The increasing role of direct reduced iron (DRI) in global steelmaking

Grobler, Francois
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This report gives an overview of the role and use of directly reduced iron (DRI/HBI) used in the electric arc furnace (EAF) steelrnaking route as a substitute to the traditionally favoured ferrous scrap. A comparison of the main steelmaking technologies showed that the electric arc furnace (EAF) has emerged as the preferred route for producing steel since the early 1900's. Due to its lower costs, scale and flexibility, it is expected to outgrow the conventional steelmaking method based on the blast furnace and basic oxygen converter in the next century. A look at historical steelmaking patterns showed that electric arc steelmaking has relied almost entirely on ferrous scrap as Its primary feedstock up to the present time. This traditionally low-priced commodity has in tha past fulfilled the steelmakers' criteria in terms of quantity and quality. Investigation of the current situation, however, showed the mounting pressure on high quality scrap more recently, with the subsequent rise in the price as well. The most important factors contributing to the tightness in scrap availability proved to be the increasing popularity of the EAF, and especially the "mini-mills", accompanied by improvements in technology such as continuous casting (CO) and near net shape casting (NNSC). This has forced EAF steelmakers to consider other Substitutes such as direct reduced iron (DR!) and pig iron, not just as an alternative to scrap. but as an effective blending material to reduce residual elements in the scrap melt. A comparison of different metal charges in the EAF showed that the blending of DRI with scrap enabled the steelrnaker to utilise the move abundant, less expensive, lower quality scrap grades, whilst maintaining quality requirements. A study of the trends in DRI technologies indicated that the gas-based technologies, such as Midrex and HyL, still dominate the market for DRI, as they have in the past, enjoying economies of scale and other favourable cost advantages. It appears as if coal-based processes have traditionally encountered constant economical problems, which disabled them in competing with those based on gas. Another trend of the past was the high proportion of captive DRI production, compared to the very limited amo...merchant product available on the market. That was the status quo in past years. The present situation seems to be different. It appears as if that current problems with scrap availability and quality is actually paving the way for the use of DRI. Prices asked for good quality scrap are on the way upwards as steelmakers frantically search for low-residual, reasonably priced iron units. This has lead to a multitude of new DRI projects, either being built, planned, or considered, aimed at fulfilling this demand. Some of the new projects are based on older, tested technologies, but the amount of new projects based on newer, customised technologies that utilise low-cost fines, non-coking coal and other incentives to minimise costs seems to be increasing as well. Another change in the past trend lies in the large proportion of the new non-captive capacity that will come on stream, specifically aimed at the merchant market. The most critical determinant for such a merchant DRI project is its location. The strategic positioning of it in terms of its raw materials i.e. iron ore, natural gas, coal etc., as well as its location with regard to the potential market, will determine whether it will be competitive or not. Operating costs are considered and compared to determine the competitive advantages with regard to different location- and technology options. Additionally, it seems as if the successful DRI producer of the future will be the one who, apart from optimising its position, will minimise cost by utilising low-cost iron ore fines, cheap low-grade coal, nas recycling and many other cost cutting incentives vigorously explored by all DR technology producers in recent years. In summary, there proves to be an increasing need for DRI and other scrap substitutes in the steelmaking industry and such projects will definitively have a market in the future, but care must be exercised in the decision on the location, and other cost-contributing determinants of such facilities. Another potentially dangerous situation stems from the fact that this "hungry" market, although currently undernourished, is ultimately not insatiable, and care must be taken to prevent the development of a massive oversupply, which could cause imbalances in the market again. In any event, with all the new merchant product coming into the market, it seems evident that DRI will develop its own spot market, and competition between different DRI technologies, as well dS with scrap will become fierce in the future.
A project report submitted to the Faculty of Engineering, University of the Witwatersrand, in fulfilment of the requirements for the degree of Master of Scienoe in Engineering.
Iron, Steel