How can steel decarbonisation technologies deal with the problem of low-grade iron ore?

• Smelter technology addresses the issue of low-grade iron ore
  
  
• All estimates point to widening supply crunch of DR-grade feedstock
  
  
• Smelter filters out DRI impurities via slag which resembles that of a BF
  
  

Morning Brief: Most projections indicate that while global steel production is likely to grow to 2.2 billion tonnes (bnt) by 2050, the share of the BF-BOF route, which accounts for over 70% of global steel production currently, will drop to around 35% by 2050. This is in sync with the gradual decarbonisation of the global steel industry.

Research by technology supplier group Primetals Technologies shows that the share of the scrap-based EAF route, pegged at around 20% of global steel production in 2020, will rise to 33% by 2050. This is the least CO2-intensive route with a footprint of not more than 0.3 tCO2 per tonne of steel, although constraints in scrap supply limit its growth globally. However, the estimate for the DRI-EAF route is just 13% of global production by 2050 despite the massive investments in low-CO2 DRI in the EU and the MENA region. This is because of the concern related to availability of high-grade iron ore feedstock. DR-grade iron ore accounts for just 3% of global seaborne supplies and the DRI-EAF route is highly dependent on high-grade ore.

DR-grade feedstock shortage

As per Vale, demand for premium DR-agglomerates will rise phenomenally from around 40 mnt in 2022 to 110 mnt in 2030. BloombergNEF estimates that by 2040, the seaborne market for DR-grade pellets will face a supply deficit of 133 mnt per annum. Recent research by IEEFA shows that the projected total DR-grade pellet demand for 2040 may rise to 385 mnt, while the available pellet supply can only reach 252 mnt, implying a 133 mnt deficit.

This naturally casts a shadow on the DRI-EAF route, as its expansion is directly linked to high-grade feedstock supply. Therefore, the low-CO2 transition in the steel industry will have to deal with the problem of proper utilisation of a huge volume of mid-to low-grade iron ore available globally, which is currently being used in BF-based steel production.

Why smelter technology?

It has to be understood that efforts to ramp up production of DR-grade feedstock is happening across the globe, with initiatives led by Vale and other major miners, as well as the prospect of developing magnetite mining in Australia for subsequent beneficiation of ore to DR-grade quality. However, these efforts will most definitely fall short of demand given the urgency of phasing out the blast furnace in many parts of the world. Moreover, the yield factor of processed high-grade ore is likely to be highly low compared to total volumes mined, making the process cost-sensitive and uneconomical for producers. Most importantly, this leaves a crucial question unaddressed: how to properly utilise existing iron ore reserves of mid-to low-grade in production processes that will simultaneously be low in emissions.

Therefore, for utilisation of low-grade feedstock in steel production and simultaneously boosting DRI to replace the BF, as well as maintaining existing downstream infrastructure of the steel plant, the electric smelting furnace (ESF) has emerged as an alternative. The smelter produces a slag which is unlike the EAF slag but closely resembles the BF slag. It filters out the impurities in the DRI through the slag which has further downstream use in the cement sector.

The BF and agglomeration processes (sintering, coking) account for around 80% of plant emissions. By eliminating these processes the DRI-smelter-BOF route achieves major reduction in emissions, as well as addresses quality issues and retains the feasibility of downstream steelmaking infrastructure. These advantages have led to the technology being trialled by mining majors such as BHP and others.

India perspective

In India, the BF route dominates in terms of investment pipeline and current infrastructure. Smelting reduction technologies such as Hisarna and Corex have been adopted in small scales by some of the leading producers. The economics of carbon capture in the long term will determine the C02 reduction potential from the integrated route.

However, the problem of the urgency of utilisation of huge volumes of domestic mid-grade iron ore, the presence of a significant DRI capacity and the persistent shortage of quality scrap feed make India an attractive destination for smelter technologies, especially as supplies of DR-grade material are likely to fall short of demand by the mid-2030s and 2040s.