KOREAN RECYCLING PLANT

South Korea is the world’s second largest importer of scrap and, in addition to is steel production from blast furnaces, it produces over 20 millon tonnes of steel from recycling scrap in electric arc furnaces. The company identified South Korea as having potential for the development of a recycling plant in 2007, during which year aver 350,000 tonnes of EAFD were being generated annually . All this EAFD was being sent to landfill.

In 2007, ZincOx contacted the companies operating EAFs with a view to entering into long term contracts for the supply of EAFD to a central EAFD treatment plant based on the rotary hearth furnace. There was great interest in the Company’s plans, but in order to ensure that there was not a better technology available the steel mills asked their trade association, the Korean Iron and Steel Instutute, KOSA to undertake a competitive tended for the supply contracts.

Several other companies made proposals, but in 2009, ZincOx’s proposal was endorsed by KOSA and this led to the signature of supply contracts with all the major steel kills in South Korea with a total estimated annual production of EAFD of 400,000 tonnes. In order to build the rotary hearth furnace at a size that was no larger than that which had been made previously for other applications, a two phase development was planned, each of 200,000 tonnes per annum. A site of 9Ha was required for both development phases.

The Korean Recycling Plant takes EAFD from twelve steel mills by bulk silo truck. The EAFD is briquetted and treated in a rotary hearth furnace to make two intermediate products. The zinc intermediate product was of very high purity having less than 0.03% iron and chloride and fluoride salts that can be reduced to less than 300ppm by simple washing. All the zinc oxide product is sold to Korea Zinc.

Industrial land in South Korea is expensive (>US$200/sqm). As the Korean Recycling Plant was considered to be a project of national importance, in July 2010, the government bought a site near Pohang for the project and awarded ZincOx’s Korean subsidiary special investment incentives including a generous corporate tax holiday.

View from the West

Between August and October 2010, the company undertook a basic engineering and costing study. The development cost was estimated to be US$113 million and the feasibility study demonstrated an attravtive project. A development decision was taken in October and detailed engineering commenced immediately thereafter.

In November 2011, a development financing loan package was agreed with Korea Zinc which provided loans of US$50 million in exchange for a ten year exclusive zinc product offtake agreement. The balance of the development cost was provided as equity by ZincOx.

The groundbreaking ceremony took place in March 2011 with commissioning 12 months later . The plant was developed on time and budget and the first product was made in April 2012.

While the ramp up was quite rapid, the radiant heat exchangers that formed an integral part of the gas handling system proved to be very susceptible to corrosion and began to fail every 6-8 weeks. Numerous solutions were attempted but none proved successful and eventually in July 2015 the heat exchangers were removed and the baghouse expanded to provide for additional gas flow. This action effectively removed the problem and the plant worked well at design capacity. Unfortunately, as these changes were implemented the zinc price was collapsing and by the end of the year the price hit a nine year low (US$1,450/t). Shareholders, concerned about the state of commodities generally were unwilling to support the company and the project company was restructured with Korea Zinc providing working capital and taking a 90% interest.

Since 2016 the plant has worked profitably and in March 2017 ZincOx sold its minority interest in the plant.