100 MAR 2018 I & TECHNOLOGY I AIST.ORG Lakes, bothofwhichareinefficient routes. up fromtheGulfofMexicoorbarged downthroughtheGreat circumstances are,importedmaterial eitherhastoberailed saidthatas by exploitingalogisticaladvantage. Observers displace importsintotheGreat Lakes andMidwestregions increasing demandforalternative ironunits,butratherto furnaces, whichwouldproducetheiron. ERP’s plantinReynolds,Ind.,andshipthemtoRepublicblast Steel, thejointventurewouldtakepelletsmanufacturedat tons ofmerchantpigironinOhio.InpartnershipwithRepublic Ore LLC,isformingajointventuretomakeabout1million after theprojectranoutofmoney. that previousownerEssarGlobalhadstartedbutleftunfinished would befedpelletsfromthetaconitemineandpelletplant Minn. Theplant,whichwillbebasedonTenova technology, Partners, isproposinga2-million-tonDRIplantinNashwauk, billionaire investorTom Clarkeandhisfirm,ChippewaCapital formerly EssarSteelMinnesotaandnowundertheownershipof based plantisexpectedtoenterproductionin2020. Ohio, notfarfromthewesternshoresofLakeErie,Midrex- plant capableofproducing1.6milliontonsannually. Locatedin to startconstructionthisspringonahotbriquettediron(HBI) announced projects. claim thatbusinessforthemselves,givingrisetoseveralrecently Others, however, haveturnedtotheoverseasmerchantmarket. house production,throughacquisitionorgreenfieldexpansion. most notably, havesecuredasupplybyestablishingtheirownin- dilute impuritiesintheirscrapcharges.Some,NucorCorp. the valuechain,they’vehadtoseekoutpurerironinputs Industry observers saidtheseprojectsarisenotthrough observers Industry And separately, another Clarke-ownedcompany, ERPIron Meanwhile, would-becompetitorMesabiMetallicsCo., Consider: IronoreminerCleveland-CliffsInc.ispreparing And hereU.S.ironoreproducersseeanopportunityto As U.S.electricarcfurnacesteelmakerschasebusinessup Alternative IronAlternative New iron projects, scraplikely will Standard remain thedominantfeedstock for U.S. EAFproducers Janice Bolen,asenior processengineeratHatch Associates. blast furnacerestart sofarseemtobethefront runners, said compete withscrap,whichwould notbeeconomicallyfeasible. production inexcessofexisting demandwouldbeforcedto said,explainingthatany than two,”onemarketobserver around. Republic Steel.Orwhetherthereisevenenoughdemandtogo prefer tobuyfromCleveland-CliffsorMesabiMetallicsERP- ‘Cleveland-Cliffs.’” to buyfromRussiaorCleveland-Cliffs?’Theywillsay, Cliffs.’ Andthengotoanotherbuyerandsay:‘Would youprefer Cleveland-Cliffs orfromVenezuela? Hewillsay, ‘Cleveland- problem. Askanypotentialbuyer:Doyouprefertobuyfrom from akid,”hesaidtoanalystsduringrecentconferencecall. in theMidwest,alreadybuys3milliontons.Soit’s likestealing capture it. at 3 milliontons,andhe’s confidentthathiscompanycan has peggedthenorthernmarketfordomesticalternativeiron to 10%. consumption overthepastfiveyears,hasamountedtoabout8% mineralconsumptiondata. Survey produced2milliontons,accordingtoU.S.Geological country double America’s productionofironmetallics—in2017,the If itcomesintobeing,thisnewproductionwouldmorethan mostly allforthebenefitofRustBeltsteelmakersandfoundries. 3.6 million tonsofdomesticallyproducedalternativeiron, iron oreconsultantJoePoveromo. Midwest hasalogisticalcostadvantage,”saidblastfurnaceand Of theprojects,Cliffs’HBIproject andtheERP-Republic “There isroomforseveralprojects, butprobablynotmore But whatremainstobeseeniswhetherthesecustomers “We aregoingtotakethisbusiness withabsolutelyno “We arestartingwith1.6million tonsinamarketthat,just Cleveland-Cliffs Inc.chiefexecutiveLourencoGoncalves According tothesamedata,DRIuse,asaratioofscrap The projects,ifallcometofruition,wouldprovidefor “Anyone whocanproducethesamematerialsinupper by SamKusic

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Alternative Iron vs Standard Scrap A rendering of Cleveland-Cliffs Inc.’s proposed 1.6-million-ton hot briquetted iron plant. The Midrex- based plant is to be built on a brownfield site along the Maumee River in Toledo, Ohio, USA. Credit: Cleveland-Cliffs Inc.

“I like both of these projects, and I think they make a lot of scrap and pellets will be the lowest-cost charge materials sense.” for blast furnaces or EAFs. I see this situation continuing in the Cleveland-Cliffs is looking to break ground on its HBI plant future.” this month. Some preliminary site work is underway now, and She added that any future increases in alternative iron the equipment has all been put on order, said Cliff Smith, demand likely will be slight, driven by the slow shift away from executive vice president of business development. He also said integrated to EAF and incremental growth in the company has hired about 15 people who are leading the new overall North American steelmaking capacity, such as through business. the entrance of Big River Steel to the market. He said the project remains on track for start-up in 2020. In addition to cost, there are technical limitations that cap “We’re feeling pretty good about where we are to date,” he the market potential. said. Poveromo said that with pig iron, EAF steelmakers have to Meanwhile, ERP Iron Ore, which acquired the Reynolds limit usage to 40% to 45% of the charge in order to keep plant through bankruptcy, is working to retrofit the plant with levels in check. And with HBI and DRI, content is limited to new environmental equipment and hopes to launch production about 50% before furnaces have to be redesigned for higher by the third quarter. power consumption and lower yields. “The goal is to be making iron by the end of this year,” Considering those limitations and current market Clarke recently told the Duluth (Minnesota) News Tribune. conditions, neither Poveromo nor Bolen said they foresee any Given the need for purer iron inputs in EAF steelmaking, it’s new projects in the southern U.S., which has become the seat of tempting to see these projects as the beginning of a wholesale steelmaking and automotive manufacturing shift away from scrap to alternative iron. But Poveromo and in the U.S. others said such a shift is highly unlikely because, at the end of “Imported alternative iron can get into the southern U.S. via the day, alternative iron cannot compete, pricewise, with scrap. the barge system pretty efficiently. Plus voestalpine has taken up “There’s no way DRI, HBI or pig iron can really compete much of the remaining southern U.S. demand,” Bolen said. with scrap on the price. Scrap is essentially a collected material. voestalpine opened its Midrex-based HBI plant in November There may be some transportation and processing costs 2016, targeting 2 million tons of production. About 60% of MAR 2018 associated with it, but for the most part, it’s a collected material. the output is reserved for its integrated mills in Austria; the So the scrap dealer can drop the price substantially if faced with remainder is being sold to other steelmakers. Big River Steel in I

price competition. So really, people producing and selling DRI Arkansas and Tyasa in Mexico are among those that are buying IRON & STEEL TECHNOLOGY should never try to compete with scrap on a cost basis.” from it. Given that, he said, the availability of scrap and the price “I don’t see much interest in additional southern U.S. DRI dictate that scrap will remain the primary feedstock for electric capacity. This region is in decent shape from a supply/demand arc furnace steelmaking in North America — and western and shipping cost perspective,” Bolen said. F Europe — well into the future. Bolen said she, too, does not foresee a significant increase in

demand. I AIST.ORG “I don’t see existing EAFs or integrated producers using any more alternative iron units than they do now. In North America,