Spain Rising

In the past 25 years, Spain has been a rising star in Europe and the world, establishing itself as a player in the ferrous, nonferrous, and paper commodity markets.

By Kent Kiser

Kent Kiser is editor and associate publisher of Scrap. 

Since ancient times, Spain has been prized for its natural riches, especially its metallic resources—from iron to copper to precious metals.
   The Iberians, early immigrants to Spain, for instance, were recognized for their metallurgical skills and reportedly taught the world to perceive gold as valuable.
   During Rome’s heyday, Hispania—as the Romans called Spain—was renowned for its mineral wealth and provided Rome with a seemingly endless supply of gold and silver. Not surprisingly, it became one of the wealthiest, and thus most exploited, provinces of the empire.
Given these and other enticements, Spain became a major focus for trade and conquest, both of which also made it an intriguing melting pot of influences from groups as varied as the Romans, Visigoths, and Moors.
   Along the way, Spain has faced its share of challenges, including its 20th-century travails of a civil war in the late 1930s and almost 40 years of repression and isolation under dictator Francisco Franco, which only ended with his death in 1975.
   Since then, Spain has undergone a social, political, and economic renaissance, embracing democracy under King Juan Carlos, joining the European Union (EU), liberalizing its cultural and social practices, and deregulating and privatizing its economy. As a result, the “new Spain” is a rising star on both the European and world stages. Nowhere is the country’s promise more evident than in its ferrous, nonferrous, and paper industries.

Heart of Steel
The steel industry, which has had a major presence in Spain since the mid-1800s, saw its greatest growth in the 1960s and 1970s. After some growing pains, the Spanish steel industry has become stronger than ever, thanks in large part to the government’s privatization and consolidation efforts of the past 25 years.
   From 1990 to 1999, for instance, Spain’s crude steel production rose about 15 percent from 12.9 million to 14.9 million mt, according to the International Iron and Steel Institute (IISI) (Brussels, Belgium). At that production level, Spain is the fifth-largest steelmaker in the EU and 16th-largest in the world, in the same league as Mexico, the United Kingdom, Turkey, Taiwan, and Canada.
   Spain’s steel industry is based largely on scrap-fed electric-arc furnaces (EAFs), which account for about 10.7 million mt—72 percent—of its crude steel production, with oxygen-blown converters taking up the remainder. Since 1990, EAFs have gained 15 percentage points in market share from oxygen-blown converters, and that trend is likely to continue.
   Aside from being a significant steel producer, Spain is also a major steel consumer, with 1999 crude steel demand of 18.5 million mt and finished steel consumption of 15.4 million mt, IISI reports. That makes the country the fourth-largest consumer of both in the EU and around 10th in the world. As a growing nation, it should come as no surprise that, since 1990, Spain’s consumption of crude steel has leaped 59 percent while its finished steel consumption has climbed 40 percent.
To feed its EAFs, Spain requires a significant tonnage of ferrous scrap. From 1997-1999, the country imported the most ferrous scrap of all EU nations. In 1999, it imported 5.6 million mt of steel scrap, down from its record of almost 6 million mt in 1998 but up about 30 percent from its 1990 total of 4.3 million mt, IISI figures indicate. In all, Spain accounts for about 24 percent of all ferrous scrap imports by EU countries.
   In contrast, Spain exported only 30,000 mt of ferrous scrap in 1999 and, in general, has the lowest ferrous scrap exports of all EU nations, IISI says.
   The main player in Spain’s steel industry is Aceralia Corporación Siderúrgica (Madrid), which produces around 10 million mt a year. The company, which owns 22 plants in Spain and one in France, is both an integrated and EAF steelmaker, turning out almost equal percentages of flat- and long-rolled products. Big changes are coming this year for Aceralia given that it is part of the megamerger between Europe’s two largest steelmakers—Usinor S.A. and Arbed Group, which owns 35 percent of Aceralia. If the merger is successful, the combined entity—to be called NewCo—will reportedly be the world’s largest steel company with 46 million mt of annual crude steel production capacity.

A Stainless Reputation
In the steelmaking world, Spain is particularly known for its stainless production. For the past four years, it has consistently been the fourth-largest stainless producer in the EU—behind Germany, Italy, and France—and sixth-largest in the world. By the numbers, Spain produced about 1.1 million mt of stainless steel in 2000, says the International Nickel Study Group (INSG) (The Hague, the Netherlands).
   To feed this production, Spain imported 375,309 mt of stainless steel scrap through November 2000, with its biggest suppliers being the Netherlands at 205,885 mt, Germany at 53,799 mt, the United States at 30,423 mt, and Kazakhstan at 21,430 mt, INSG says.
   Since 1998, Spain has drastically reduced its purchases of stainless scrap from the United States, Canada, and the Russian federation. In the same period, it has dramatically increased its stainless scrap purchases from Germany, Italy, Bulgaria, Turkey, and Kazakhstan, according to INSG data.
   Spain also exported 11,186 mt of stainless scrap in the first 11 months of 2000, up almost 390 percent compared with the same period in 1999 and far above its annual average of about 2,900 mt in 1998 and 1999, INSG notes.
   On the primary side, Spain has no primary nickel production, so it must import metal to meet its needs.
   In the first 11 months of 2000, it imported around 19,000 mt of nickel, sourcing most of this material from Australia, the Russian federation, and the Netherlands, reports INSG.
   In the same time frame, Spain imported around 41,000 mt of ferronickel, primarily from New Caledonia/ France (almost 23,000 mt), Greece, and Colombia.
   Spain’s reputation as a leader in the stainless steel market is due largely to Acerinox Group (Madrid), which claims to be the fifth-largest producer in the world as well as “the most competitive group in the world in stainless steel manufacturing.”
   Acerinox Group has four main operating units: Acerinox S.A., which has a 1.1-million-mt-a-year mill at El Campo de Gibraltar that incorporates a melt shop plus hot- and cold-rolling capabilities; Roldán S.A., a rolling mill in Ponferrada that produces long products; Inoxfil S.A., a subsidiary of Roldán based in Igualada that makes stainless steel wire; and North American Stainless, a hot- and cold-rolling mill based in Ghent, Ky.
   North American Stainless is undergoing a $200-million expansion, adding an 800,000-mt-a-year melt shop. When this expansion is completed—scheduled for later this year—Acerinox says it will become the third-largest stainless producer globally with approximately 1.9 million mt of capacity.

Nonferrous Know-How
Blessed with “some of the most mineralized territory in Western Europe,” Spain enjoys “one of the highest levels of self-sufficiency with respect to mineral raw materials among the EU members” and stands as a “significant European producer of nonferrous and precious metals,” says the U.S. Geological Survey (Reston, Va.).
   Aluminum: Compared with its European neighbors, Spain is not an aluminum-intensive nation. In 1999, for instance, it consumed 718,000 mt of aluminum, giving it a per capita consumption of 11 kg—lowest in the EU and about half of the overall European average (excluding Turkey), notes the European Aluminium Association (EAA) (Brussels, Belgium).
   Spain’s primary aluminum production was 364,000 mt in 1999, about 10 percent of the Western European total of 3.72 million mt, according to EAA numbers.
   Compared with its primary production, which has remained virtually unchanged since 1995, Spain’s secondary aluminum production has more than doubled from about 107,000 mt in 1995 to 224,000 mt in 1999—about 11 percent of overall Western European secondary production of 2.03 million mt that year, EAA notes.
   The Spanish aluminum industry is dominated by Alcoa Inespal S.A. (Madrid), which produces primary aluminum as well as aluminum products from its plants in Avilés (84,000 mt of capacity) and La Coruña (80,000 mt). The group’s largest primary smelter, operated under the name Alúmina Española S.A., is based in San Ciprián and has 196,000 mt of production capacity. Alcoa also has four other Spanish divisions—Alcoa Navarra S.A., Alcoa Arquitectura S.L., Alcoa CSI España S.A., and Alcoa Transformación S.A.—that produce aluminum products, including foil, wire, rod, bar, extrusions, tube, closures, and building products.
   Copper: Though not a top-10 copper producer, Spain is still considered a significant player in the red metal. In 2000, its total copper refinery output was about 330,000 mt, of which 264,000 mt was primary and 66,000 mt was secondary, ranking Spain 15th among world copper producers, according to the International Copper Study Group (ICSG) (Lisbon).
   Comparing its 2000 and 1990 figures, Spain has basically doubled both its overall copper refinery output (from about 171,000 mt) and the primary portion of that output (from 122,000 mt) in the past decade. Its secondary refinery total hasn’t grown as much, increasing 35 percent from 49,000 mt in 1990, ICSG reports.
   Spain’s consumption of direct-melt copper scrap, meanwhile, reached about 78,000 mt in 1999, up 7 percent from the previous year and 34 percent since 1992, according to ICSG. To meet its consumption requirements, Spain imported 67,000 mt of copper scrap in 1999, down 13 percent from 77,000 mt in 1998. Those same years, the country exported 49,000 and 31,000 mt of copper scrap, respectively.
   Madrid-based Atlantic Copper S.A. is the major Spanish copper producer, operating a 300,000-mt-a-year smelter and refinery at the port of Huelva that it calls “one of the world’s largest copper smelters.”
   Lead: Despite its sizable lead mine production—estimated at 28,000 mt in 1999 and 51,000 mt in 2000—Spain has no primary lead production, instead exporting its mine output and turning to secondary lead and metal imports to meet its needs.
In 2000, Spain’s secondary lead production totaled 97,000 mt while its imports of the metal were 104,000 mt, reports the 
International Lead and Zinc Study Group (ILZSG) (London). The latter number represents a dramatic spike for imports—up about 167 percent from 39,000 mt in 1993, ILZSG notes—to keep pace with the country’s rising demand for lead.
   Exide Technologies (Reading, Pa.) owns the two largest secondary lead smelters in Spain—Exide Tudor in Megorsa, which has a capacity of 50,000 mt a year, and Metalúrgica de Cubas in Madrid, which produces 21,000 mt. 
   The next-largest smelter is 11,000-mt-a-year Ferroaleaciones Españolas S.A. in Medina del Campo.
   Though Spain’s secondary lead production has increased 56 percent from 62,000 mt since 1993, that hasn’t kept pace with its rising consumption, which has almost doubled from 102,000 mt in 1993 to 200,000 mt in 2000, ILZSG data note. At that demand level, Spain accounted for about 10 percent of Europe’s 2000 lead metal consumption of 2 million mt.
   Zinc: In contrast to its lead situation, which relies heavily on secondary supplies, Spain’s zinc business is dominated by the primary side. In 2000, for instance, its primary zinc production of 372,000 mt accounted for 95 percent of its overall zinc production of 393,000 mt, with secondary production taking up the remaining 21,000 mt, says ILZSG.
   In terms of production, Spain accounted for about 14 percent of the 2.7 million mt of European zinc metal production in 2000 and 4 percent of world production of 8.8 million mt, according to ILZSG numbers.
   On the demand side, Spain’s zinc consumption has increased 68 percent from 1993 to 2000, rising from 119,000 to 200,000 mt, notes ILZSG. At that consumption level, Spain accounts for about 7 percent of European demand of 2.7 million mt and around 2 percent of world consumption of 8.7 million mt in 2000.
   Given that its zinc consumption is considerably smaller than its production, it’s not surprising that Spain is a significant exporter of zinc metal. In 2000, it exported 96,000 mt of zinc metal—almost 20 times its zinc-metal imports of 5,000 mt. Interestingly, though, Spain’s zinc metal exports have generally been declining, with its 2000 total about half of its 1993 exports of 198,000 mt, ILZSG says.
   Asturiana de Zinc S.A. is not only the largest primary zinc producer in Spain but also the largest in the world, producing about 320,000 mt a year—around 5.4 percent of Western World production—at its electrolytic plant in San Juan de Nieva.
   According to the company, it is expanding this operation to 460,000 mt, with completion planned for 2002.

Building a Paper Presence
In sharp contrast to its enviable mineral reserves, Spain has scant forest resources. Only a small part of the country is forested, and much of its forests are reportedly located on mountainous slopes, particularly in the northwest. What this means is that Spain has insufficient forest resources to meet its wood-pulp and timber needs.
   Still, Spain is no lightweight in the paper field. The country has more than 121 paper mills that produced 4.4 million mt of paper and paperboard in 1999, making it the seventh-largest papermaker in the EU, reports the Confederation of European Paper Industries (CEPI) (Brussels, Belgium). By product category, the country produced 2.4 million mt of paperboard and packaging paper, 900,000 mt of printing and writing paper, 400,000 mt of sanitary and household paper, 200,000 mt of newsprint, and about 500,000 mt of other types of paper, according to the Asociación Nacional de Fabricantes de Pastas, Papel y Cartón (ASPAPEL) (Madrid).
   On the scrap paper side, Spain consumed 3.6 million mt of recovered paper in 1999 (20 percent of which was imported secondary fiber), making it the fifth-largest consumer in the EU and 11th-largest in the world, CEPI notes.
   By grade, Spain consumed 696,000 mt of mixed, 1.8 million mt of OCC and kraft, 436,000 mt of ONP and OMG, and 631,000 mt of high grades, reports CEPI. 
   Though the country has a paper recovery rate of 46 percent—eighth-best in the EU—it has the fourth-highest scrap utilization rates at about 81 percent (scrap utilization is defined as use of recovered paper in a country as a percentage of its total paper production).
   Apparent paper consumption in Spain is about 6.4 million mt a year, with per capita use at 161 kg—better than the world average of 50 kg but below the EU average of 196 kg, ASPAPEL notes. Still, that means there’s room for growth, and Spain’s paper industry is reportedly expanding production some 700,000 mt.
   Room for growth—that term applies to more than just Spain’s paper industry. The country as a whole continues to reinvent itself, adding momentum to its post-Franco renaissance. Where Spain and its commodity industries will end up may be a mystery, but for now both are going nowhere but up. 

Spain at a Glance
Full Country Name: Kingdom of Spain
Government: Parliamentary monarchy
Population: About 40 million
Capital: Madrid
GDP: $646 billion
Currency: peseta
Major Industries: Textiles and apparel, food and beverages, metals and metal manufacturing, chemicals, shipbuilding, automobiles, machine tools, tourism
Major Trading Partners: European Union, United States
Member of EU: Yes, since 1986
Geographical Details: The country occupies about 85 percent of the Iberian Peninsula and is bounded by water on 88 percent of its periphery. The nation is divided into 50 provinces in 17 autonomous regions. •