v099n02p111 PDF
v099n02p111 PDF
Definition
‘Scrap’ cannot be ‘produced’ or ‘manufactured’
Introduction in the strict sense of the word, but can be
defined as pieces of ferrous metal which occur
Steelmaking has been around since ancient ➤ as a by-product in the steelmaking
and medieval times, when steel was produced process (internal or domestic scrap)
by heating and manipulating iron ore at
temperatures below the melting point of iron,
and then going through the laborious ritual of
re-heating and manual reworking to
* The Minerals Bureau, 78 De Korte Street,
eventually end up with a useable piece of steel.
Braamfontein, Johannesburg.
In the more civilized era, the interest in
† University of the Witwatersrand, Private Bag 3,
producing iron directly from the ore in a solid Wits 2050, South Africa.
state without having to melt it at high temper- © The South African Institute of Mining and
atures already existed in the early 19th Metallurgy, 1999. SA ISSN 0038–223X/3.00 +
century. The technical and economic problems 0.00. Paper received Aug. 1998; revised paper
experienced in those days, however, prevented received Dec. 1998.
▲
The Journal of The South African Institute of Mining and Metallurgy MARCH/APRIL 1999 111
The increasing role of direct reduced iron in global steelmaking
➤ or which is produced as a by-product in the usually have poor ageing characteristics which make
manufacture of steel-containing parts or goods (prompt them practically unsuitable for deep drawing
scrap) applications.
➤ or which has been discarded after use in the form of
➤ Price volatility
consumer goods (obsolete or capital scrap).
The mounting pressure on the available high quality
Factors influencing scrap supply scrap sources results in increased price volatility (see
Figure 3). Obsolete scrap is basically elastic in price,
Steel technology and productivity improvements such as
discarding seasonal factors and depends, essentially,
continuous casting and near net shape casting reduces the
on demand. Prices will go up or down in response to
amount of internally generated scrap, increasing the demand
demand, within a reasonable price range. Low residual
for purchased scrap. New technologies allow electric arc
scrap prices, however, are not elastic. While demand
furnace plants to produce higher quality products with longer
continues to increase, prices will rise. The price
lifetimes, which keeps them (the products) out of the scrap
mechanism of scrap works well to the extent that,
cycle for a longer period than before (Scarnati13) Increasing
during peak steel demand years, collection and
demand due to the development of ‘mini-mills’ has strongly
processing of scrap that would otherwise be considered
influenced the expansion of the scrap market with
uneconomical becomes feasible due to higher prices.
concomittant upwards pressure on their prices.
As the scrap price rises, at some point it becomes more
Availability of various scrap grades expensive to produce steel from scrap than from iron
ore. The incentive to the integrated producer is then to
The available scrap supply, which is the primary feedstock
cut back on purchases of scrap and increase the
for these furnaces, has fallen short of requirements (Barnett
proportion of hot metal/DRI, if available.
and Kopfle2). The current situation is as follows:
➤ internal (home) scrap (i.e. from iron and steel plants),
which has been used as high-quality scrap feed by
steelmakers, has decreased in availability because of
the improved continuous casting rate and rolling yield
➤ prompt scrap (i.e. from the industry processing the
steel products) is not increasing much and appears to
be more or less proportional to steel production
➤ obsolete or capital scrap, (i.e. what is recovered from
used or dismantled products) is the only scrap source
which is increasing, the accumulation of which
increases in direct proportion to the increase in world
steel production.
The mounting pressure on the scrap market from mini-
mills coming on stream, is forcing scrap users to turn
increasingly to the low grade scrap sources, such as obsolete
scrap, as source of iron units. The major problem with
obsolete scrap, however, is its quality.
Problems with scrap
➤ Residuals’ problem
Tremendous growth in electric arc steelmaking has led Figure 1—Home scrap vs purchased scrap comparison.
to an unavoidable quicker turnabout of scrap and (Source: Scarnati13)
consequently, to increased contamination of scrap by
other elements.
Steel, in its final form, produced from scrap contains
other metals and when such products are scrapped, is
difficult, or sometimes impossible, to separate these
metals which in turn contaminates the steel produced
thereafter. New steel applications have increased the
number of additives to steel which must eventually be
removed during re-melting. The residuals (Cr, Ni, Mo,
Cu, Sn—often ranging from 0,15 to 0,75 per cent
depending on the type of scrap) have an adverse effect
on the mechanical properties of the steel. That is why
the use of EAFs (using scrap only) for the production
of deep drawing quality steels as well as low carbon
steel products is generally avoided. The nitrogen
content of EAF steels is higher than that of OH or BOF
steels. As a result, steels produced in arc furnaces Figure 2—Typical residual content of scrap. (Source: Scarnati13)
▲
112 MARCH/APRIL 1999 The Journal of The South African Institute of Mining and Metallurgy
The increasing role of direct reduced iron in global steelmaking
DRI as alternative solution (CH4), into a mixture of reducing gases (carbon monoxide
and hydrogen) using carbon dioxide (CO2) or steam (H2O).
Historical The reforming process takes place in a reformer, and the
Direct reduction technologies have been developing since the heated gas from the reformer is passed through the iron ore
early 19th century, as an attempt by steelmakers to produce in the furnace where it reacts with the oxygen in the iron ore.
iron directly from iron ore, avoiding high temperatures Similarly, in the case of solid fuels such as coal, the carbon
needed to melt iron. Besides technical problems, direct (C) acts as the reductant to form reduced iron and COx.
reduction technologies met with economic and financial This is different from blast furnace practice, where the
difficulties in its development due to the relative ore is reduced mainly in the solid state, and carbon saturated
unimportance of it in the shadow of ferrous scrap as a iron (in the liquid state) is the product. Silica, which is
feedstock for EAFs. absorbed in the blast furnace slag, is then removed. In the
More recently, the search for better quality iron units in case of directly reduced iron, however, the quality of reduced
the production of steel in mini-mills, as well as problems iron is not as desirable as blast furnace pig iron, seeing that
with price volatility of scrap has led to a renewed interest in the remaining oxygen and silica contained in the reduced
the development of direct reduced iron (DRI), also called product, need to be removed in the steel furnace, at some
sponge iron. added cost.
The Journal of The South African Institute of Mining and Metallurgy MARCH/APRIL 1999 113
The increasing role of direct reduced iron in global steelmaking
facility (Houseman9). Several DR plants have been Current and future capacity
constructed in less than 18 months and have reached
design rating within 30 days after start up (Brown4) Current capacity
➤ Availability—unlike low residual scrap supply, which is
limited, the supply of DRI can be increased according to Current global nominal capacity is around 37,5 mt/y. By far
the demand the majority (90%) of this is gas-based with the two
dominant technologies being Midrex (55%) and HYL (32%)
➤ Associated carbon—DRI has the added benefit, when
(CRU5). Feedstock in most cases are lumpy iron ore and
compared to scrap, that it contains an associated
pellets. Exceptions to these are Nucor’s iron carbide plant in
energy value in the form of combined carbon which
Trinidad, and the FIOR plant in Venezuela which feeds on
increases furnace efficiency
iron ore fines. The rest (10%) of the capacity is based on coal
➤ Direct charging—the use of hot DRI directly transported and other solid fuels. Contrary to the gas-based units with
and charged to a furnace, can reduce energy large output capacities of over 1 million t/y, the coal-based
consumption by as much as 16 to 20 per cent by units have traditionally much lower output capacities
making use of the energy value of the DRI at temper- (200 000–600 000t/y).
atures greater than 600°C (Scarnati13)
➤ The price for DRI is basically open to negotiation with Planned and future capacity
the producer, unlike scrap prices, which are routinely Considering all the new DRI projects which came on stream
published by grade and market. Generally, DRI prices in the past few years, together with those planned in the
have been in the range of $100 to $140 per ton over future to the turn of the century, it is clear that there has
the past decade, and DRI and HBI will typically be at a been a virtual explosion of new DRI projects world-wide in
price equivalent to that of premium low residual scrap recent years.
grades Currently, there is nearly 20 mt/y additional capacity
➤ Blending abilities of DRI with scrap allow cheaper, low under construction, with at least 48 mt/y being under consid-
quality scrap grades to be used eration. Including the phenomenon of capacity creep, a total
➤ In the oxygen furnace, DRI acts as a ‘coolant’, while in of 115 mt/y of capacity could be added by the year 2005
the blast furnace it is used as charge material to (CRU5).
increase productivity and decrease coke consumption
Merchant markets
(Bonomo3)
➤ More environmentally friendly—avoids problems of Compared to only 10% merchant capacity of existing plants,
hazardous contaminants such as lead or cadmium in 50% of capacity under construction and 80% of that under
EAF dusts. consideration will be targeted at the merchant market. These
merchant DRI producers are not restricted to poor countries,
Disadvantages as was the case with the captive plants, but rather the
➤ Due to the nature and surface area of untreated DRI, it determinants, in consideration of a suitable location, are the
has the inherent disadvantage to be highly reactive availability of low-cost iron ore, gas and proximity to
with moisture, leading to re-oxidation and possible consumer markets.
exothermic auto-ignition. However, considerable
research into various methods of passivation has been Economic and financial considerations
done, and the problem has been largely overcome by
hot briquetting Location—a strategic consideration
➤ Unlike blast furnace pig iron, which is almost pure
metal, DRI contains some siliceous gangue, which Probably the most important strategic factor determining the
needs to be removed in the EAF, increasing the power feasibility of a DRI project is its location. It should be kept in
consumption mind that any kind of transportation adds an additional cost
to the final selling price of the DRI product, whether it be
➤ Increased refractory consumption if large amounts of
transporting of the raw materials to the DRI plant, or the
pre-reduced pellets are used instead of scrap.
Table II
Table I
Planned world DRI capacity
Current world DRI capacity Region Planned capacity (mt/y)
114 MARCH/APRIL 1999 The Journal of The South African Institute of Mining and Metallurgy
The increasing role of direct reduced iron in global steelmaking
DRI/HBI product to the consumer market. This refers to: cheap sources of gas or coal, as well as a ready supply of
➤ Proximity to consumer market good quality iron units are a prerequisite. Furthermore, the
➤ Proximity/availability of iron ore potential market should not be too distant.
➤ Proximity/availability of cheap and abundant natural Fines-based feed—Technologies implementing low grade
gas or coal sources iron ore fines, rather than the traditionally used high grade
➤ Favourable local socio-political situation. lumpy and other higher grades, seems to be becoming
increasingly popular. This is due to the cost-saving lower
Capital costs priced fines feedstock. Compared to the unsure nature of
The capital cost involved in building a DRI plant is high; future iron ore lump and pellet supplies, abundant fines will
around US$200/t to US$300/t. If this is compared with a be available.
complete scrap-based mini-mill, it is in the same order of Fines vs. pellets—Processes using iron ore fines rather
magnitude (Ullah and Yepez14). In addition to the DRI than pellets or sized lump ore can save as much as $25 for
production units, in many cases a large part of the 30 t of iron produced. High iron yield can be achieved by
investment is made in the building of other infrastructure recycling fines and dust generated during the reduction
and transport facilities such as railroads, ports and harbours. process.
In the consideration of an ideal location for a DRI plant, the Fines and low-cost pulverised coal—The Fastmet process,
existence of these facilities would contribute favourably to which utilizes iron ore fines and pulverised coal in a rotary
the viability of such a project. hearth furnace, could be developing into potentially the most
The apparatus associated with the raw materials economical method of producing DRI in North America
contribute the highest cost to the plant. With natural gas, the (Lepinski and Griscom10). There seems to be an increasing
cost of a reforming unit is an important part of total capital interest in reserving natural gas for higher value-added
costs. In cases where coal-based technologies are used, costs products (i.e., petrochemicals) which makes the use of DRI
increase due to handling and preparation, as well as cleaning processes using readily available non-coking coals even more
of DRI to discard ashes (Astier1). attractive.
Capital costs for altering an older (brownfield) plant are Direct hot charging—Hot charging of Fastmet iron
minor relative to the cost of building a new plant directly into the melting vessel can lead to substantial
(greenfield). Capacity creep also helps to reduce the capital savings in energy, electrodes and refractory costs. Capital
costs of a new plant. (Griscom7). costs for a Fastmet plant is minimized because all the high
temperature processes are achieved in one single piece of
Selling price equipment, the rotary hearth furnace, making the use of gas
The future for merchant DRI shipments depends largely on reformers, gas cleaning, and gas pumping unnecessary.
the ferrous scrap market situation, in terms of availability, Midrex estimates the capital cost of a 450 000t/y turnkey
price and quality. In the past, the ample supply and low price plant supplied to a US Gulf Coast location at around $65 to
of scrap has been a dampening factor on the growth of 75m (Griscom and Lyles8).
merchant DRI shipments. Therefore, in the past, it was Top gas recycling—Although the original Hyl (batch)
seldom economically viable to give preference to DRI. The process did not recycle top gas, the newer HyL—(continuous)
situation has, however, changed since the increasing scarcity process does so to reduce energy consumption. The other
of good quality scrap, which resulted in increasing scrap gas-based processes, Midrex and FIOR, also recycle all or part
prices to levels between $120 and $140 after 1994. of their available top gas (Ullah and Yepez14).
Operating costs
Conclusions
➤ Cost of iron ore—in all cases it will be cheaper to
produce metallics near the mine at FOB prices rather In the midst of increasing growth in global demand for steel,
than in the importing countries at CIF prices; DR plants the manufacture of steel via the electric arc furnace (EAF)
using fines-based technologies, have the added route is becoming more and more popular compared to other
advantage of a lower cost input (natural fines or pellet more traditional production methods due to reasons such as
feed) compared to the more expensive lump and pellets efficiency, size, simplicity, etc. This has led to the
used by solid fuel-based processes popularizing of the ‘mini-mill’.
➤ Cost of coal; but the price variations world-wide are High quality, low-residual scrap, which had traditionally
usually not very large been used in EAFs to produce good quality steel is becoming
➤ Cost of natural gas, where variation from one place increasingly scarce due to efficiencies at the steel factories
where gas is abundant, to the usual conditions of and manufacturing plants which were ‘producing’ it,
industrialized areas, is very large resulting in escalating prices. Consequently, EAF operators
➤ Briquetting adds an additional cost, but is essential in are increasingly forced to consider the use of DRI and other
the passivation of the unstable DRI. forms of ‘scrap substitutes’ to blend with lower quality scrap
sources, which is relatively more abundant, and in that way
Cost-efficient options for the future to increase the iron units and decrease the residuals to
produce a higher quality steel. DRI, which has traditionally
Favourable location—DRI/HBI producers planning to compete been ‘the more expensive alternative’ is thus becoming
on the international merchant market would have to choose increasingly viable.
the location for their plants very strategicly. Proximity to The ‘explosion’ of new DRI projects all over the world
▲
The Journal of The South African Institute of Mining and Metallurgy MARCH/APRIL 1999 115
The increasing role of direct reduced iron in global steelmaking
shows the interest and the opportunity which have been Europe, Milan, September 1996. pp. 1–26.
shown by steel producers and iron ore suppliers alike. 2. BARNETT, D. and KOPFLE, J.T. Steel 2000—A Roadmap to the 21st Century,
However, the economic viability of a DRI project depends, not Proceedings of Ironmaking Conference, Chicago, USA, 20—23 March
1994, Iron & Steel Society/AIME. pp. 31–33.
just on the urgent need for good, low-residual iron units, but
on strategic economic determinants. The most important 3. BONOMO, F. and FEDERICO, G. DRI: Production and Utilization, International
Conference—Pre-Reduced Products and Europe, Milan, September 1996,
strategic factor is the location of DRI plants, as this translates
35 p.
into all the other important inputs. The positioning should be
4. BROWN, J. W. Alternative Routes to Steel, Iron and Steel Engineer, June
made in such a way that advantage can be taken of the 1976, pp. 37–38.
proximity of good quality, low cost iron ore, as well as
5. CRU-DRI/HBI Market Outlook: Investment Bonanza for the Next
natural gas (or coal). Additionally, the plant should not be Century?, July 1997. pp. 8–212.
too far from the market or point of off-set as the transport
6. FURUKAWA, T. 5,000 Daily tons of direct iron-ore smelting by 2000, New
cost can easily absorb the competitive advantage or profit Steel, November 1994. pp. 36–40.
made by such a project.
7. GRISCOM, F. (Midrex), Future for DRI, Presentation at Gorham/ Intertech
Some of the newer developing technologies based on Conference on Iron & Steel Scrap Substitutes, Charlotte, North Carolina,
low-cost fines and/or cheaper non-coking coal gives an March 1997. pp. 1–5.
additional cost saving which could make such technologies 8. GRISCOM, F.N. and LYLES, D.R.(Midrex), The Fastmet process coal based
ideal for the future. Other cost-saving strategies such as hot direct reduction for the EAF, Steel Times, December, 1994. pp. 491–493.
metal transfer and top-gas recycling also reduces costs 9. HOUSEMAN, D. H. Direct Ironmaking Processes, Steel Times, vol. 206(4),
significantly to give it a competitive edge. 1978. pp. 326–333.
DRI plant operators and steelmakers should make use of 10. LEPINSKI, J.A. and GRISCOM, F. N. Producing Direct Reduced Iron Utilizing
the current opportunity to benefit from increasing scrap Rotary Hearth Furnace, Industrial Heating, January 1994, vol. 4.
prices, as well as the real demand for low-residual iron units. pp. 28–31.
This unique scenario will not last forever, seeing that 11. McManus, G.J. Direct-reduced iron comes of age, New Steel, October 1994,
competition between different DRI technologies, each with its pp. 26–29.
own competitive advantages, will set in place, driving down 12. ROMENETS, V.A. The Romelt Process, I & SM, January, 1995. pp. 37– 41.
operating costs. This will lead to lower DRI prices and, 13. Scarnati, T.M. Use of DRI and HBI in electric furnace steelmaking: Quality
consequently, eroding of the competitive margin. and cost considerations, Iron and Steel Engineer, April 1995. pp. 86–89.
14. ULLAH, A. and YEPEZ, L. Technical, Financial and Managerial
Considerations in the Production of DRI, Proceedings of Ironmaking
References Conference, Chicago, USA, 20–23 March 1994, Iron & Steel Society/AIME.
1. ASTIER, J. The challenge of Direct Reduction (DR) World-wide and, 15. WESTON, T. R. and THOMPSON, M.W. Bright future seen for the Romelt
specially, in Europe, International Conference—Pre-Reduced Products and process, MBM Metals Technology Supplement, August 1996. pp. 6–13. ◆
116 MARCH/APRIL 1999 The Journal of The South African Institute of Mining and Metallurgy