USS/KOBE STEEL

COMPANY
Energy Management
Project
Organization Meeting
September 30, 1997
SUMMARY OF SSC/USS/KOBE PROJECT OPPORTUNITIES

OPPORTUNITIES SAVINGS

1. Rolling Mill Heating Strategy $ 202,284

2. Rolling Mill Mixed Gas $ 169,570

3. Rolling Mill Hot Charge $ 66,132

4. BOP Shop Bag house-Elec. $ 87,309

5. BOP Shop Motors-Elec. $ 290,935

6. BOP Shop LMF’s $ 267,397

7. BOP Shop Ladle Prehtr. (Cap) $ 555,300

8. BOP Shop Ladle Prehtr. (Non-Cap) $ 119,000

9. Powerhouse Water in Blast Furnace Gas $ 230,400

10. Powerhouse Compressed Air System $ 337,500

11. Powerhouse 25-cycle $ 90,200

_________
Total Savings $2,297,027
USS/KOBE CAPITAL PROJECT SUMMARY

CAPITAL SAVINGS

Project # 9 - WQC Blast Furnace Gas Refit $2,213,000 $1,325,000

Project #10 - #1 Turbo Generator Refit $ 3,416,000 $ 3,100,000

Project #11 — Automated Cutting Transfer $ 5,200,000 $ 3,000,000

Project #12 — Gas Transmission Line Conn. $ 7,750,000 $ 4,000,000

Project #13 — Roll Mill Billet Straightener $ 2,588,000 $ 2,080,000

TOTAL $21,167,000 $13,505,000

Capital Project Summary

March 24,1998
USS/KOBE CAPITAL PROJECTS POWERHOUSE

There are two projects related to capital improvements in the powerhouse that will have an
energy savings impact on the plant operations.

Description of operation
The “powerhouse” is actually tour buildings providing a variety of services/utilities to iron making
and general plant operations. The buildings are the new boiler house, steam powerhouse, gas
engine house, and old boiler house. Utilities provided are 25 cycle AC electricity, 250 volt DC
electricity, 900 & 250 pound steam, blast furnace wind, service and recycle water, and
compressed air.

The 25 cycle electricity is generated by the #2 Turbine Generator, which has a peak out put of 17
- 17.5 Megs. This generator uses 250 pound steam, which act as a system buffer for the steam
loop. Steam is first made to make wind and then to generate 25 cycle power. If there are any
problems in the steam loop, the generator is the first equipment to be dropped off line. The 25-
cycle electrical generation provides two base benefits to the plant: first, as an independent power
source for river pumps, dc generation, boiler fans, it’s own injector pump, and as back up power
to blast furnace pumps; and secondly, it provides a cost avoidance opportunity for electrical
service by converting the 25-cycle electricity to 60-cycle electricity at #4 Bloom Mill’s frequency
changer. The 60-cycle electricity is distributed through the “Clinton” grid, resulting in a reduction
of purchased power from Ohio Edison. Direct users of 25-cycle electricity include 250-volt DC
generation, through either a motor generator set or a single field rotary AC-DC converter,
servicing iron making. (Back Up DC is provided by House Set #2, a 2250-pound-steam -powered
DC generator.) 3 & 4 Blast Furnace stand-by pumps, #5 injector at #2 HPT, #1 circuit to
Frequency Changer, and #2 pump house.

A second turbine generator, (#1), is also 25 cycle and has a potential capacity of 12 Megawatts.
The cost of a refit for this equipment is covered in the scope of Project I 0.

Ladd boilers #7, #8 and #9 in the Old Boiler House produce 250-pound steam. 250 pound steam
supplies the #5 turbo blower to create wind for the #3 furnace, #2 high-pressure turbo generator
for 25-cycle electric generation, power plant auxiliaries and the plant steam system. Water to
these boilers is provided by the recycle system.

900-pound steam is only produced in the New Boiler house and supplies steam to #6 turbo
blower, generating wind for #4 Blast furnace. Feed water is condensate from interconnected
condensers in powerhouse and iron making; make up comes from the treated water system. As a
back up #6 Turbo Blower can use either 900 or 250-pound steam. In case of a turbo blower
failure the #4 Turbo Blower can service either furnace, using 250 pound steam. Service water is
river water that comes into the site by two methods, either from #2 and #3 pump houses or the
lower tunnel. The pump houses lift river water to the main plant header while the lower tunnel
draws water directly from the Black River to the powerhouse at the $30 Million Hole.

Compressed air produced at the power house services iron making. It can also supply the plant
wide system if needed. Back up for #6 and #7 Ingersoll Rand compressors is provided by the
PAP, a steam system driven air compressor.
USS/KOBE PROJECT 9. WQC Blast Furnace Gas CLEANING LOOP REFIT

Description of Project

Approximately $230,400 excess purchased electricity is used annually through reduced fuel
efficiency at the boilers in the Powerhouse. This amount of electric savings could be realized by
removing water from the blast gas

Blast gas is the primary fuel for Powerhouse boilers. The current problem with blast gas results
from the high temperature blast gas used to fire the boilers. Since March of 1996 the average
blast gas temperature has been 112 degrees Fahrenheit. This is greater than the previous
average temperature of 96 degrees Fahrenheit. The increase in temperature results in more
saturated water in the blast gas, which is an indicator of a larger problem. Saturated water in the
blast gas causes combustion inefficiencies for the boilers. The water must be removed by heat
before the fuel can burn effectively. What exists is a crisis loop. Fuel expends energy to
evaporate moisture, reducing combustion efficiency. The result is that the boiler requires
additional inefficient fuel, hence reducing steam out-put. Reduced out-put means less steam to
the turbo-generator. The reason for this is the inadequacy of the WQC system. It can not cool
down the cleansing water enough to remove the moisture from the Blast Furnace Gas.

There are several reasons why the system has not been improved. There are isolation problems
within the gas-cleaning loop; work can only be done during Blast Furnace outages. The isolation
valves on either side of the strainer can’t close completely precluding its’ being cut out of the loop
for repair. During the last double outage the repair was attempted but a Well valve failed flooding
the system curtailing any attempt to open the system.

Recommendations

The solution to this problem is threefold. First, new hot well strainers are needed to stop
contaminants and sludge entering the WQC system. Second, the cooling tower cells and spray
deflectors must be cleaned. Finally, increase the capacity of the WQC system. Originally, the
WQC pumping was designed to provide 9,000 gallons per minute, but the current requirement to
clean blast gas is 11,000 to 12,000 gallons per minute. For every degree the blast gas
temperature is lowered, there is an estimated savings of $1200 per month.

Cost Justification

Annual Savings = 16 degrees x $1200 x 12 month = $230,400

Additional savings for the use of BFG in the boilers through a higher heating value would
also add to the savings. This will be calculated during early engineering analysis.
USS/KOBE PROJECT 1O#1 TURBINE GENERATOR REFIT

Description of Project

The #1 Turbine Generator is of the same vintage as the #2 Turbine Generator previously
described. This equipment is in poor repair and needs a major overhaul to be operational. The
current contract relations between USS/KOBE and Ohio Edison preclude new electric generating
capacity at this site until after the year 2004. This 25 cycle generator can be restored at a cost
much less than what the cost would be for new generating capacity. There are certain
improvements needed in the auxiliary systems to allow this equipment to reach its capacity of 12
Megawatts

Recommendations

A refit of this equipment primarily requires a complete overhaul of the turbine side of the unit,
expanding the transformer capacity leading into the frequency changer, new steam piping to
supply the turbine and associated labor and parts.

Cost Justification

The additional benefit of reducing the purchase of 60 cycle electricity may be as much as $3
million in annual savings.

POWERHOUSE CAPITAL REQUIREMENTS

WQC BFG CLEANING LOOP REFIT #1 T/G REFIT

Cleaning and removal $600,000 Turbine blade replace $2,000,000
Filter pump $ 75,000 Rotor, Bearings,etc $ 350,000
Pumps $150,000 Transformer $ 200,000
Underflow pumps $ 75,000 Piping $ 250,000
Motor repair $ 60,000 Labor $ 250,000
Valve repair $ 50,000 Engr,procur,fin. $ 366,000
Pipe repair $ 50,000
Instrument repair $ 60,000 Total $3,416,000
Clarifier 1&2 spares rebuild $140,000
Electrical and instrument contractor $ 60,000
Vacuum pump repair $ 77,000
Cooling tower repair $ 77,000
Clarifier 1&2 screens $250,000
New settling basin $250,000
Contractor $125,000
Replace hot well strainer $ 25,000
Valves (strainer) $ 24,000
Piping $ 50,000
Engineering, procurement, finance $336,000

Total $3,139,000

Total Powerhouse Capital $6,555,000

USS/KOBE PROJECT 11AUTOMATED CUTTING AND TRANSFER SYSTEM
IN ROLLING MILL

Description of Project

The Rolling Mill produces approximately 40% of its product as 6” rounds. The
rounds must be cut to specific lengths for the 4 Seamless Mill, which uses all of
the 6” rounds produced in the Rolling Mill. USS/KOBE presently load all 4
Seamless product into railcars in the conditioning building. The cars are then
moved to the south rail yard for holding and cooling. When the steel is ready to
be mult cut, the cars are called to the peeler area for unloading, cutting, and
reloading. After the cars are reloaded, they are dispatched to the seamless mill.
The peeler area presently employs 18 people on 2-12 hour shifts for 5 days per
week. This is equivalent to a work force of 27 people. There are 8 “torch
machines” and it is assumed that 2 are out of service at any time.

Recommendations

An automated transfer and cutting system located at the Rolling Mill will eliminate
rail and labor components of the existing method. Overall yield and productivity
will be enhanced. A layout of the proposed arrangement is found on the attached
sketch.

Justification

Annual Savings

Labor- Change crew from 27 to 4 $1,300,000

Rail Dummurrage $1,200,000
Yield 2% $ 500,000

Total $3,000,000

Capital Improvements

Demolition $1,200,000
Purchased Equipment $4,200,000
Construction Labor $2,600,000
Design and Engineering $ 720,000

Total $8,700,000
USS/KOBE PROJECT 12 NATURAL GAS TRANSMISSION LINE
CONNECTION

Description of Project

A purchasing benefit can be obtained by the installation, (or ability to install), a

pipeline to connect to the natural gas transmission network, USS/KOBE
management estimate the savings to be as much as $4,000,000 annually.
Easements have already been obtained for 20 miles of the 22.5 mile distance to
connect to the gas transmission company. USS/KOBE has reached an impasse
in the negotiations for the remaining easements and is not willing to take certain
risks related to a conditional easement on the remaining lengths.

Purchased Equipment and Materials $3,800,000

Construction Labor $2,400,000
Purchased Easements $ 850,000
Legal and Title Fees $ 200,000
Design and Engineering $ 480,000

Total $7,750,000

USS/KOBE CAPITAL PROJECT SUMMARY

CAPITAL SAVINGS

PROJECT 9 & 10- BOILERHOUSE $ 6,555,000 $ 3,230,400

PROJECT 11- AUTOMATED CUTTING/TRANSFER $ 8,700,000 $ 3,000,000

PROJECT 12- TRANSMISSION LINE CONNECTION $7,750,000 $ 4,000,000

TOTAL $23,005,000 $10,230,400

ROLLING MILL BILLET STRAIGHTENER Project No. 13

Description of Project

Yield at the Rolling Mill suffers because of an inordinately high loss percentage due to
billets being bent both during and after rolling, therefore the production of straight billets
has been identified by the company management as being of the highest priority.

Losses from bent billets fall into the following categories:

An average of 0.007% of the monthly throughput, amounting to 5880 tons annually is
scrapped outright.
Operational delays directly attributable to bent billets.
Damages and replacement parts for the ultrasonic tester and the Magnaglo equipment
because the bent billets do not enter the test area squarely.
Maintenance labor costs to repair affected equipment.
Current cost to transport and straighten bent billets at Betin Steel, Wickliff OH.

Options

• Install an already purchased straightening guide just ahead of the cooling beds.
This would probably remove the in-transit defects but would have no effect on
those caused while on the cooling beds. The equipment is already available on
site but has never been installed because there has been no adequate
downtime.
• Purchase and install saw-touth, chain driven cooling beds designed to rotate
each billet through 90° with each cycle of the bed.
Cost prohibitive ($10 million plus), with no guarantee of 100% straight product
• Purchase and install a reconditioned gag straightener.
Too slow to keep up with production and could not be used in- line of product
flow Requires an operator at all times
• Purchase and install an in-line roll straightener.
Permits continuous flow of product
Requires no additional operator(s)
Is the choice of many European mills, and is fast gaining acceptance in USA
Several good quality, reconditioned, used units available
Danielli has also made a proposal in 1995 for a new machine for $960,000, plus
shipping and installation at site

Recommendation

• Purchase and install a used and reconditioned roll straightener of proven design
and from an experienced European manufacturer after expert inspection and
evaluation by person(s) acceptable to both USS/KOBE and SSC
• Purchase and install all necessary material handling equipment
Cost

Roll Straightener $1,000,000

Material Handling Equipment $ 536,000
Equipment Engineering $ 100,000
Civil, Structural and Installation $ 460,000
Power Distribution and Control $ 190,000
Freight and Handling — Roll Straightener $ 25,000
Engineering Procurement and Finance $ 277,000
Total $2,588,000

Benefits

Annual production loss avoidance from:

Scrapped production. 5880 tons x $250 per ton $1,470,000
Cost of operational delays $ 345,000
Cost of damaged and replacement UST and Magnaglo parts $ 150,000
Avoidable maintenance labor $ 80,000
Transport and straighten at Betin Steel $ 35,000
Total $2,080,000

Roll Mill Billet Straightener

3/24/98