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Cleveland Cliffs

Autor:   •  December 21, 2017  •  938 Words (4 Pages)  •  470 Views

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D. Evaluation of Proposal 3

The CAL team has been defining cutting-edge metallurgists theories in the past two years and, as we believe, will continue to do so. The great success that the team has achieved is a solid proof of the capabilities and possibilities CAL possessed. By implementing a $2M investment in the Trinidad plant, we hope to bring about resolutions on three critical issues and the production process is currently suffering from. Details of the issues are as follows.

- Reduce the tremendous operational yield losses

Yield losses resulted from inefficiencies in the plant operations are potentially caused by the loss of usable output in the form of dust or other outflows. They were of high importance as they contribute an ample amount to the increase in cost per ton of HBI produced. Improvements on the efficiencies allow a reduction on iron ore fines required, hence an efficient use of production units that yield more HBI outflow. Specifically, the yield loss at the terminal stages could be reduced from 10% to 2% by feeding back into the system. It also helps accomplish a better spread of the fixed costs over the higher volume of tonnage.

- Increase the flow rate of bottleneck stationary fluidized bed reaction step

A staggering 4 hours are required for the metallization rate to increase from 70% to 95%, while merely 15 minutes already boost the number from 0% to 70%. As a bottleneck process, the inadequate flow rate of the stationary fluidized bed reaction stage limits the flow through all the other steps, from the pre-heater to briquetting. With extra investment, engineers from CAL already confirmed that they have developed plans that could shorten the reaction time by 0.5 hours, thus advancing the overall system capacity to a new level.

- Increase the flexibility of production (lower the interdependence among process steps)

The current Circored process the company is employing requires that all process steps be operational simultaneously, i.e. shutdown of one of the process steps, in spite of full functionality of all other process steps, will subsequently lead to the shutdown of the entire plant. This imposes a huge risk and uncertainty to the whole production chain. The $2M includes a project in which engineers can work on the problem and eventually achieve an up-time of 99% at each of the process steps.

E. Conclusion

After careful evaluations of the three proposals, we believe that Proposal 3 is highly optimistic in increasing the long term valuation of Cleveland Cliffs while Proposal 1 and 2 do the opposite. Therefore, as the consulting team to Cleveland Cliffs, we recommend Proposal 3 as it can help the company to fully unleash its potential.

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