IRON ORE
The Iron Dichotomy
July 2019
DRI, or Direct Reduction Iron, is a high-quality iron product that provides a suitable alternative to ferrous scrap, often used in Electric Arc Furnaces when scrap supply is low. It is necessary to use high-quality ferrous feeds for an EAF when the mini mill is producing higher-quality steel products. DRI is often briquetted for ease of transport and safety and is thus known as Hot Briquetted Iron (HBI). Whereas DRI is prone to spontaneous combustion during transport and sometimes even during heap storage, HBI is more stable. Hence, the additional expense of briquetting is justified by the improved safety.

The past two decades have seen the development of a range of processes that can produce direct reduced iron (DRI), in large part because there have been concerns about securing high-quality scrap at a reasonable price. As scrap supply cannot be expanded easily, DRI production via an expanded range of processes has been the path of least resistance.

DRI is able to be utilised in a wide number of process in the production of crude steel. Most commonly, DRI is used as both a complement and a competitor to scrap in the Electric Arc Furnace (EAF) process route. In the EAF route DRI can be used as a complement to scrap to balance steel chemistry, as its overall composition is known and consistent—unlike scrap. At the right price point, DRI can become a direct competitor with scrap, displacing it in the EAF sector—particularly in regions and markets where there is low availability of scrap steel. DRI can also, although far less commonly, be used in the Blast Furnace (BF) and Basic Oxygen Furnace (BOF) processes. BF capacity can be increased by using DRI, as it contains significantly higher iron content and reduces the steelmaking method’s coke requirement. In the BOF process, DRI can be used as a coolant to achieve thermal balance and is a direct competitor with scrap steel.

 

 

The production of DRI currently consumes just over 5% of the world’s iron ore supply and requires high grade DR pellets, typically 67% iron content. The ferrous feed and subsequent DRI are required to be low in gangue, or waste material, as it is most commonly used in electric arc furnaces that have limited refining capacity. Magnetite ores are the most commonly used as they are more suitable for upgrading by concentration, as; the concentrates are of a suitable particle distribution for balling into pellets; they have a higher iron content than hematite; and they have an exothermic reaction during reduction thus reducing the external energy required. 

The majority of DRI production is captive and supplied to an adjacent steel plant. Hot Briquetted Iron (HBI) is a subset of DRI production which is compressed, while hot, into bricks. These are less susceptible re-oxidation and spontaneous heating than DRI and can be safely transported and traded on the seaborne market. Around 20% of DRI is converted to HBI.

India and Iran are the largest producers of DRI, accounting for 25% and 22% of production respectively. Iran is the fastest growing user of DRI technology. Over the past five years it has reported 9% year on year growth in production and 20% in capacity. An estimated 65% of Iranian iron ore supply is used to produce DRI. Iran has chosen this route as most of its domestic iron ore is magnetite and the low cost of natural gas leading to reduced costs to produce pellets, DRI and electrical power generation. Iran also has limited availability of scrap steel. As Iran’s steel production continues to rise, despite sanctioning efforts, DRI is also forecast to continue to grow.

The Middle East dominates the production of DRI with 45% of supply due to the availability and low cost of natural gas, but unlike Iran the remaining Middle East countries import ferrous feed which has limited their economic viability to build a substantial DRI industry.