, increasing the weight and size of bars and reducing the rolling cycle. The share of Ukraine in the all-Union total production reached 48% of cast iron, 41% of rolled metal products and 36% of steel pipes.

Production of the main product types of 
the iron and steel industry in the Ukrainian republic (in millions of tonnes)

In 1970 steel production amounted to 46 million tonnes and reached 50 million tonnes in 1980 and 52 million tonnes in 1990.

To compare, in 1982 FRG produced 35.9 million tonnes of steel, France - 18 million tonnes, Italy - 24 million tonnes, China - 34million tonnes.

In the foreign world, it is only Japan and the U.S.A. that produced more cast iron and steel than Ukraine did. At that time Ukraine smelted more steel than such world steel industry giants as South Korea and Germany do now. However, Ukraine’s share of the all-Union manufacturing was decreasing (due to the accelerated development of ferrous metallurgy in the Urals, Siberia and Kazakhstan). In the last decades of the Soviet power, Ukraine accounted for up to 52% of all-Union iron ore mining, up to 35-40% of steel production and rolled mill products, up to 40% of cast iron, up to 47% ferrous alloys and more than one third of steel pipes.

Ukraine smelted about 1000 kg steel per capita – against 600 kg in the Union and 30 kg per capita in pre-revolutionary Russia.

At the turn of the 1970^’s the oxygen-converter method of steelmaking was introduced to increase the productivity of the iron and steel industry in Ukraine. Later (in the 1980^’s) it was implemented in about 40% of all plants. The “Dniprospetsstal” Zaporizhzhia factory launched the method of electromagnetic stirring of steel in electric furnaces, which later spread to other works. The rolled metal product range was also somewhat extended. There were certain improvements in utilisation of blast furnace and steel smelting slag, 94% blast and 37% respectively. In the 11^th five-year plan term (1981-85) the investment increased by 30% compared to the previous period, with about 37% of which allocated for development of the raw materials supplies. In the 1980^’s, technically obsolete rolling mills in some enterprises of Ukraine— Dnipropetrovsk plant named after Dzerzhinsky, Makiivka Metallurgical Plant, “Krivorizhstal”, etc as well as tube assembly factories and workshops—underwent a sound reconstruction.

The lack of fuel prompted manufacturing of molded metallurgical coke from low-caking coal and increased the construction and reconstruction of units for smelting converter steel and electrical steel. Production of quality alloy steel was being developed. To obtain such alloy steel, the liquid metal was processed by vacuum, inert gases, synthetic slags.

Indeed, the E. Paton Electric Welding Institute in Ukraine developed and was the first in the world to use (at the "Dniprospetsstal") the method of electro-slag remelting (ESR) which makes it possible to obtain high quality steel.

However, we must admit that in the last years of the USSR, during the “stagnation” period, it became obvious that the country was falling behind the Western world in terms of technologies due to the slow introduction of oxygen-converter method. In 1983 its share was only 35% whereas, for example, Japan completely abandoned the open heath furnace method back in the 1970's. There appeared an utter need in reconstruction of production.

Despite considerable difficulties in the steel industry in Ukraine before the Soviet Union collapse, the ferrous metallurgy of Ukraine was still a well developed and competitive industry.

All the above facts being considered, we can distinguish the following main stages of this industry development:

• 1870–1913 – origin and development of the iron and steel industry;
• 1914–1918 – war time, industry stagnation;
• 1918–1940 – ferrous metallurgy recovery and notable development prompted by the industrialisation period;
• 1940–1945 – war stagnation;
• 1945–1990 – steady industry growth;
• 1990–1999 – period of instability caused by transition to the market economy;
• 2000–2012 – modern period.

3. Economic conditions for development of ironworks and peculiarities of their territorial organisation. 
   The geographic pattern of iron and steel production.

There exist favourable prerequisites for the iron and steel industry development, they are:

• significant deposits of coking coal, iron and manganese ore, high-quality limestone, molding sand and refractory materials in the close proximity to each other;
• the country’s need in metal, availability of its consumers;
• availability of qualified labour force;
• availability of transport routes;
• scientific and technical progress.

The iron and steel industry is one of the major consumers of fuel, electricity, water. The country is completely self-sufficient in its own iron ore, coke, manganese and other additional materials.

Ukraine ranks 4^th in the world in terms of iron ore reserves (the world's reserve makes up 160 billion tonnes, of which 27 billion tonnes are in Ukraine) after Russia, Brazil and Australia, and 6^th in terms of extraction (48 million tonnes) after China, Brazil, Australia, India, and the United States.

The world’s largest iron ore basin is in Kryvyi Rih (Dnipropetrovsk region). Its reserves are estimated at 30.6 billion tonnes, of which only 18 billion tonnes are explored. 75% of ores are mined by open cut. Iron ores are rich in iron containing up to 60% of ferrum. More than a half of enriched ore is supplied to the European part of Russia, Slovakia, Hungary and Poland.

The Kerch iron ore basin accounts for 4.2% of the total production of ore in Ukraine.

The total reserves are 1.8 billion tonnes of ore with significant content of manganese, vanadium, phosphorus. In this regard, Kerch ore is used at the “Azovstal” iron and steel works where it is delivered by the Azov Sea.

The Kremenchug iron ore basin is located in on the territory of Kremenchug district of Poltava region. The explored reserves of iron ore are 4.5 billion tonnes, but the geological work is not completed.

The Bilozerske iron ore producing area combines several fields. It is located on the left bank of the Dnieper, to the south of Zaporizhzhia. The total reserves of ore in the area reach nearly 1.4 billion tonnes.

The manganese ore basin in the Dnieper region ranks second in the world in terms of ore stocks and mining after South Africa. 80% of the manganese ore reserves of the former USSR are concentrated in it.

In 1989-90 Ukraine supplied 75% of all-Union mining of manganese ores. The ore basin is located in the Southern part of Dnipropetrovsk and Zaporozhzhia regions and consists of 3 subareas:

• Nikopol (over 1 billion tonnes of deposits);
• Velykotokmatsk (1.4 billion tonnes of deposits);
• Inguletsk (nearly 600 billion tonnes of deposits)

The total reserves of the basin exceed 3 billion tonnes.

Ukraine supplies manganese ore mainly to iron and steel complexes of Russia and European countries.

Donbas, where 13 of the 18 Ukrainian coke plants are based, produces half of coke for metallurgy. Major coke plants of Donbas and the Dnieper region are located in Makiivka, Mariupol, Horlivka, Stakhanov, Zaporizhzhia, Dniprodzerzhinsk, Kryvyi Rih, Dnipropetrovsk.

Fluxes, manganese quartzite, refractory clays also make up a part of the raw materials base for the metallurgy complex.

Refractory clays are extracted in Donetsk region, high-quality limestone and dolomites come from Donetsk, Dnipropetrovsk and the Crimea.

In our country the iron and steel industry has extremely favourable economic conditions for its development.

Firstly, Ukraine has a number of well-developed metal consuming branches of economy, in particular machine building and metalworking which provide 15.5% of the total industrial production in Ukraine. These branches require a lot of metal, which makes them the greatest consumers of the metallurgical products, thus stimulating the development of the iron and steel industry.

Secondly, Ukraine has sufficient labour manpower and skilled workers, of which 429 thousand are employed in enterprises of this industry.

Ukraine’s transport infrastructure is a well-developed one, which makes it possible to deliver raw materials to the manufacturer and transport finished products to the consumer. There are both a well-developed dense network of paved roads and a network of railway lines which is especially dense in the industrial Donbas and the Dnieper region.

An important factor to mention is that the share of railway tracks belonging to companies and enterprises in the Dnieper region and Donets Basin is much bigger than that of the public railway lines. The reason for this is the significant amounts of cargo handling at metallurgical enterprises. The Donbas – Kryvyi Rih railway line is unique to Ukraine as it is a three-track railway. Coking coal is carried in one direction, the iron ore concentrate is carried backwards.

Scientific and technological progress also has a great impact on the development of ferrous metallurgy. New technological advances ensure improvement of the quality of industrial products and the labour efficiency. Scientific and technological progress also helps to extend the finished sections range (there are over 3000 types of rolled sections whereas Ukraine produces only 200-250 items).

The most common form of manufacturing iron and steel is an integrated works.

Ukraine has 13 iron and steel integrated works (Ukraine ranks highest in the world in terms of concentration of ferrous metallurgy manufacturers: 98% of cast iron and 97% of steel are produced in the enterprises with the annual smelting of over 1 million tonnes) They all are among the largest industrial enterprises and classified as the metallurgical energy and chemical complexes by the character of internal technological ties

The structure of steel production technology in Ukraine is broken down as follows: 44.3% – open hearth production, 3.5% – electrical steel - 52.2% – oxygen steelmaking.

In ferrous metallurgy there can be distinguished enterprises with a full production cycle and those specialising in either cast iron and steel smelting, or only in steel smelting and rolling products.

Enterprises that do not include cast iron production are in metal manufacturing industry.

A special place is taken by companies that produce ferroalloys. There is a separately distinguished “small metallurgy”. It is organised by large machine building enterprises and specialises in steel smelting and rolling.

Ukraine's steel enterprises have their own specific principles of geographical location.

The first principle is availability of own coking coal and imported raw materials. Iron and steel works in Donbas are subject to this principle.

The second principle is availability of own raw materials and imported coal. Such integrated works include Kryvyi Rih, where there is Ukraine’s largest metallurgical plant of “Krivorizhstal” with capacity of 6.7 million tonnes.

Such metal plants as those in Kharkiv, Dnipropetrovsk, Dniprodzerzhynsk are located in the proximity of fresh water basins and metal consumers, between raw materials and fuel. This location provides for a better territorial organisation of ferrous metals production.

Another widespread principle of the steel industry location in developed countries is proximity to seaports. In Ukraine, plants in Mariupol (“Azovstal” and ironworks named after Illich) are located under this principle and receive iron ore from Kryvyi Rih and Kerch, and coking coal from Donbas.

Thus, there are now 3 major steel producing areas formed in Ukraine: the Dnieper region, Donetsk, the Azov region.

The Dnieper metallurgical region produces half of the cast iron and steel. 14 of the 32 large enterprises of Ukraine are based there. This metallurgical area uses its own huge reserves of raw materials: iron and manganese ores. The coking coal is brought here from Donbas and fluxing limestone – from the Crimea.

In the Dnieper region there have been formed such large industrial hubs as Dnipropetrovsk, Zaporizhia and Kryvyi Rig.

The Donetsk metallurgical area gives one third of steel products in Ukraine. It combines large industrial hubs and centres which appeared around deposits of coking coal and fluxing limestone. Iron and manganese ores are imported here from the Dnieper region. Donetsk metallurgical area includes 13 ironworks, powerful coke-chemical enterprises producing over 50% of coke in Ukraine. Donetsk, Makiivka, Alchevsk, Khartsyzk have two ironworks each, Yenakiieve, Kramatorsk, Kostyantyniv, Luhansk and Almazne have one ironworks each. They produce about 50% of cast iron and about 33% of metal products in Ukraine. In Donbas there have been formed such large industrial hubs as: Donetsk-Makiivka, Yenakiieve, Alchevsk-Almaznytsk. Apart from hubs, there are separate industrial centres in this area: Kramatorsk Stakhanov, Khartsyzsk.

The Azov area combines powerful Mariupol metallurgical plants. It was formed at the intersection of transport routes required for importing raw materials here. Iron and manganese ores are brought here from the Dnieper region, coking coal and fluxing limestone - from Donbas, iron ore- from Kerch deposits.

4. Modern development. Location of individual ironworks.

5. Problems and outlooks on the industry development.

Conclusions