steel technology innovation life stil international · 2015. 4. 1. · stil steel technology...

STE E L TEC HNOLOGY I N NOVATIO N L IF E

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Steel WorksSalzgitter AG: a Steel Group

based in Germany

T H E S A L Z G I T T E R A G M A G A Z I N E

I N T E R N A T I O N A L

WWW.SALZGITTER-AG.DE

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20731_STIL_E_02_03.QXD 30.03.2006 7:22 Uhr Seite 2

Steel works:The Salzgitter Group and its people


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With a workforce ofaround 17,500 employees andsales in excess of EUR 7 bil-lion in 2005, the SalzgitterGroup is the second-largeststeel producer in Germany.Since the takeover of Man-nesmannröhren-Werke in theyear 2000, Salzgitter AG is notonly supplying top-gradesteel products, but also a range of tubes in all sizes.

In this issue of our magazine, we wouldlike to introduce you to the Group. Not justthrough facts, figures and interviews, but alsothrough exciting reports from all over theworld which illustrate the versatility of Salz-gitter products. Did you know, for example,that it takes just 50 days for ore mined inBrazil to be turned into a brand-new motorcar? Or that in Canada the valuable raw ma-terial palladium can only be extracted withthe aid of super-hard plate?

We would like to introduce you to the peo-ple who work for and identify with theGroup. Their efforts are directed towardsmaintaining and developing our technologylead, now and in future.

The progress achieved by Salzgitter AG ismirrored in the Group magazine STIL. Wereflect the fascination and versatility of steelas a material, and we keep our staff, custom-ers and partners regularly informed eachquarter. With the aim of keeping you too in-formed of all the things Salzgitter AG is doingnow and has planned for the future, this issuethat you are reading now is the first to beproduced in English.

Incidentally, the title STIL – the lettersstand for “Steel”, “Technology”, “Innovation”and “Life” – is a German play on words. STILis pronounced like the English word “steel”,but its meaning also implies “style”, in thesense of good taste, aesthetics and cosmo-politanism.

We hope you enjoy reading our magazine!

Welcome!

MannesmannExecutive Board member Tubes Wolfgang Eging(r.) with Prof. Wessel, director of the archives

IN THIS ISSUE

Bernd Gersdorff,Head of CorporateCommunications


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PEOPLE 2

Steel works: Employees of the Salzgitter Group

SALZGITTER GROUP 6

Chairman of the Executive Board WolfgangLeese: “Everyone in the steel business knows Salzgitter”

REPORT 10

From ore to steel: The long route from the raw material to the high-quality end product

TRADING 18

Executiv Board member Heinz Groschke:“We know the international markets”

REPORT 20

Putting the bite on granite: Palladium mi-ning in Canada – with excavators that relyon super-hard steel

MANNESMANN 26

Salzgitter Group is increasingly emphasizingthe appeal of the Mannesmann brand name

TUBES 32

Large-diameter pipes, medium line pipes,

small-diameter tubes: The right product forevery application

FINANCE 34

Executive Board member Dr. Heinz JörgFuhrmann: “Credible capital market communication delivers results”

FUTURE 36

Salzgitter Mannesmann Forschung is safe-guarding the Group’s ability to innovate

FUTURE 38

SCALIGHT: New concepts for automobileconstruction

FUTURE 40

Salzgitter Group is cooperating in the re-search field with South Korean steel groupPOSCO

SUSTAINABILITY 41

The Salzgitter Group is aware of its responsibility

CLASSICS 42

The steely sound of Mozart

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Published by: Salzgitter AG, Eisenhüttenstr. 99, 38239 Salzgitter, telephone: 0049 (0)5341 / 21- 01, www.salzgitter-ag.de.Overall responsibility: Bernd Gersdorff (Corporate Communications). Coordination: Olaf Reinecke (Salzgitter AG),Norbert Fischer (Mannesmannröhren-Werke GmbH). Magazine orders: Michaela Kruffke, [email protected]: SchauVerlag GmbH, Grüner Deich 1, 20097 Hamburg, telephone: 0049 (0)40 / 32 87 27 - 0,[email protected]. Editor-in-chief: Carsten Wurr. Layout: Katharina Osterwald. Printed by: Ruth PrintmedienGmbH, 38114 Braunschweig. Translations: Baker & Harrison, Munich

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Wolfgang Leese, Chairman of the Executive Board of Salzgitter AG

Raw materialA view of the Alegria

ore mine (Brazil)

FutureSCALIGHT: New concepts for

automobile construction

IN THIS ISSUE


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The Salzgitter Group Executive BoardSix men, six tasks: the team that heads the Salzgitter Group

SALZGITTER GROUP

The six members of the Salzgitter Group Executive Board: (front, from left) Peter-Jürgen Schneider, Personnel; Wolfgang Leese, Chairman of theExecutive Board; Dr. Heinz Jörg Fuhrmann, Finances; (back, from left) Hans Fischer, Steel; Heinz Groschke, Trading; Wolfgang Eging, Tubes

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Wolfgang Leese has been Chair-man of the Executive Board ofSalzgitter AG since the year

2000. In the interim, his name has come tobe associated with major decisions on Salz-gitter Group strategy. STIL talked to himabout the changing steel industry and theposition of Salzgitter AG.

STIL The steel industry worldwide is busilyengaged in joint ventures and takeovers.What role does Salzgitter AG have to play inthis scenario?WOLFGANG LEESE The process of consolida-tion in the steel industry is a healthy deve-lopment. Large, global enterprises arebeing created with an annual capacity of50 million tons or more of crude steel. Andthey are taking the lead on price. In theirwake, we can secure a strong position forourselves as niche suppliers of high-qualityproducts with close and stable relation-ships with our customers.In the flat rolled products business alone,

Salzgitter produces around a hundred dif-ferent grades of steel – the overall totaladds up to 380. And once these steels havebeen rolled and processed, the number ofproduct variants is five times as great.STIL Growth in China is generally expected tomoderate and forecasters are predicting thatthe steel economy will flatten out. What isyour assessment of future development inChina and the impact on the markets?LEESE Even if growth rates in China are nolonger in double figures, three to five per-cent expansion still represents a huge vol-ume. And the economies of India, SouthAmerica and Russia have come along tre-

mendously. Their demand for steel willincrease dramatically, especially for theconstruction industry, transport and logis-tics.STIL Chinese manufacturers were showing off

their vehicles for the first time at the recentInternational Motor Show in Frankfurt. Atthe time they were criticized as lackingmaturity for the markets of Europe andNorth America and short on quality. Howlong will it be before Chinese industry iscompeting eye-to-eye?LEESE It will take a few years yet. The Chi-nese may have the latest plant and equip-ment, bought mostly in Europe, but it willbe five to ten years before their people havea solid grasp of the complex processes andare able to achieve the quality levels ex-pected internationally. And even then theywill initially be manufacturing for the Chi-nese market.STIL The declared aim of Salzgitter AG is tosafeguard its independence through profita-bility and growth. What steps are necessaryto maintain this position in future?LEESE We continue to strive for growth within the Group. With our internalinvestments, we are coming up against cer-tain natural limits. There is only a small

It’s not only China that is deve-loping a huge demand for steel

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“Everyone in the steel business knows Salzgitter”Interview with Wolfgang Leese, Chairman of the Executive Board of Salzgitter Group

SALZGITTER GROUP

SteelExternal sales: € 2.18 billion

Employees: 7,200

TubesExternal sales: € 1.41 billion

Employees: 4,300

TradingExternal sales: € 3.24 billion

Employees: 1,700

ServicesExternal sales: € 0.32 billion

Employees: 4,300

Salzgitter GroupExternal Sales cons.: € 7.15 billion Employees: 17,500


SALZGITTER GROUP

amount of scope left for organic growth.However further substantial growth can beachieved through acquisitions by theTubes, Steel and Trading Divisions.STIL Salzgitter AG itself has frequently beendescribed as a takeover candidate.LEESE As has already been clearly stated,our corporate aim is to preserve our inde-pendence. As long as we know that 35 % ofour stock is in private hands, it would behard to imagine a hostile takeover againstthe declared wishes of management, staffand our major shareholders.STIL The acquisition of Mannesmannröhren-Werke was the biggest step towards growthyet taken by Salzgitter AG. Its integrationhas been an incremental process. Whichwere the most important stages?LEESE With Mannesmannröhren-Werke wehave entered a new dimension. We are nowon a more international footing, and inaddition to flat rolled products, beams andplate we now also supply a wide range oftube products – from precision tubes viamedium line pipes, through to large-dia-meter pipes. An important step in the inte-gration process was the appointment ofthe Executive Board Chairman of Mannes-mannröhren-Werke (MRW) to the Salz-gitter Board. There have been structuralchanges as well, such as establishing MRWas a classic management company at thehead of the Tubes Division.

And the adoption of tube products andthe Mannesmann brand by many of theTrading Division companies has also beenimportant in the fusion process. With theformation of a consolidated tax and fiscalentity, integration is now largely complete.In future, there will continue to be exchan-ges of management staff.STIL A few years ago you were laughed at forpredicting a share price of 50 deutschmarks.The company’s stock currently stands at over50 euro. What is behind this positive deve-lopment?LEESE The takeover of Mannesmann-röhren-Werke following the philosophy of“from steel to steel” was undoubtedly themost significant step. As a result of thechange in size of Salzgitter AG, we subse-quently introduced a new organizationalstructure. The single operating entity hasdeveloped into a clearly structured Groupin which a management holding companydirects and coordinates four divisionsdedicated to Steel, Tubes, Trading and Ser-vices. In turn these divisions are composedof independent subsidiaries which func-tion decentrally with a close orientationtoward their markets and their customers.In support of this organization process wehave developed and systematically introdu-ced 5P management, a toolkit which isused at all levels of the Group. Anothermanagement tool used within the Group is

professional controlling, which assists us inboth strategic and operational planning.Similarly, the system of target agreementswith management staff impacts on the suc-cess of the Group.STIL The introduction of the 5P CorporateGuidelines program has brought with it achange in corporate culture and increasedthe willingness of the workforce to embracechange – which was the desired intention.How will you maintain this new momen-tum?LEESE By permanently stretching, transla-ting and living the 5P program. First of allwe publicized the Corporate Guidelineswithin the Group, then deployed it succes-sfully as a means of pinpointing weaknes-ses. With 5P management we now have aprocess in place at all Group companies bywhich we are using the 5P program todevelop our own balanced scorecard,which supports successful self-manage-ment at company level.STIL You have been active as Chairman of theExecutive Board since the year 2000. Whatwere your personal high-points over the pastfive years?LEESE The successful takeover of Mannes-mannröhren-Werke, which has broughtgrowth, change and innovation. Everyonein the steel business knows Salzgitter. Wehave become an internationally respectedniche supplier, we operate eye-to-eye withthe major players in the industry, and ourmanagement skills are recognized. Thanksto our own research and development wemanufacture high-quality products and wehave attained a high degree of customerloyalty. We are much more extensively andmore positively appreciated by the public.Our wide-ranging activities have attractedsubstantially heightened media and publicinterest. And that is reflected not least inthe capital market. The turnover in ourshares on the stock market has multiplied.However, in spite of all these positive deve-lopments, at the end of the day, it is resultsthat count – and the results are sound.STIL Have you achieved the goals you set your-self? What are your plans for the second half ofyour tenure in Salzgitter through to 2010?LEESE So far we have achieved our goals.Salzgitter is reaping the benefits of theextensive actions taken to improve profit-ability and make efficient use of manage-ment and workforce capacities. We willcontinue to safeguard our goal of indepen-dence through further growth.

Confident of the future: Wolfgang Leese, Chairman of the Executive Board of Salzgitter AG

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SALZGITTER GROUP

1858Foundation ofIlseder Hütte

1937Foundation of Reichswerke

(former Salzgitter AG)

1945Salzgitter

Hüttenwerke AG

1595Foundation of Ilsenburger Kupferhammer

1885Invention of seamless tube rolling

1890German-Austrian Mannesmannröhren-

Werke AG

1970Mannesmannröhren-Werke AG

1990 - 1997Cooperation with Krupp, Usinor,

Dalmine, Vallourec

1945Nationalization

As from 1946Plate production

1992/95Privatization and integration

1970Stahlwerke

Peine-Salzgitter AG

1989Preussag Stahl AG

1998Salzgitter AG

Stahl und Thechnologie

2001Salzgitter AG

Stahl und TechnologieHolding

The History of the Salzgitter Group

Salzgitter GroupWith the integration of Mannesmann-Röh-

renwerke in the year 2001, the SalzgitterGroup acquired its present form

“Building the new company”The 5P management guidelines encourage a willingness on the part of the workforceto embrace change

Independence through profitability andgrowth – these were the words of Wolf-gang Leese when he was appointed

Chairman of the Executive Board of Salz-gitter AG in the year 2000.

Salzgitter has consistently and dynami-cally pursued this strategy under the mottoof “Building the new company”. One of thetargets is to lift ROCE (Return on CapitalEmployed), viewed over the cycle, above 12percent.

The acquisition of Mannesmannröhren-Werke was the catalyst for major changeswithin the Group.

The original hierarchical concern has be-come a decentrally managed Group inwhich central tasks are performed by a lean

management holding company which di-rects the several divisions.

The manufacturing companies operatein close contact with their markets and takeresponsibility for production and sales.

All of these developments have been de-pendent on a high degree of willingness onthe part of the workforce to embrace chan-ge. In turn, this willingness was specificallyencouraged by the company‘s 5P CorporateGuidelines program developed by youngmanagers from within the Group. “Thebreakdown into Processes, Personnel, Pro-fit, Partners and Products provided em-ployees with a firm structure within whichto pinpoint weaknesses and accept morebusiness responsibility,” explains Dr. Jürgen

Enß, head of CorporateStrategy.

Meanwhile, 5P hasentered a new phase.All of the companiesin the Group are gettingto grips with 5P manage-ment. “This is our balanced scorecard, tai-lored to Salzgitter and its 5P program,”continues Dr. Enß. The companies use 5Pmanagement as an instrument with whichto define their corporate objectives.

The general managers and their manage-ment teams have created for themselves atool which supports the strategic develop-ment of their business units, making themfit to face the future.

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The Alegria ore mine.Caio Libanero gazes outover the hills to thesouth of Belo Horizonte

NEWS REPORTS

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Ore from the Alegria mine is brought by rail to the port of Vitória. From there

the cargo is shipped by sea to Germany

TubaraoVitória

Salzgitter

NEWS REPORTS

The day is March 7, 2005. The time is 09.41. With a flickof the wrist Geraldo Silva Pinto (32) pushes forwardthe control level of his twelve meter tall excavator. The

bucket of the mighty machine digs into the iron rock, rears upagain and swings through 90 degrees to empty its load with athunderous crash into the truck driven by Tereisio Alemão(35). Seven times the bucket bites, until the vehicle is full. A

wave and a “see you”, and already the next truck is rolling intoposition. Another monster with tires 2.50 meters in diameter,courtesy of Caterpillar. And so it goes on – dig, swing, dump –for 14 hours a day the excavators manned by Geraldo SilvaPinto and his colleagues burrow into the Brazilian soil.

We’re at the Alegria iron ore mine, around 100 kilometerssouth east of Belo Horizonte. With an annual output of

From the mine in Brazil to the hand-over of a new VW Golf to its proud owner, step by step, STIL hastraced the transformation of the raw material iron ore into a high-quality product ‘made in Germany’

Half way round the world in 50 days

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around nine million tons, it is one of the country’s mid-sized mi-nes and belongs likes most others in Brazil to the “CompanhiaVa-le do Rio Doce”, or CVRD for short. Salzgitter Flachstahl GmbHsources 1.4 million tons of iron ore per year from this conglome-rate which has become one of the largest suppliers of raw materi-als to the Salzgitter Group.

10.12 hours: About a kilometer from the excavation site,Tereisio Alemão tips his load onto the storage pile awaiting theatten-tions of the “cracker”. Here sand and rock are separatedfrom the ore which, dependent on the customer’s order, is crus-hed into various sizes from pebble-sized lump ore to fine powder.The waste is minimal, given that according to mine geologistCaio Libanero (34), “the ore content in our mine is between 70and 90 percent.”

12.30 hours: While the order delivered by Tereisio at 10.12 hasbeen making its serpentine way through Alegria‘s super-crackerto emerge sorted and cleaned and ready for shipment from themine’s own rail depot, Libanero the geologist takes our photogra-pher to the highest point of the mine, 1340 meters up. The viewextends far into the interior. The green and gently rising hills cladwith eucalyptus trees are reminiscent of the Black Forest. At thisaltitude, the climate is pleasantly comfortable. A fantastic sight –if it were not for the wounds that open-cast iron ore mining hasinflicted on the landscape.

But in matters of environmental protection, Brazil is catchingup fast. Says Libanero the geologist: “For a long time now wehave been back-filling worked-out pits with soil and restoring thevegetation.”

17.15 hours: Quality controller Lindemberg Marcio da Silva(30) bids farewell to his colleagues at the mine’s administrativeoffices. He intends to take a shopping trip with his wife this eve-ning to Belo Horizonte (you can read more about the da Silva fa-mily bottom left on this double page). As he is leaving the site, ashrill whistle echoes across the Alegria freight yard which is loca-ted right beside the main gate.

A vast train slowly picks up speed. It is the fourth train of theday – and the last. It takes two locomotives to haul the 80 cars,each of which carries an 80 ton payload. It will take 17 hours forthe train to cover the 600 or so kilometers to its destination onthe Brazilian coast – the port of Tubarão ...

March 8, 15.35 hours: Four hours after the arrival of the orefrom Alegria, with a steady hand Captain Alexandre José de Mou-ra (41) guides his bulk ore carrier “Docebay” into the narrowharbor basin at Tubarão. The 150,000 ton vessel with its crew of23 will lie here for 24 hours before setting off back to Europe.And while de Moura is still a little pale as a result of sea sickness

Tereisio leans againstthe wheel of his truck

Sandro Mizaeland his col-leagues in thelaboratoryregularly checkthe quality ofthe ore excavat-ed at Alegria

Super-cracker:Behind thesewalls of corru-gated sheetingthe ore is clea-ned and crushed intovarious sizes

The rail yard:Four times aday a trainleaves the Alegria mine – each one hauling 80cars carrying80 tons a piece

The mine is their life. This iswhere they earn their money,this is where they met and fellin love: Sueli Maria dos SantosSilva (39) and LindembergMarcio da Silva (30). The qua-lity inspector and the assistantchemist each earn around 1500Real per month (roughly EUR

460). The couple live with theirchildren Iago, 5, and Igor, 2, inthe little town of Mariana.Their three-room apartment ina simple block cost them so-mething in the order of EUR15.000. The Silvas are a typicalmiddle class Brazilian family.Once a week in their Fiat Pan-

da they drive to Belo Horizon-te to do their shopping. Buteven in Brazil the housekee-ping budget generally doesn’tquite balance, even if you’remiddle class. Sueli Silva: “Breadand milk have just gone upagain. They both now cost overone Real ... !”

A loaf of bread costs around 30 cents

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the night before (“It can happen to captains too, you know ... !”),outside is a hectic bustle of activity. Less than 30 minutes after theship has tied up at the pier, the first of the ore is hustling intoholds – including the load from Alegria.

The ore arrives, is recorded, tipped, briefly stacked and thenloaded onboard ship by conveyor belt – long storage times are aluxury the port at Tubarão cannot afford. The flood of fresh supplies arriving here around the clock by rail from the ore minesof south east Brazil is simply too great. The flow is managedamong other ways by the most modern train routing system inSouth America. Control room operator Oladir Sales (36): “Fromhere we control more than 7,000 kilometers of track – rightthrough to the endless sidings where the ore cars wait to be un-loaded.” Three dozen 80-car trains, with each car carrying 80tons, arrive in Tubarão each day – 360 days a year.

Tubarão is the third largest ore port in the world – as well asbeing home to a vast steel works. Some 9,000 people work here atthe northern end of a broadly curving bay – across the waterfrom the teeming city of Vitória, known fondly by its million-plusinhabitants as “Little Rio”.

March 9, 20.20 hours: Four hours behind schedule the “Doce-bay” departs from Tubarão, heading for Rotterdam and Hamburg. Laden with ore from Alegria and other mines, the shiplies deep in the water. Captain de Moura waves goodbye to hiswife on the quayside and hopes for a calm voyage …

March 29, 04.15 hours: After a 15-day crossing and five dayslay-over in Rotterdam, early in the morning the “Docebay” slipsinto the port of Hamburg. Its destination is the Hansaport just

beyond the Köhlbrandbrücke, Hamburg’s bulk cargo terminal –51 percent owned by Salzgitter AG.

March 29, 5.20 hours: Hardly has the “Docebay” docked beforethe hatch covers are off and unloading begins. Without a pausethe remaining 80,000 tons of ore are excavated from the belly ofthe “Docebay” and carried by conveyor belt to the storage areasimmediately behind the pier.

April 5, 9.05 hours: With the “Docebay” long since making asteady 16 knots on its return voyage to Tubarão, a 38-car DB Car-go train departs from Hamburg’s Hansaport. It is laden with theore from Alegria, and its destination is the rail depot in Gleidin-gen, four kilometers from Salzgitter.

There, as usual at around 17.00 hours, Deutsche Bahn willhand over the wagons to the Group’s own rail service VPS (Ver-kehrsbetriebe Peine-Salzgitter) which hauls them to the blast fur-nace bunkering plant. Three or four such trains arrive at theworks each day.

April 6 to 8: The ore which in the last 30 days has coveredaround 12,000 kilometers by sea and rail is now transformed inless than 48 hours at the Salzgitter steelworks from a simple rawmaterial into a high-quality, versatile product - steel.

The starting point for this complex process is the blast furnace.Belt conveyors feed the lump ore, coke and other ingredients intothe furnace. Hot air blasted in from outside through nozzles thatring the furnace melts the brew at a temperature of 1,500 degreesor more. The molten pig iron and slag collect at the bottom ofthe blast furnace where they are separately tapped (drained off)about a dozen times each day. The “passage“ through the blast

Dig, swing, dump: for 14 hours aday the excavator operators andtruck drivers keep the ore coming

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furnace takes around eight hours. Each tapping yields some 600tons of molten pig iron and 150 tons of slag. The two blast fur-naces at the Salzgitter works produce up to 12,000 tons of pigiron per day.

The iron in liquid form flows via a system of channels into spe-cial transport containers known as transfer ladles which are haul-ed by a locomotive to the steelworks some 300 meters or moreaway. There the pig iron is desulphurized and poured into hugecontainers, the converters.

By blasting in oxygen during the converter process the impuri-ties in the iron such as carbon, silicon, manganese and phospho-rus are burned off. The process takes 14 minutes – at the end ofwhich the iron has become steel.

In addition, dependent on customer requirements, certain al-loying elements such as titanium, chromium or manganese areadded to the steel in order, for example, to make it highly ductileor extremely hard. Only in this condition can the material beused in the way it is needed.

The clean, liquid steel is now cast into slabs via the continuouscasting line. Next door in the hot mill – a shop 500 meters inlength – these slabs are rolled to reduce them from a thickness of25 centimeters to around 1.5 millimeters. The mill has the powerto squeeze a 12 meter long slab into a 2000 meter long strip ofmetal which at the end of the shop is then wound tightly into acoil.

Dependent on its intended use, the steel may now be shippeddirect to the customer. Or it may pass through a variety of pro-cessing stages at Salzgitter Flachstahl GmbH or other Groupcompanies. Steel for the automotive industry, for example, iscold-rolled down to thicknesses of as little as 0.4 millimeter.Some of this steel may then be galvanized, before being made ready for dispatch to the customer.

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The last few meters: The train from Alegria draws into the rail yard at Tubarão

There is ore enoughto last for everWhere does the ore come from that is smelted in Salzgitter? How is itobtained? STIL spoke to three experts at SZAG:Mario Lanza, Rainer Stoll and Klaus-Henning Großpietsch.STIL From which countries does Salzgitter AG mainly source its iron ore?MARIO LANZA Most of the ore, some 1.6 million tons, comes from South Africa. Then there are 1.4 million tonsfrom Brazil, 1.1 million tons from Swe-den and 0.7 million tons from Canada.STIL What is distinctive about Brazilian ore?KLAUS-HENNING GROßPIETSCH It is cleanto smelt and has a high iron content.STIL Why isn’t ore still mined in Ger-many as it used to be?RAINER STOLL The iron content of orefrom our own mines is too low.STIL How long will the known ore de-posits around the world last for?KLAUS-HENNING GROßPIETSCH From a geological perspective, there are so many known deposits that there is noforeseeable likelihood of their being ex-hausted.


From Brazil toHamburg(1) The line from Alegria winds

its way for around 600 kilome-

ters down to the coast of Brazil.

Its destination is Tubarao, the

third-largest ore port in the

world

(2) Freight cars loaded with iron

ore wait to be unloaded at the

port of Tubarao

(3) The “car dumpers” flip the

freight cars complete with track,

tipping the ore into under-

ground bunkers

(4) Giant bucket loaders keep

the ore moving at the port

(5) The port control center whe-

re the rail network throughout

the province is monitored

(6) Tubarao: 1st Officer Paulo

Abreu supervises the loading of

the “Docebay”. Hours later the

ship departs

(7) Hansaport Hamburg – 20

days later: Bucket-load by

bucket-load the ore emerges

from the holds of the ship and is

taken by rail to Salzgitter

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4 5

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April 18, 9.30 hours: A truck carrying three coils of cold-rolledsteel pulls out of the yard at Salzgitter AG. Its destination: theVW plant in Wolfsburg, where Salzgitter steel is used to make thebodies for VW’s Golf models.

April 18, 17.40 hours: Immediately upon arrival “just in time”in Wolfsburg the three coils are unwound in the No. 1 Press Shop(at 100 meters per minute), cut to size and formed into side pan-els and roofs, hoods, tailgates and wings. And so it continues:Over the next 18 hours, human workers and robots bring the bodies to life. There’s the dashboard, steering wheel, windows andmuch, much more to be fitted – after all, a Golf consists ofaround 9,000 individual components.

April 19, 12.15 hours: The Golf has reached the stage of finalassembly. The moment has arrived at which the pre-assembledand painted “top” of the vehicle is wedded to the similarly pre-as-sembled “bottom”, the power train. Then the wheels are fitted, thevehicle undergoes a final inspection followed by a short test driveon site (every Volkswagen is briefly test-driven by specially train-ed drivers) – and the Golf is ready for its future owner.

April 26, 12.10 hours: Helga Angermann from the town of Zie-pel in Saxony-Anhalt gently brushes her hand over the gleamingblack hood of her new Golf. She has just been handed the keys tothe vehicle at VW’s Autostadt, and her eyes are alight with joy.Little does she realize as she cautiously joins the traffic on the A2autobahn at around 13.00 heading back towards Magdeburg, thatless than eight weeks ago the most important raw material ofwhich her new car is made was just being dug out of the groundin Brazil. By Geraldo Silva Pinto – 12,000 kilometers and moreaway from Germany…

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From Salzgitterto Wolfsburg(8) Aerial view of the Salzgitter

works: The entire manufacturing

process takes place on site – from

smelting the iron ore to the pro-

duction of high-quality steel

(9) One of the two modern blast

furnaces which together produce

12,000 tons of pig iron per day

(10) Tapping the furnace:

The molten iron flows through

a system of channels into special

transport containers.

The workman is wearing protec-

tive clothing

(11) The molten iron is hauled

by rail in so-called transfer ladles

to the steelworks some 300 meters

away

(12) The liquid steel is molded via

the continuous casting line into

slabs which are trimmed to the

desired length by flame-cutters

(13) In the hot mill the slabs are

heated to rolling temperature

and reduced in multiple passes to

a thickness in the order of 1.5

millimeters. The resulting steel

strip can be up to 2000 m in

length.

(14) For the automotive

industry, the hot-rolled strip is

then cold-rolled to as little as 0.4

millimeter in thickness and

galvanized

(15) Bye-bye, Salzgitter: A crane

carefully lifts the coil onto a

truck...

(16) ... which conveys it to VW

in Wolfsburg

(17) Sparks still fly, even when

body parts are being welded by

robots – human workers are a

rarity in these areas

(18) A Golf can travel about 20

kilometers around the pant be-

fore it is finally complete. Here

the characteristic shape of the

Golf is now recognizable.

(19) Doesn’t it gleam and shine?

Helga Angermann proudly

brushes her hand over the hood

of her new black Golf. The raw

material started life in Brazil.

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16 17

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Hamburg

Berlin

LauchhammerKöthen

Fürth

MannheimPlochingen

Munich

LutinStrasbourg

Paris

Madrid

Milan

Scunthorpe

HarrogateDrachten

Düsseldorf MülheimGladbeck

Hannover

Prague

Budapest

Bucharest

Slupca

Kassel

Lulea

Oosterhout

RogoznoOsterholz-Scharmbeck

Katowice

Sofia

➣

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TRADING

The organization of Salzgitter Mannesmann Handel GmbHActive at 63 locations in 27 countries

Operating a tight Europe-an sales network, as wellas worldwide trading

companies and agencies, the Salz-gitter Mannesmann HandelGruppe (SMHD) is ensuring theinternational presence of the products and services of the Salz-gitter Group.

SMHD is headquartered inDüsseldorf and acts as compe-tence center performing strategicand administrative tasks for theassigned companies.

The organization structure issubdivided into three areas,namely Stockholding Trading inEurope, International Tradingand the agency business.

Stockholding trading in Eu-rope is fielding a wide range offlat products, beams and tubes.Customer services such as pre-processing, logistics and consult-

ing, for example, are gainingincreasing significance.

By way of companies, repre-sentations and agencies SalzgitterMannesmann InternationalGmbH (SMID) is maintaining apresence in all key business andindustrial locations worldwide. Inaddition to steel and tube prod-ucts, SMID is also offering a ser-vice portfolio extending all theway through to turnkey projectconception and realization.

European agency businessforms the third area, and is as-signed to SMHD in organization-al terms. The core function is thesale of products produced bycompanies of the Salzgitter AGGroup.

All in all, Salzgitter Mannes-mann Handel is active in 27countries, at 63 individual loca-tions.


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“We know the international markets”Interview with Heinz Groschke, Executive Board Director responsible for Trading, and Dr. GerdSchöler, Executive Director of Salzgitter Mannesmann Handel

The Salzgitter Group is comprised offour divisions. One of these is Trad-ing, which in 2005 generated

around EUR 3,24 billion in sales, repre-senting about a third of the Group total.The largest company in this Division isSalzgitter Mannesmann Handel GmbH,based in Düsseldorf. STIL talked withHeinz Groschke, the Salzgitter AG BoardDirector responsible for Trading, and Dr.Gerd Schöler, Executive Director of Salz-gitter Mannesmann Handel, about thecompany’s orientation.STIL How is Salzgitter MannesmannHandel structured?HEINZ GROSCHKE There are essentiallythree elements. Firstly Steel Stockholding -we sell a broad range of flat rolled prod-ucts, beams and tubes via our branches inGermany and across Europe. Then there isInternational Trading, which maintains apresence via companies and representativeoffices in every major center. And finallythe SZAG manufacturing companies alsosell their products via our European agen-cies. We are represented in a total of 63locations spread across 27 countries –from Lauchhammer to Singapore.Our headquarter in Düsseldorf is a centerof competence which directs the orienta-tion of the entire Salzgitter Trading group,handling strategic and administrative du-ties. In this way we have a clear separationof central and decentral tasks.STIL The “Mannesmann” brand and thedistribution of Mannesmannröhren-Werkeproducts were integrated into your Divisionin 2005. What significance does this have forthe Group and its customers?GROSCHKE Mannesmann is known theworld over as name and as a product. Weat the Trading Division have already madea name for ourselves in recent years sellingtubes, especially welded tubes. Followingthe excellent progress in integrating Man-esmannröhren-Werke into the SalzgitterGroup, we decided to merge our commonstrengths and standardize our internatio-nal operations under the same name. Thishas already had a recognizable effect onhow we present ourselves in the market,

and internally also on the creation of anefficient network.STIL What functions does the structure ofthe Trading Division allow it to undertakefor other divisions of the Salzgitter Group?GROSCHKE Through our sales networkwe are in close contact with customerseverywhere. We therefore very quicklylearn which products and services thechanging markets require. The pre-proces-sing center in Lauchhammer and the steellogistics center in Baunatal are goodexamples. More particularly, it is an estab-lished element in our strategy to offermore service and become more tightly in-tegrated into customers‘ supply chains.Through our international trading activi-ties we are constantly up to speed with theessential markets. Which is helpful not only in good times but also when timesare hard for sales. Because we know theinternational markets, we also know wherewe can lend support, where the opportu-nities lie and where we need to be moreproactive.DR. SCHÖLER Ultimately, it comes downto the fact that the companies in a groupthe size of ours stand to profit from ourproximity to the market, because we cantell them how the global steel markets arechanging and responding.STIL Salzgitter Mannesmann Internationalhas been restructured in recent years. Wheredoes this unit stand now?GROSCHKE First of all you have to con-sider that International Trading was alwayseconomically successful. On the otherhand, we have distanced ourselves fromthings which were not part of our core business. We have also discontinued someoverseas activities, for example in Malay-sia. The foundation for our present successwas laid in years past. In 2002, we funda-mentally revised our business structureand adapted the organization of SMID ac-cordingly. Also we have implemented aneffective instrument in the form of opera-tional controlling.STIL Does that mean the Group is con-trolled from behind a desk on the basis offigures?

DR. SCHÖLER It wouldn’t work that way.Of course we need controlling and riskmanagement systems that work – not justas reporting instruments, but primarily toassist the responsible operational staff onsite, at their respective locations. Actingentrepreneurially means recognizing andseizing opportunities and at the sametime identifying and avoiding risks. Fail todo both simultaniously, and you will leada company to ruin. An entrepreneur whorelies solely on gut instinct, lets his heartrule his head and takes decisions based onmisplaced commitment will still fail in theend. On the other hand, a slave to figureswho knows every risk the world can offerand makes future decisions based on pastproblems will drain the life out of a com-pany over the medium term. It may soundcommonplace to say it, but we need both:head and heart.GROSCHKE This also has to do with re-specting other cultures. It is importantthat we and our staff are perceived as peo-ple taking action, as entrepreneurs, but al-so as individuals, as people with a humantouch. This calls for strong commitment,matched by a high degree of personal flexibility and enthusiasm.

TRADING

Heinz Groschke (left) and Dr. Gerd Schöler

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Break time: Shovelboss Stacey (right)and foreman DaveStajkowski are sittingin the bucket of thePC 4000 discussingthe shift plans for theweeks to come. Itmakes no odds to the excavator, itworks all the time

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NEWS REPORTS


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Viewed from the edge of the open-cast palladium mine, themighty machine looks tiny. Like a toy excavator tirelesslyloading trucks which look even tinier. The pit in Canada’s

province of Ontario is 330 meters deep. Deep enough to swallowCologne cathedral, the Eiffel Tower, even Hamburg’s televisiontower.

Before we leave the observation point in our dusty pick-up tohead for the floor of the pit, we cast one last glance over our shoul-ders. Behind us lies Canada‘s virgin landscape of lakes and forests– magnificent. “When the mine is worked out in seven or eightyears‘ time, we have to restore the area to its original natural state,”our driver Dave assures us. “The pits become lakes, and the landsurface is covered over with top soil. That’s in the contract with theCanadian state.”

Tiny excavators, toy trucks? 20 minutes later down at the bot-tom, we know better. The true dimensions of the machines thatwork here are astounding. The “toy excavator”, a Komatsu PC 4000built in Düsseldorf using Salzgitter steel, is about eight meters tall,eleven meters long and seven meters wide. And as for the truckswaiting to be loaded, their tires alone can be twice as tall as themen and women who drive them. Giants’ toys, maybe.

After all, they have to shift some hefty chunks of rock. Some ofthe granite blocks which litter the floor of the pit after the dailyblast of explosive can measure a meter across. That’s quite a loadto haul to the crusher. Once there, they are ground into a coarsepowder which is the end product of the mine. Before the palladi-um can be extracted, the powder has to be trucked 1000 kilometersfrom the mine to a special laboratory in Toronto.

The noise is deafening. Again and again the excavator bucketsbite into the mound of granite, pivot around and dump their loadwith a roaring crash into the bed of the waiting truck. Four or fivebucket-loads and the truck is full. Then the next one pulls into po-sition. 24 hours a day, 365 days a year. At least in theory. It’s hardto imagine now in summer with the thermometer past the 30 de-gree mark. But in winter the mercury can fall to 40 degrees belowzero – and on some days it is impossible to work. “Fog is bad too,”says Dave, “it means we have to cease operations for safety rea-sons.”

The strain on the machinery is huge. Not just because work con-

In the Canadian province of Ontario they’remining palladium. With excavators that usesuper-hard steel from the Salzgitter Group

Putting the bite on granite

NEWS REPORTS

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The 400 men and women who work at the palladium mine not only earn

up to 5000 Canadian dollars a month, they also enjoy free board

and lodgings (1). The trucks at the mine are regularly serviced

in the workshop (2). Every worker is entitled to a set of trousers which are stacked on labeled

shelves (3). Excavator driver Stacey in the cab of his PC 4000 (4).

Foreman David Stajkowski in his quarters. Like his colleagues, he has a

bare six square meters of space

Shower and toilet are shared with his neighbour (5). Gas station:

The mine’s excavators and trucks consume a staggering 60,000 liters of

diesel per day (6). The garbage container attracts bears from all

around. Up to 14 of the creatures havebeen seen at once. The bears are so cunning that they can open the locks on the containers (7).

Foreman Dave Stajkowski (right) andhis colleagues enjoy the

Canadian sunshine in front of the mi-ne office (8)

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tinues round the clock. Granite is one of the hardest rocks in exis-tence. The excavator buckets in particular must be able to with-stand the immense demands made on them – especially the abra-sion. “Normal steel is no use here at all,” says Ken Whiddon ofTranswest Canada, the company which holds the contract fromKomatsu to maintain the machines. “It would just be worn awaylike nothing at all.”

Super-hard steel is called for here. And it comes from Ilsenburg,supplied by Salzgitter AG. Parts of the buckets are composed ofwhat is called chill-hardened steel, a specially hardened materialwhich is tough enough to put the bite on granite (more on page25). This steel is also an indispensable part of the Komatsu PC5500, which is digging out granite in the neighboring pit in “Lacdes Isles”.

Stacey is perched high up in the air-conditioned cab of the PC4000. 37 years old, sunglasses, a cool dude. His right hand steersthe bucket while his feet operate the pedals that control the tracksof the excavator. He’s all the more appreciative of his speciallysprung seat when the tracks lurch over some of the larger blocks ofgranite. The machine staggers sickeningly, like a fairground ridethat other people pay good money to enjoy. Stacey is content. Hissalary of around 5000 Canadian dollars a month is well above thenational average, his job is secure – and through his headphones hecan tune in to the hottest rock station in the province. Stacey is theking of rock ’n’ roll!

The Lac des Isles palladium mine belongs to the North AmericanPalladium group, the world’s second-largest palladium mining out-fit. It is located some 120 kilometers north of Thunder Bay in theCanadian province of Ontario. Around 400 workers are employedat the open-cast pit to mine the palladium, without which exhaustgas catalytic converters would be useless (see also page 24). Eventhough a ton of granite yields only three to five grams of pal-ladium, it’s a worthwhile business: Palladium is more expensivethan gold. And the icing on the company’s cake: Where palladiumoccurs, there are always gold, copper and nickel to be found aswell. Spokesman Bill McKinney explains, “Last year these by-prod-ucts alone earned us 40 million dollars.” The deposit was discover-ed nine years ago, and the mine is reckoned to have another sevenyears left in it – half time, as it were.

18.00 hours, and the next shift takes over at the PC 4000. Themen work twelve hours at a stretch for seven days, then a week off.Stacey hands over to his buddy Ben who will control the excavatorthrough till the next morning. What happens when it gets dark?“We turn on the lights,” he laughs as he climbs the 16 steps up tothe driver’s cab.

We follow Stacey back to the camp. Like all the workers he livesin a mobile container, in a tiny partitioned space with all of sixsquare meters of privacy. After a shower – between every two livingunits is a bathroom shared by both occupants – it’s off to the can-teen for a meal. Today there are meatballs, spare ribs and fries onthe menu. Stacey asks for double helping, the work has given himan appetite.

Before Stacey heads off to Thunder Bay to his wife and two chil-dren – “starting from now I’ve got three weeks vacation!” – hedrops by the garbage containers on the fringe of the mine, as hedoes every evening. This is regularly the setting for a spectacle ofan unusual kind. “That’s when the bears come,” says Stacey. “Lastweek on one evening we counted 14 of the beauties.”

Word has got around amongst the black bears that there aresome tasty kitchen scraps to be found in the containers. “Thesebears are pretty damn clever,” says Stacey. “They’ve long since work-ed out how to unlock the containers to let the whole family in.”

Small driver – big machine: Beforethe excavator can load the graniteonto trucks, the rock must be blastedinto transportable chunks

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■ Palladium, atomic number 46,is a metal, the lightest element inthe platinum group. Of all theelements in this group it also hasthe lowest melting point and isthe most highly reactive. Palla-dium has the greatest capacity ofall elements to absorb hydrogen:at room temperature it can bind

900 times its own volume.

■ One use for palladium is in thecatalytic converters fitted to petrol engines, however it is alsoto be found in jewelry items andwhite gold (palladium “decolo-rizes” gold). It is also used as acontact making material inmobile phones and other tele-

communications equipment aswell as for tooth implants.

■ Palladium was discovered in1803 by William Wollaston. Henamed it in 1804 after the as-teroid Pallas discovered in 1802.

■ The melting point of palladi-um is 1554 degrees Celsius andits boiling point is 2963 °C.

Palladium: in cars and mobile phones

The Komatsu works in Düsseldorf: Welding the hoe of a PC 4000, which is made of chill-hardened steel


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Steel from Ilsenburg is super-hard

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The steel is 900 degrees hot whenthe shock hits it. Cold water gushes down on to it at an average

pressure of 30 bar. An elemental processwhich generates more than just hissingand steam. The steel changes its structure.As it cools it become super-hard and mu-tates into chill-hardened steel. Ideal fordemanding applications – like open-castmining in Canada.

Andreas Rost is proud of the plant.Since 2003, the Salzgitter chill-hardenerhas ranked as the most modern in theworld. Roughly 20 million euro were in-vested in order to guarantee somethingnot many steel manufacturers can offer:the ability to produce chill-hardened,wear-resistant steel to the tightest tol-erances and with highly homogenousproperties.

Even though the chill-hardener is lo-cated in Salzgitter for economic reasons,responsibility for this special steel lieswith the subsidiary Ilsenburger Grob-blech GmbH some 40 kilometers awayfrom Group headquarters. The steel issmelted in Salzgitter and brought to Il-

senburg as slabs. There the slabs are rol-led to order within extremely tight thick-ness tolerances, before returning to Salz-gitter as plate. Then it’s into the furnacebefore taking a shower – and the wear-re-sistant steel is ready. It sounds simple, butin fact it is a highly difficult process toturn out quality goods.

Ilsenburger Grobblech GmbH shipsout around 50,000 ton of chill-hardenedsteel each year, the bulk of it in two grades. “Maxil” is used for example forcrane jibs, while “Brinar” is used for con-crete mixers, road rollers and excavatorbuckets. One of the major customers forthe “Brinar” grade is Komatsu in Düssel-dorf, formerly Demag. This is where theexcavators are built which are used at thepalladium mine in Canada. Steel accountsfor 60 percent of these monsters. One ofthe suppliers to Komatsu is steel tradingcompany Ahlener Stahlhandel. Sales ma-nager André Gehrke explains: “For yearsnow Komatsu has been our best custo-mer. In 2006 we will be supplying 4,000tons of standard plate and 2,000 tons ofchill-hardened steel.”

Komatsu manufactures various excava-tor models in Düsseldorf, from the PC3000, which is made up of 20,000 parts,via the PC 4000 to the PC 8000 which ta-kes three to four months to build, featu-res twin 1500 kilowatt engines and costsaround eight million euro.

Building an excavator can be dividedinto two phases: First comes the steelwork, machining and assembly, then at-tention shifts to the “guts” of the ma-chine. The engines, pumps and hydraulicsare installed and the hoses and cableslaid. Not forgetting the driver’s cab. Theidea is that future drivers should be ableto work in comfort – and so air condi-tioning, a microwave, coffee machine andeven a wash basin form part of the stan-dard kit.

Every ten days on average at Komatsuit’s time to reach for the ear protectors.That’s when another finished excavator isready for its trial run – and the walls inDüsseldorf literally start to shake. “We al-ways used to do it outside,” says mechani-cal engineer Henry Schwarz, “but we can‘tany more because of the neighbours.”

Here in the most modern plant in the world some 50,000 tons of chill-hardened steel are produ-ced each year. A major customer is Komatsu in Düsseldorf, where the mega excavators are built

Chill-hardened steel is recognizable at first sight by its “marbled” surface structure.

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Mannesmann – a name that lives up to its pastFollowing the purchase of the rights from Vodafone, the Salzgitter Group is making increasing use of the appeal ofa brand name prized the world over

MANNESMANN


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Two men, one logo:Wolfgang Eging,Chairman of the

Executive Board ofMannesmannröhren-Werke GmbH (right),

and Prof. Dr. HorstWessel, Director of theMannesmann Archive

It was in 1995 in the Czech Republic that Professor Dr.Horst A. Wessel, Director of the Mannesmann Archive,had a striking experience. His intention was to take the

opportunity afforded by a visit to the Erzgebirge, themountains on the border between Germany and its easternneighbor, to take a look at the former Mannesmann plantin Komotau, known today as Chomutov. “As I searched forthe factory site, I spoke to lots of people in German and inEnglish. But none of them understood me,” recalls Profes-sor Wessel. “It wasn’t until I sketched out a large tube withmy hands that I met with success. ‘Oh, Mannesmann’, saidthe Czech and pointed me on my way. He still knew thename, even though the plant was expropriated 60 years agoand has since had an entirely different name.”

Not only in the Czech Republic is the Mannesmannbrand name still a recognized concept. In the course of histravels Wolfgang Eging, Chairman of the Executive Boardof Mannesmannröhren-Werke GmbH, has found that theterm to this day remains a synonym for superlative qualitytubes – in Asia, Africa as well as America.

The intention is that this “value”, as Eging describes it,should in future be more intensively exploited for the be-nefit of the Group. Following the purchase of the rights tothe name from Vodafone in 2004, a series of undertakingshave been renamed. Wolfgang Eging explains: “We are in-creasingly using the value of the brand in the tradingnames of our companies and in our approach to the mar-ket. Consider, for example, the Salzgitter MannesmannHandel trading companies, Mannesmann Fuchs Rohr andour Dutch subsidiary Mannesmann Robur.” A further 14international Salzgitter Group companies have also beenrenamed – from “Salzgitter Mannesmann International(USA) Inc.” in Houston to “Salzgitter Mannesmann Inter-national (Asia)” based in Singapore. As Wolfgang Egingcontinues: “At trade fairs, too, the name Mannesmann nowappears beside our parent group logo.”

The long history of the Mannesmann trademark is doc-umented in the Mannesmann Archive which has been inexistence since 1938. With more than 10 kilometers ofshelves stacked with files, several million photos, hundredsof films and a huge collection of artifacts, the archive ranksamong the best known and most respected institutions ofits kind in the world.

The trademark MW, the unmistakable logo of Mannes-mannröhren-Werke, has been around with only minorchanges since 1912. Archive director Professor Wessel ex-plains: “The MW in a horizontally divided circle was thebrainchild of the famous architect Peter Behrens, who alsodesigned the original Mannesmannhaus in Düsseldorf. Thelogo was registered on November 12, 1912, in the GermanReich and in January of the following year it became Man-nesmann’s registered trademark worldwide.”

The original record of the trademark which documentsthe whole procedure has outlived quite a few of the coun-tries listed in the hand-written register, Mesopotamia, Pa-lestine and British New Guinea, to name but three. Besidesthe MW mark, the word Mannesmann is also registeredinternationally as a trademark.

The archive is a treasure trove. It contains for example

MANNESMANN

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an original autograph of Queen Elizabeth who visitedHuckinger Hüttenwerk on May 25, 1965. There’s an oldpenny-farthing on which Director Wessel to the horror ofhis colleagues occasionally wobbles around the Mannes-mann site in Mülheim. This ancient bicycle is welded outof solid metal, uncomfortable and unsafe. It wasn’t untilthe invention of the Mannesmann tube that it became pos-sible to build the present generation of uncomplicatedmachines. And there is Max Mannesmann‘s “glove shoe”.Over 100 years ago he and his brother not only inventedthe Mannesmann process for the manufacture of seamlesstubes - there were also one or two inventions of lessermoment. Like this shoe which was patented on August 20,1907.

The glove shoe originated in the era of liberal reform atthe dawn of the 20th Century when the outdated and un-comfortable dress code of the preceding decades was calledinto question. Max Mannesmann, who delighted in wea-ring a string undershirt made to his own design, rejectedthe stiff attire of his forebears. He particularly the dislikedthe high, tight-laced boots dictated by women’s fashionsand gave serious thought to a style which would supportthe body’s natural posture. One result of his inventivenesswas the glove shoe – which never caught on …

Preserving this history and maintaining the archive coststime and money – money which the Mannesmann Archiverepays many times over through its work. “Three quartersof our job has to do with here and now,” says ProfessorWessel, “we use the past almost on a daily basis in the in-terests of the present.” For example in safeguarding thecompany’s rights: “Again and again we find other compa-nies unlawfully using Mannesmann patents and inven-tions, and it can happen that similar accusations are madeagainst us,” says Wessel. “Thanks to our archive we aregenerally able to substantiate our interpretation of the law.”There is often a great deal of money at stake. “The value indispute can easily run into tens of millions of dollars.”

Or when it comes to cleaning up polluted sites: As longas twenty years ago the Environmental Protection Depart-ment of Mannesmann AG was one of the most intensiveusers of the Mannesmann Archive. Today its place has beentaken by the environmental supervisors at Mannesmann-röhren-Werke and the Real Estate Department. The learn-ing process that led to this situation was a costly one. Pro-

fessor Wessel explains: “As part of the specialization agree-ment with Thyssen in 1970 we took over a tube works inthe Düsseldorf suburb of Lierenfeld. Shortly afterwards wesold the site to the City of Düsseldorf for 14 million Deutschmarks and transferred parts of the plant to Düssel-dorf-Rath. The amount seemed reasonable, a good dealeven allowing for fact that the site had to be handed overfree of any existing pollution. The initial soil samples a-roused no suspicions, but it soon became apparent that theground was contaminated to an extent that we wouldn’thave believed possible. Wessel continues: “Had we not beenin a position to pinpoint the originator of this contamina-tion, we would have had no choice but to excavate the en-tire site, wash the spoil and back fill at a huge cost whichcould have been ten times the sale proceeds.

With the help of the archive, it was possible to provethat Mannesmann could only partly be held responsible.Nevertheless, with a 40 million Deutschmark clean-up billthe company came away with a black eye. “Once again thefact that the Group has this historical archive paid divi-dends,” says Wessel. A dividend which it pays to this day. Athird of claims for example for the rectification of damagedone by mining can be disproved because the Archive canprovide evidence that the areas concerned were neverowned by Mannesmann. “That saves a lot of money!” Andthen there is the public relations aspect: Professor Wessel,who has headed the archive since 1983 and is also Profes-sor of Economic History at the University of Düsseldorf,pens articles almost on a daily basis for newspapers rang-ing from the local “Neue Ruhr Zeitung” to the “FAZ”. Healso gives regular guided tours of the archive and lectures.All of which helps to cultivate the image of Mannesmann.A positive image, which dates back almost 120 years. Agood name is worth a great deal, hence the purchase of therights to the name Mannesmann. The brand is now beingredeveloped worldwide under the umbrella of SalzgitterAG.

Coincidentally, this joint approach is also symptomaticof the extent to which, five years after the acquisition, the“Mannes-men” now increasingly identify with the Salz-gitter Group. Wolfgang Eging explains: “Our joint successhas benefited the entire undertaking. We are well on theway, and I am keen to see even closer cooperation with theparent Group.”

For 100 years andmore Mannesmannhas been producing

tubes renowned the world over

The trademarkregister in whichthe original MWlogo is recorded


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Salzgitter AG is equally at home on Europe‘s race tracks: TheGroup is partnering with Mercedes in the German Touring CarChampionship. The annual Championship series is held in Europe, predominantly in Germany. The driver of the “Salzgitter-Mercedes” is the young Englishman Jamie Green. Besides the

name Salzgitter, the product brand name “Mannesmann” is alsoin the spotlight. The German Touring Car Championship is ahuge crowd-puller, attracting almost a million spectators in 2005.Not to mention the 2.5 million viewers who followed the com-petition live on television.

Steeling the show in DTM Touring Car racing

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■ On May 10, 2000, an ad-hoc announcement was made stating that Salzgitter and Mannesmann hadbegun negotiations with a view to the take-over ofMannesmannröhren-Werke AG.■ The discussions developed into negotiations whichbore fruit. It was announced on May 30 that: “SalzgitterAG and Mannesmann AG have reached an agreementsubject to compliance with all corporate legal and anti-trust requirements to transfer 99.3 % of Mannesmann-röhren-Werke AG stock to Salzgitter AG.”■ The various bodies, regulatory authorities and com-petition commissions – including among others theEuropean Union and the USA – subsequently approvedthe deal.■ It was clear at last that Mannesmannröhren-Werkewas once again a member of a group headed by a par-ent company with a strategic interest in the tubes bu-siness.■ In the months and years that followed, the MRWcompanies adopted the corporate identity of theGroup.■ In turn, their integration prompted a change in theorganizational structure of Salzgitter AG. Whereas pre-viously other business units had simply been satellitesof the dominant steel segment, Salzgitter now acquireda clear corporate structure comprising five separate di-visions.■ Since July 1, 2001, the Salzgitter Group has been headed by a small management holding company. Theindependent companies assigned to the various divi-sions operate autonomously, functioning on a decen-

tralized basis with a close orientation towards theirindividual markets. Alongside Steel and Trading, theTubes Division is a core business area.■ Further important steps towards integration includ-ed the transfer of interests in joint venture companiesinto the ownership of MRW.■ The stainless tubes manufacturer DMV Stainless ismeanwhile a wholly-owned subsidiary; with the pur-chase of the remaining 50 percent stake in Röhrenwer-ke Gebr. Fuchs, MRW is now the sole owner, and fol-lowing the acquisition of the outstanding 0.7 percentof MRW GmbH still held by ThyssenKrupp, Salzgitteris now the outright owner of MRW.■ The integration led to the fusion of various depart-ments and companies. In the field of research and de-velopment, for example, Mannesmann Forschungsin-stitut merged with elements of Salzgitter’s own applica-tions research to form Salzgitter Mannesmann For-schung GmbH. Salzgitter Mannesmann Altersversor-gung Service GmbH now looks after the beneficiariesof company pensions schemes throughout the Group.■ Since January 2005, the Trading Division has adop-ted the Mannesmann brand. The management compa-ny Salzgitter Mannesmann Handel GmbH has been re-named to emphasize its international competence intubes trading. In addition, numerous trading compa-nies worldwide have adopted the Mannesmann brandname.■ In the tubes business, Salzgitter AG identifies withand is committed to the ongoing strategic developmentof the Mannesmann brand.

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Putting theirnames to the contract, seatedfrom left: Dr. HeinzJörg Fuhrmann,Wolfgang Leese (both SZAG), Dr.Klaus Esser and Albert Weismüller (Mannesmann AG)

Salzgitter and Mannesmann – step by step integration

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Strong stuff: The Story of MannesmannIt all began with the invention of a rolling process for the manufacture of seamless steel tubes

The history of Mannesmann begins five years before the companywas actually founded with a technical achievement of brilliance: Itwas in 1885 in their father’s file-making works in Remscheid that

Reinhard and Max Mannesmann invented a process for rolling seamlesssteel tubes. With this invention as their capital contribution, by 1889 theyhad set up tube works together with various partners in Bous an derSaar, in Komotau in Bohemia (which at the time belonged to Austria), inLandore in Great Britain and in their native Remscheid. It was not untilthe 1890s, however, with the invention of the pilger rolling process thatthe brothers made the final technical breakthrough that turned theirconcept into a truly marketable prospect. The combination of pilger androtary rolling became known worldwide as the “Mannesmann process”,and it is successfully used internationally to this day.

Reinhard and Max Mannesmann were the first executive directors ofthe company, but stepped down from the board as early as 1893. In thesame year the company moved its head office from Berlin to Düsseldorf.

Before the end of the year in which the company was formed, theworld’s first pressurized oil pipeline was laid in the Caucasus using Man-nesmann pipes, and further shipments were subsequently destined forwater supply systems, pipelines, utility poles and modern street lightingthe world over.

Mannesmann initially remained purely a processor of steel and wastherefore dependent on supplies of input stock from other companies. Inorder to take control over price, delivery and above all quality, the mostimportant strategic goal at the start of the 20th Century was to developan independent source of input supplies. The first step came in 1906with the acquisition of Saarbrücker Gußstahlwerke AG, followed later bythe plate mill Blechwalzwerk Grillo Funke. Finally in 1929 Mannesmanncommissioned its own steelworks in Duisburg-Huckingen. Mannesmannwas now a vertically structured coal and steel concern, an arrangementwhich remained typical of German heavy industry until the 1970s.

After World War II, Mannesmannröhren-Werke was liquidated at theorder of the Allies and divided in 1952 into three independent compa-nies. By 1955, however, these three were reunited, before the mining busi-ness Mannesmann-Steinkohlenbergbau was folded into Ruhrkohle AG in1969. In 1970 Mannesmann reached a specialization agreement withThyssen. Mannesmann took over pipe and tube manufacture and pipelaying from Thyssen and in return handed over its own rolled steel man-ufacturing and plate processing operations in Germany to Thyssen.

The continuing process of structural change at Mannesmann was dra-matically accelerated in 1990 with the acquisition of the license to deve-lop Germany’s first private mobile phone network D2. In next to notime, Mannesmann was the market leader. In 1999 the Executive Boardof Mannesmann took the decision to focus the group on telecommuni-cations. The industrial activities were consolidated within Atecs Mannes-mann AG, with the intention of floating these units independently on thestock market over the coming years. At the start of the year 2000, how-ever, the British telecommunications company Vodafone secured a majo-rity interest in Mannesmann, putting an end to the company’s corporateindependence. In the same year Salzgitter AG acquired a majority hold-ing in Mannesmannröhren-Werke AG. With the integration of the latterinto the Salzgitter Group, the steel tubes with which Mannesmann hastraditionally been associated, once again became of strategic importance.As a core business within this steel-based undertaking, the potential andthe enduring modernity of steel tubes are clearly evident. The Man-nesmann brand lives on triumphantly in its original field. Mannesmann-röhren-Werke AG, renamed Mannesmannröhren-Werke GmbH with ef-fect from 2005, is the management company which heads the Tubes Di-vision of the Salzgitter Group.

The companies in this Division offer a wide-ranging selection of high-quality seamless and welded steel tubes and make a substantial contribu-tion to Salzgitter Group profits.

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Still standing:The lamp standard erected in 1906 outside Moscow’sBolshoi Theaterusing Mannesmann tubes

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The last pipes were shipped out of Bremen at the end ofJanuary 2006, marking the completion of one of the largest orders in the history of Europipe GmbH. Since

April 2004 some 630,000 tons of large-diameter pipes with wallthicknesses up to 34.1 mm have been sent to Norway, whereconstruction of the longest underwater pipeline in the world,nicknamed “Lange Led” is due to be finished by the end of2006. The pipeline will be used to tap a Norwegian gas fieldsnamed after one of the largest and most famous Viking ships –“Ormen Lange”. Once it is completed “Lange Led” will stretchacross the sea bed for 1200 kilometers, carrying gas from thenorth west coast of Norway as far afield as the east coast ofGreat Britain.

Even though orders of this magnitude are not unusual for

Europipe, this project presented a real challenge – not least be-cause the X70 grade steel modified for offshore applicationswas not exactly an everyday material to work with. In close co-operation with the plate suppliers in Mülheim and Dillingen,the steel was rolled specially to meet the high quality standardsrequired and delivered exactly on time. The welding, too, wasalso subject to some stringent requirements: When it came to

producing pipes with wall thicknesses up to 34.1 mm using so-phisticated grades of steel, Europipe’s substantial long-term in-vestments in welding technology paid dividends. The compa-ny’s new, ultra-modern transformers which were used for boththe internal and external welding machines proved more than amatch for this complex task. The pipes were produced at theEuropipe works in Mülheim an der Ruhr and Dunkirk, France.

Europipe, one of the world’s largest producers of large-dia-meter pipes, is a joint undertaking owned by Salzgitter subsidi-ary Mannesmannröhren-Werke and Dillinger Hüttenwerke.The company employs a workforce totaling around 1300 andoperates plants in Mülheim and Dunkirk as well as in Florida,USA.

Europipe offers a broad spectrum of tailor-made productsfor the economically efficient transportation of oil and gas. Itspipes are produced to meet national and international stan-dards (API, EN, ISO) and specifications (NACE, DNV, etc.), aswell as customers’ own specified requirements.

Large-diameter pipes designed for high internal pressuresnecessitate the use of extra-strong materials. To meet thesehigh-strength requirements, Europipe uses steels with a par-ticularly fine particle structure. Europipe achieves the desiredferritic-bainitic or purely bainitic microstructures by thermo-mechanical rolling with additional cooling. The input stock issourced from works operated by the two shareholders.

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Europipe GmbH is one of the leading manufacturers of large-diameter pipes. Since 2004 the com-pany has supplied around 630,000 tons to Norway for the world’s longest underwater pipeline

January 2006: The last pipes for the Lange Led projectwere shipped out of Bremen

The map shows the route of the pipeline

Ormen Lange

Nyhamna

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A broad spectrum of tailor-made productsfor economically efficient transportation

TUBES

Large-diameter pipes


It doesn’t always have to be heavy going: When applications call fortubes with tight dimensional tolerances, minimal wall thicknesses,specific mechanical properties or smooth surfaces, there is only

one solution – precision steel tubes.MHP is one of Europe’s leading manufacturers of precision tubes

with around 1100 staff employed at plants in Hamm, Wickede, Biele-feld-Brackwede, Holzhausen and Remscheid. The company suppliescold drawn and welded precision steel tubes for almost every applica-tion. As a top supplier of precision steel tubes to the automobile indu-stry, MHP Mannesmann Präzisrohr GmbH is developing products ofits own which help to optimize vehicle handling, comfort and safety.MHP precision steel tubes are used in many automotive applications:■ Drive train: Drive shafts, prop shafts, ball bearing cages, connecting

shafts■ Suspension: Shock absorber cylinders and casings, hollow piston

rods, gas springs■ Occupant protection: Airbags, impact absorbers, roll bars■ Fuel-injection: Ultra-high pressure diesel fuel-injection lines

(common rail technology)■ Engine/transmission: Cam shafts, balancer shafts, pump components■ Body/chassis: Stabilizers, axles, cross members, hydroforming

components

■ Steering: Power steering cylinders and steering components as well as hollow steering racks.

MHP precision tubes are also to be found in trade and industry. TheMHP product range of cold-finished precision steel tubes is as variedas their uses in mechanical engineering and plant construction.They are particularly suited to applications such as cylinder construc-tion, hydraulic and pneumatic lines and for machining, and they alsofeature in apparatus engineering, boilers and heat exchangers.

Mannesmann Fuchs Rohr based in Hamm and Siegen spe-cializes in HFI-welded steel pipes. Most of the company’sbusiness is in the medium pipes segment, though it offers

a range of diameters between 33.7 and 508 millimeters. High fre-quency inductive welded pipes have been used for decades in techni-cally sophisticated applications. Line pipes designed specifically forhigh pressures allow gas, oil, water and other media to be transport-ed and distributed safely and reliably. Likewise, the exploration ofessential raw materials would be unthinkable without welded steelpipes. And it would be hard to imagine how mechanical engineersand plant designers would manage without welded steel pipe andtube components. In addition to HFI-welded steel line pipes, Man-nesmann Fuchs Rohr also offers customers a range of coatings andsheathings to suit all soil conditions likely to be encountered. Man-nesmann Fuchs Rohr has over 100 years experience in pipe produc-tion and ranks as a globally active leader in technology. Both thecompany’s plants cover the entire value chain from steel to coatedpipes, and customers benefit not only from the increased availabilityafforded by targeted stockholding, but also from a technical advisoryservice that extends from the planning stage to the construction site.

MHP Mannesmann Präzisrohr GmbH is the number one choice for small-diameter precision tubesSmall-diameter tubes

Mannesmann Fuchs Rohr: The specialist in HFI welded pipes for the safe and reliable transportation of gas, oil, water and other media

Medium line pipes

Precision tubes for cylinder production (l.) and airbag housings

Pipes made by Mannesmann Fuchs Rohr

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“Credible capital market communicationdelivers results”Interview with Dr. Heinz Jörg Fuhrmann, Executive Board member Finance

Since Salzgitter AG was floated onthe stock market in June 1998, theGroup has attached high priority to

its communications with active and po-tential shareholders as well as financialanalysts. The quality of the investor rela-tions activities practiced by Salzgitter AGhas earned awards more than once fromthe business magazine “Capital“ and theSociety of Investment Professionals inGermany (DVFA). STIL talked with Exe-cutive Board member Finance, Dr. HeinzJörg Fuhrmann about the developmentin steel stocks, the Salzgitter paper andthe role of financial communication.STIL What are the criteria for successful fi-nancial communication?DR. HEINZ JÖRG FUHRMANN The most im-portant criteria are speed, consistencyand credibility. In addition, sustainabili-ty is also a decisive aspect. Sustainabilitymeans consistently making statementsthat also retain their validity in the longterm, possibly over a period of years. Ex-aggerated proclamations of corporate ac-tivities or euphemistic representations ofany given situation may bring short-term success in the stock market, but ex-perience shows that sooner or later youcan expect harsh punishment from in-

vestors who have been misled. Sustain-ability also means maintaining a con-stant level of communication, in goodtimes and in bad. The object of sustain-ably credible investor relations is not tosuperficially talk up the share price, butto convey both pleasant and unpleasantinformation without reservation. IR isnot a beauty contest, it is serious busi-ness practice: but it also needs an unmis-takable signature and a conscious noteof originality.STIL What means do you employ to com-municate with decision-makers in the cap-ital market?DR. FUHRMANN Since its flotation, Salz-gitter AG has made use of the entire ga-mut of financial communication. Everyyear, for example, we have held two con-ferences for analysts, even before it wasobligatory to do so. The deciding factor,however, is not to transmit simultane-ously on as many channels as possible,but to gain the confidence of investors asoutlined above through a continuous ef-fort. One obvious principle, of course, is

to observe the rules on insider trading.STIL What was the significance for Salzgit-ter in taking second place in the InvestorRelations Prize 2005?DR. FUHRMANN When one of Germany‘smost important business magazines, inconcert with the largest association re-presenting German financial analystsand institutional investors, reaches theverdict that the quality of Salzgitter AG’scommunication with the capital marketranks among the best that German cor-porations are currently achieving, that isan accolade with which one can rightlybe content. Nor is this second place anaccidental one-off: it marks the highestassessment of our investor relationswork to date by those outside the com-pany at whom our activities are directed.In recent years we have always rankedamong the front runners.STIL How important are classic industrialcompanies such as SZAG in the capital market?DR. FUHRMANN Such companies have meanwhile regained an appropriate level

FINANCE

Dr. Heinz Jörg Fuhrmann

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DAXMDAXThe European Steel Index (Datastream STEELEU)Salzgitter

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of importance. The financial scandalswhich emanated from the “New Econo-my“ boom have evidently had an effecton investors which has lasted to this day.Qualities once dismissed as old-fashion-ed, such as a sound balance sheet andstrong financial structures, sustainedprofitability and dividend yields havebeen back in demand for a while now.And since Salzgitter AG scores above-average marks in these respects, we areattracting substantial investor interest.STIL How has the perception of SalzgitterAG in the eyes of the capital market changed in recent years?DR. FUHRMANN After a somewhat difficultstart in 1998, we have meanwhile reached a very gratifying level ofappreciation. Besides our unremittingwork in the capital market, the broad-based activities of our colleagues in Cor-porate Communications have also play-ed a part in this success. Their effectiveimage campaigns and their systematicwork with the press have had a highlypositive impact on public perceptions.The image of a company and its prod-ucts will never dominate investor decis-ions which are based on economic ratio-nale, but it is certainly no accident thatcompanies which enjoy an excellent im-age also have certain latent advantages ingaining favor on the capital market. Wemust therefore remain on the ball in ev-ery respect.

STIL Salzgitter AG stock has been includedin the MDAX index since 2001. Whatchanges has this entailed for the Group?DR. FUHRMANN Membership of a shareindex in the first place means greater re-porting costs, given that, among othercriteria, a high level of transparency is aprerequisite for inclusion. We have satis-fied this precondition since 1999 whenwe were adopted into the SDAX, eventhough there were often doubts express-ed at the time that the increased costwould be worthwhile. Now that we havemoved up to the MDAX, of which we re-main an undisputed member, Salzgitterhas finally taken its place in the majorleague of stock corporations in Ger-many.STIL How has interest developed in Salzgitter AG as a company as well as inits stock?DR. FUHRMANN The level of interest hasgrown continuously over the years. Be-sides moving up to join the MDAX, theprincipal reasons for this include ourhighly profitable growth following theacquisition of Mannesmannröhren-Wer-ke (MRW) in 2000, and the outstandingrecent development in the steel business.As a matter of fact, our acquisition ofMRW was initially regarded with someskepticism. I think that overall we canlook back with pride on what we haveachieved since 1998. After a decidedlydifficult start, we have become some-

thing of a stock market star, not on thestrength of some visionary image of thefuture, but by providing reliable infor-mation backed up by presentable eco-nomic results.

Frankfurt is Germany’s most important fi-nancial center. Almost all the major Ger-man banks are headquartered here, andlarge numbers of international financial in-stitutions and service providers maintain apresence. For Salzgitter AG, which as astock corporation currently represents amarket value in excess of EUR 3.3 billionand whose sales of over EUR 7 billion con-stitute a substantial financial transactionvolume, Frankfurt is the venue for meetingswith many of its partners in the capitalmarkets: institutional investors, financialanalysts, lenders and stock and foreign ex-change traders. In 2005, some 95 percent oftrading in Salzgitter stock took place viaFrankfurt, equating to a turnover of EUR2.7 billion. Salzgitter shares are also tradedon the company’s “home exchange” in Ha-nover; on all the other regional German ex-changes, the shares are traded on the OTCmarket.

The Frankfurt marketplace

Frankfurt Stock Exchange: The bull outside on the forecourt and the display board showing the stock prices (r.)

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FUTURE

Duisburg: Salzgitter Mannesmann Forschung’s new Gleebel 3500 hot tension testing machine

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Salzgitter Mannesmann Forschung GmbH enjoys a worldwide reputation

Salzgitter Mannesmann ForschungGmbH (SZMF) is the central researchunit serving the Salzgitter Group.

With a staff of 275 members of staff dis-tributed between six principal departmentsbased in Salzgitter and Duisburg, the com-pany is engaged in extensive research anddevelopment work covering all aspects ofsteel as a material. The research focus inSalzgitter is on hot- and cold-rolled strip,while work in Duisburg is concentrated ontubes, sections and plate. The companySalzgitter Mannesmann Forschung GmbHwas created in 2003 when the MannesmannResearch Institute was merged with parts ofthe Materials Center in Salzgitter.Salzgitter Mannesmann Forschung leadsthe field in Europe and enjoys a worldwidereputation. Its clients include not only themembers of the Salzgitter Group, but alsoleading companies in many industrial sec-tors including energy, mechanical engineer-ing and plant construction, the automobileindustry and construction.The Group’s own research unit is a power-ful driving force behind the continuous de-velopment of Salzgitter AG. General Man-ager Prof. Dr. Niemeyer explains: “With ourwork in the field o

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