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Fed by diverging prices for iron ore and scrap and stoked by
newly cheap and plentiful natural gas across North America, a
new era of steel mill inputs is upon the industry, featuring
direct-reduced iron (DRI) in all of its hot, cold and
Charlotte, N.C., is nearing completion of its new plant in St.
James Parish, La. It is widely regarded as the herald of the
new era, but was a lone voice until midyear. Then in rapid
succession this summer Midrex Technologies Inc., Charlotte,
N.C., announced two major new deals representing the next steps
in the DRI renaissance: a contract with Austrias
Voestalpine Group and Siemens Industry Inc. for a
2-million-tonne-per-year hot-briquetted iron (HBI) plant near
Corpus Christi, Texas, and a venture with industrial gases
company Praxair Inc., Danbury, Conn., to develop a DRI process
using coke-oven gases that could go commercial before year-end.
U.S. Steel Corp., Pittsburgh, also is known to be mulling a DRI
venture with Republic Steel in Lorain, Ohio.
The top two global DRI
technology licensors are Midrex, a wholly owned unit of
Japans Kobe Steel Ltd., and Italys Tenova SpA,
using the HYL process. Midrex claims primacy, saying that about
80 percent of the 64 million tonnes of DRI produced globally
via the shaft-furnace process in 2011 used its technology, with
more than 11 million tonnes of newly licensed DRI capacity to
be commissioned and brought into service within the next two
The Voestalpine plant
has already signed a regional customer, Altos Hornos de Mexico
SA de CV, Mexicos largest steelmaker. The partners in the
project claim it will be the largest single HBI-producing
module in the world. The $726-million plant, which has
direct deep-sea access to the Gulf of Mexico, is slated to be
in service early in 2016, producing high-quality HBI sponge
iron from ore pellets. About half of the planned output of 2
million tons per year will be supplied to mills in Linz and Donawitz,
Austria, while the other half will be sold to partners
interested in a long-term supply.
A few weeks before the
HBI announcement, Midrex signed a strategic alliance with
Praxair to develop and market a new thermal reactor system that
will produce DRI using a variety of fuels using a proprietary
partial-oxidation technology to convert hydrocarbon fuels into
high-quality, high-temperature syngas suitable for DRI output.
Under the alliance, Midrex and Praxair are conducting tests at
a 1:20-scale semi-works facility at Midrexs research
facilities in Charlotte.
If not for a record
rainy spring on the U.S. Gulf Coast, all those announcements
might have come at the same time that Nucor was cutting the
ribbon on its DRI unit in St. James Parish, the first new U.S.
DRI facility in many years. The first three months of
this year were the wettest in the history of the state,
Nucor president and chief executive officer John Ferriola said.
It takes a great deal of rain to make history in coastal
Louisiana, and that did not bode well for construction. We lost
eight or nine weeks when we had to stop construction, and so
have had to push the start for the DRI plant back to the end of
the third quarter. Nucor plans to supply only its own
mills once the unit is in service.
Jeremy Jones, vice
president of process services at Coraopolis, Pa.-based Tenova
Core, said that the two biggest drivers in the recent surge in
DRI are the costs of iron ore and natural gas.
The spot price for
natural gas on the New York Mercantile Exchange was around
$3.35 per million BTU in early August, up more than a dollar
from the record low last year but still far below the $10 to
$13 range that crushed DRI economics in past years. More
importantly, producers and most major consultants are
forecasting gas prices in a range of $4.50 to $6.50 per million
BTU for the next two to five years due to the shale gas
bonanza. Since about 2000, natural gas producers have combined
sophisticated three-dimensional seismic survey analysis with
directional drilling, where the bore can go horizontally
through thin but rich formations, and hydraulic fracturing to
enhance recovery from dense rock. All of that has meant vast
volumes of new production and trillions of cubic feet added to
excited about the new low cost of natural gas, Jones
said. That, and ore prices have stabilized, even dropped
off, with slackening demand from China. At the same time, scrap
prices have not dropped that much.
This has led to
multiple points of savings along the supply chain, and
increasing interest by electric-arc furnace (EF) and blast
furnace operators to move into higher-quality markets make the
case for DRI from downstream operations just as compelling as
We have seen
some consolidation among the EF operators, Jones said.
These larger mini-mill groups are now looking for better
reliability, flexibility and quality. The new focus on DRI is a
natural progression. In recent years we saw several mini-mill
companies buying scrap operators to gain control of that input
stream. DRI is the next step.
Jones said that DRI
isnt a substitute for scrap in the EF, but rather an
enhancement. Using DRI creates opportunities for the
furnace operator. By combining DRI with low-quality scrap, the
operator can realize a large discount on inputs and still
achieve the same melt chemistry.
That said, he
acknowledged that the new options also put a lot more variables
in the supply chain. The International Iron Metallics
Association is doing a lot of work on value and use models that
will help the industry understand these materials and make best
use of them.
DRI is a fairly
well-proven technology worldwide, said Thomas A.
Danjczek, president of the Steel Manufacturers Association.
Everyone wants to gain efficiency, but that is just one
part of the equation. Electrical energy is about two-thirds of
the melt, but the other third is chemical energy, so the charge
is very important.
There are five main
factors in the DRI decision for an EF operator: the overall
availability of scrap; the availability of scrap with low
residuals; the all-in costs of DRI vs. scrap at charge; the
consequential costs of power and fuel; and the required quality
and characteristics of the steel and finished products.
Any melter prefers to use scrap, not any alternative. ...
DRI is a substitute that allows for the use of lower-quality
scrap, Danjczek said. DRI is not going to be a home
run for anyone. (But) it can be cheaper to build an EF with a
DRI unit of some kind than to build a new blast
Which is not to say
that DRI doesnt have benefits for blast furnaces.
Absolutely we consider DRI to be an opportunity for us
and for the industry, said Steve Baisdan, vice president
of strategy for Cliffs Natural Resources Inc., Cleveland, which
supplies blast furnace pellets in North America.
Cliffs, which has had
some experience providing ore specifically for DRI, is poised
to modify as much as half of the 5 million tons per year
produced at its Northshore Mine on Minnesotas Mesabi
Range to DRI-grade ore, said Bill Hart, the companys
chief strategy and marketing officer. Most ore is
typically 60- to 65-percent iron and 4- to 5-percent silica.
Our DRI pellet from Northshore is 68-percent iron and less than
2.5-percent silica and alumina. It would take about a year from
the time we got the go-ahead from the board.
All of the existing
DRI processes can use any grade of ore, but high gangue
in is high gangue out, he added.
director and owner of Pittsburgh-based Metserv Consulting and
an old hand in DRI going back to 1967, agreed. He noted that
the old divisions between producers of long products and
flat-rolled steel are diminishing and that both EF and
blast-furnace mills have operational and metallurgical reasons
for including DRI in their supply chains and melt
Smailer is optimistic
about the new generation of processes being licensed. However,
looking back, most of the current technologies have not
quite lived up to expectations.
DRI isnt quite
the mix-and-melt ingredient that it seems to be, he added.
If you are going to go for DRI or HBI, then you really
have to go all the way and modify the furnace for optimal
energy and materials use.
In many cases, DRI
cant be added to a blast furnace because of its physical
strength, Henry Gains, vice president of marketing at Midrex,
said. That is what led to HBI.
The next step is the
thermal reactor system process being developed with Praxair,
Gains said. The focus on coke oven gas as a reductant not
only provides a high fuel-value gas, but reduces the amount of
coke required to metalize the ore. For every 10 percent that
the burden is metalized, you increase productivity by 8 percent
and realize a fuel saving of 7 percent.
Overall, Gains sees the spectrum of fuels broadening to
provide both EF and blast furnace operators with more options
and greater efficiency. Even the charge itself in effect
becomes a fuel when its retained heat is added to the equation.
Hot discharge led to HBI and hot DRI in the 1980s and
90s, he said. Now the next big thing is new
fuels and a series of options to transfer DRI to the