A recent publication has indicated that CGI is 25% more expensive to produce than conventional grey iron. The publication also suggested that SinterCast would need 2% of the automotive market to breakeven. Can you comment on these items? How many engines would the 2% market share represent?

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It is true that, on a per weight basis, CGI is approximately 25% more expensive to produce than grey iron. The cost increase is accounted for by the extra process steps required to produce CGI. For example, grey iron typically contains approximately 0.1% sulphur, which must be reduced to approximately 0.01% for the production of CGI (and ductile iron). The removal of sulphur from the iron is a standard process, but it requires capital investment, treatment materials and processing time. As the desulphurisation treatment typically causes a temperature loss of approximately 100 degrees Celsius, it is also necessary to reheat the iron after the desulphurisation step. CGI also requires an addition of magnesium (0.010-0.015% Mg) to modify the shape of the graphite particles, and increased quality assurance controls and checks to ensure that the graphite shape has been successfully achieved. Overall, the production process of CGI is very similar to that of ductile iron (0.035-0.050% Mg), which also has a cost premium of approximately 25% relative to grey iron. Finally, it must also be noted that the cost of a casting is not only determined by the processing of the liquid iron. The complexity of the mould, especially including the number of sand cores used in the construction of the mould, also plays an important role in determining cost, and thus, price.

The suggestion of a 2% market share is difficult to convert to a number of engines. The year 2002 worldwide production of passenger car engines is approximately 45 million units per year, while the annual production of medium duty trucks is approximately 10 million units and that of heavy duty (> 12 litre) trucks is approximately one million units per year. SinterCast is compensated based on the weight of CGI produced, not the number of engines. The weight of a medium duty engine block may be 2-4 times heavier than that of a typical passenger car engine block while that of heavy duty engine may be 5-10 times greater. The potential production mix between passenger cars, medium duty, and heavy duty engines is limitless and this makes it impossible to refer to the number of engines. Regardless of the detail, 2% is on the correct order of magnitude. It is not 0.2% and it is not 20%.