With EAF steel production worldwide increasing on the back of the continuous reduction in the availability of scrap (the main raw material for EAF steel production), many steelmakers are turning in search of an alternative raw material to be used in the EAF steelmaking process. One such material may be hot briquetted iron (HBI), the characteristics of which allow it to be used in EAF steelmaking as a supplement of scrap.
HBI: What is it?
HBI is a briquetted form of direct reduced iron, which allows it to be stored and transported with ease. DRI has become widely known and accepted as a premium iron unit source for steelmaking. DRI is produced from the direct reduction of iron ore, in the form of lumps, pellets or fines. DRI can be produced using coal (rotary or fluidized bed) or gas as the energy source. Gas-based DRI can be produced by a fluidized bed (Finmet, Iron Carbide and Circored) or in a shaft furnace (HYL and MIDREX). First DRI and later HBI technology have been around for almost 30 years now, with production performed in different locations around the world. In the late 1970s, the first sustained DRI plant production with hot briquetting was installed using the FIOR process in Venezuela while a PUROFER plant was installed in Iran. But the real technological breakthrough occurred in the mid-80s after the successful operation of the first MIDREX plant with hot briquetting at Sabah Gas Industries in Malaysia.
Although DRI/HBI production is generally more expensive than reducing iron in more conventional iron making processes such as in blast furnaces, the final product has many advantages, which can make it more economically preferable in steelmaking.
Compared to pig iron, DRI/HBI has a higher iron content, no less than 89 percent. The specific investment and operating costs for a DRI plant are lower compared with an integrated steel mill, since the direct reduction process uses powdered ore, avoiding the sintering process otherwise necessary to use this ore in a blast furnace. Meanwhile, due to its size specifications, HBI has storage and shipment advantages over other forms of iron ore products. The last but not least advantage of HBI is that the material is an excellent feedstock for use in EAFs by mini-mill, as HBI can be used entirely by itself or else as a supplement to low grades of scrap in the rest of the charge.
Increasing importance of HBI
Although the DRI/HBI technologies have been known for years now, they have only recently started to receive increasing importance as a basic material used in EAFs. Several factors have sparked the growing attention steelmakers worldwide are giving this raw material.
First of this factors is the increasing share of steel smelting through use of EAFs. According to the statistics, currently about 34 percent of all steel in the world is produced via the EAF route. Over the past decade, EAF production has shown an average growth of five percent and this number looks set to increase due to several factors. Thus, according to the statistics, the global production of crude steel by the EAF route amounted to about 280 million mt in 2000, is predicted to rise to slightly less than 400 million mt in 2008, and is expected to reach 550 million mt in 2016. The main additional EAF capacities are expected to come from so-called new steel producing regions such as China, Asia and the Middle East, while other regions are expected to see only a marginal increase in EAF production.
On the back of the growth in steel production by means of EAFs, the availability of scrap, the main raw material for EAF production so far, as well as the quality of scrap, is expected to decrease. Currently, scrap is mainly sourced from several regions across the world - traditionally, Europe, the US and the CIS states. While the scrap availability in Europe and the US remains more or less at the same level, the availability of scrap from the CIS, which has been supplying many scrap consuming regions for more than a decade, has started to register a reduction, as has the actual quality of the scrap. For instance, according to various estimates, scrap collection in Russia will vary at around 30 million mt for the next ten years, which will be barely enough to meet the needs of domestic steelmaking. Meanwhile, several pessimistic forecasts even predict that Russia will start importing scrap itself in around 10 years' time. Thus, with one of the main scrap sourcing regions turning from net scrap exporter to importer of this material, while collecting capacities remain at the same levels in the other scrap sourcing regions, new EAF capacities will have to seek out new raw materials suitable for use in EAF steelmaking.
The last factor impacting the growing importance of HBI lies in the latest trend of increasing the share of higher value added products. As mentioned above, HBI has a higher iron content than pig iron, and less impurities than scrap. These characteristics allow steelmakers to use HBI for production of higher grades of steel. HBI is already being widely used in the production of special steels as well as in the production of flats by the EAF route. As the share of higher value added products rise, so will the demand for HBI from steelmakers.
Where to build?
Since to produce HBI a country requires iron ore and natural gas and coal resources, most HBI production is located in regions rich in these natural resources. The most advantageous locations in this sense seem to be South America, some countries of the Middle East, some countries of Southeast Asia, India, Australia, and some countries of the CIS region. Currently, there are 20 different HBI plants operating around the world, mostly located in the stated regions with an expected total production of around 20 million mt of HBI in 2008.
Although South America, and in particularly Venezuela, was a pioneer and is a current leader in HBI production, growing importance in the HBI market, with new capacities on the way, is being acquired by countries such as Russia, India and several counties in the Middle East, such as Oman. These newcomers will rapidly gain importance in the HBI market due to their advantages in terms of iron ore reserves, metallurgical coke and natural gas reserves. For instance, currently, Russia has two operating HBI modules, while another three are under construction. Meanwhile, India has four HBI plants in place and three others on the way. Oman, which so far has no completed HBI capacity, is proceeding with plans for three HBI modules. Another country, which may yet have a say in the international HBI market is Iran, which is also very rich in natural gas and iron ore reserves.
Costs: Scrap vs HBI
Comparing the costs of scrap and HBI, the current world prices of HBI are seen to be about five percent higher than those of scrap. However, due to its advantages resulting from consistent quality, higher iron content and lower levels of impurities, HBI can be more beneficial for steelmakers. Many EAF steel producers are already using a mixed charge of scrap and HBI, where the proportion of each depends on the desired result and on the cost analyses. Meanwhile, several steel producers, such as those who have decided to produce flats from HBI, and also producers of high grade steels, are slowly moving to complete the switch to HBI as a raw material.
Thus, with new mini-mills and EAF capacities on the way, demand for HBI appears certain to increase, due to the declining scrap collection levels and also due to the increasing share of higher value added products, which will require improvements of the metallic charge through dilution of the impurities present in scrap. In addition, the easy handling, transportation and storing of HBI creates good prospects for HBI as an alternative raw material source for EAF steelmaking.