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Resource efficiency benchmarking of the Russia Ferrous Foundry Industry:

Key findings of the studyImplemented under IFC Russia Cleaner Production Program

GOAL: to identify the ferrous foundry sector’ resource efficiency potential and develop practical tools for foundries to implement it

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Benchmarking study time line

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Stakeholder consultations at every important stage:

Methodology Questionnaire for data collection Self diagnostic guide Matrix of casting types

Advisory board included over 20 representatives from industry, R&D, officials and policy makers.

Consultation process Written comments on all key documents Meetings of Advisory board Workshops in smaller teams

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What made our study successful : Stakeholder consultations process

7 Key performance indicators (KPIs)

LABOUR

KPI 7

OVERALL PRODUCTION EFFICIENCY

KPI 2

PROCESS YEILD

KPI 1

WATER USE

KPI 6

SAND USE

KPI 5

ENRGY USE

KPI 4

CAPACITY UTILIZATION

KPI 3

Depends on technology and

processes

Depends on type of final product and technology

Depend on management practices and

equipment

What is being benchmarked?

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Raw material

Melting shopMeltingHolding

Treatment

Molding shopMold formingCore makingCore setting

Casting shopPouringCooling

Shake outSeparation

Finishing shopShot blasting

Grinding Deburring

Thermal treatmentInspection/testing

PackagingLabeling

StorageShipping

Sand recyclingTransport,

сooling

Metal recyclingSeparation,

transport

Metal yardStorage, charging

Sand plantStorage,

preparation

1 2 4 7 3

1 2 7 3

1 2 7

1 2 7 3 7

2 3

2 73

2 7 3buy

Sell

Risersand

runnersScrap

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Selected KPIsProcess YieldOverall production efficiencyCapacity utilizationEnergyFresh SandWaterLabor

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4

7

3

56

5

6

5

66 4

1 42

7 KPIs methodology tailored to foundry process

Selected KPIs and methodology tailored to foundry processes

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32 category’ matrix developed to cover diversity of foundry’ production

Grey Iron Product Categories

automatic mouldingGABH = automotive engine

blocks and cylinder heads

GAAO = automotive otherGAAG = agricultureGAMI = mining

mechanized mouldingGMBH = medium size engine

blocks and heads (energy generation)

GMAG = agricultureGMMI = miningGMGE = general engineering

manual (hand) mouldingGHBH = large size engine blocks

and heads (energy generation)

GHMI = miningGHGE = general engineering

Ductile Iron Product Categories

Steel Product Categories

automatic mouldingDAAU = automotive otherDAGE = general engineering

mechanized mouldingDMAU = automotiveDMGE = general engineering

manual (hand) mouldingDHEN = energy generation

componentsDHCO = compressor

componentsDHGE = general engineering

automatic mouldingSARC = railway components (c)SAMM = mining components

(m)SAAC = commercial vehicles (c)SAGC = general engineering

(c)

mechanized mouldingSMRC = railway components

(c) SMMM = mining components

(m)SMPC = pumps & valves (c)SMPS = pumps & valves (s)SMGC = general engineering

(c) SMAC = commercial vehicles

(c)

manual (hand) mouldingSHMM = mining components

(m) SHPC = pumps & valves (c)SHEA = energy components (a)SHGC = general engineering

(c)

c: carbon steel, s: stainless steel, m: manganese; a: high alloy steel

215 foundries(first long list; 25% of all legally registered ferrous

foundries in Russia)

55 sets of independent data for foundries

Study based on real data from enterprises

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Coverage :•Period : 3 years (2007-2009)•Total # of data sets: 150•Categories covered: 27 out of 32 (85%) • Industry: 478 kt (14% of market)

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KEY FINDINGS OF THE STUDY

Russian foundry European foundry предприятие

Russia foundries significantly lag behind European

Russian ferrous foundry us per tone of good casting:•Energy: 3 times more•Sand: 3,6 times more•Water: 161 times more•Labor : 3,6 times more man-hours

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4.5 mln t CO2e

Costs:

EU Russia Russia at EU efficiency level

-36%

Inefficiencies eliminate Russian foundries’ competitive advantage in low prices

Prices for major resources in Russia are less than in the EU:

• Energy: 54% less

• Labor: 92% less

• Overheads: 71% less

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4 times

• Average defect rate in Russia is 4 times higher than in EU• Effect export: Russia exports less than 1% of casting

• Low quality – threat for internal markets as customers require certain quality (eg. automotive producers)

High levels of defect rate

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EU Russia

- 26%

Cost structure index for ferrous foundry (materials, labor, energy, equipment maintenance, overheads, water and sand)

How much can Russia ferrous foundry industry gain via resource efficiency?

$ 3.3 bln USD

$2.13 bln USD

$ 3 bln USD -

29%

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- 43% Low cost and management

practices Capital investment

Over 50% of the potential can be implemented via low-cost measures and management

practices

$3.3 bln USD

Costs

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Capital investment

Low cost and

management

practices

KPIs and resource efficiency potential:

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Materials (metal)

Energy

Labor

Equipment related

Overheads

4,2%

43,3%

9,4%4,4%9,7%

$ 3.3 bln USD

12,8%

7,1%

21,4%

13,4%

45,2%

-3.1%-2.7%

-12%

-9.2%

-1.9%

Benchmarking of KPIs is a tool to priorities interventions to achieve maximum impact

Russia average level

Level of best practices

Cost structure

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Next steps:

• Toolkit: Self diagnostic guide, Compendium of KPIs, Best practice guide, Benchmarking study report

• Pilot program with 5-7 companies with foundries

• Resource efficiency finance directly and via FIs

Information available in public domain

http://www.ifc.org/ifcext/eca.nsf/Content/

Russia_Foundry_Russian

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http://www.ifc.org/rcpp

IFC contacts

IFC Russia Cleaner Production (IFC RCPP)• Yana Gorbatenko, Program [email protected]

Study team IFC RCPP:• Kristina Turilova, Task leader [email protected]• Boris Nekrasov, Technical expert [email protected]• Maria Sigutina, PR and [email protected]

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