Straight course

The use of direct reduction of iron technology allows metallurgical enterprises to significantly enhance the efficiency of production, so the global output of the raw product are increasing every year. In the CIS countries, this trend is embodied primarily in the Russian projects of the "Metalloinvest.

World trends

First, we note that in the manufacture of metal products in the world three main types of raw materials are used: 1) liquid and solid pig iron, 2) steel scrap and in smaller quantities - 3) Direct Reduced Iron, (DRI). Supply and demand for these materials are closely related and largely determine the situation on world markets as a metallurgical raw materials and finished products.

At the same time the world production of iron using direct reduction (porous, hot briquetted, iron carbide, etc.) in recent years had a stable tendency of growth. According to experts from the Ministry of Industrial Policy of Ukraine in the near future, one third of steel in the world will be produced using DRI. But now this area as compared with cast iron is still developing.

Major modern manufacturers of DRI - Venezuela (Leader, Production - up to 7 million tons per year), India (more than 6.6 million tons), Iran (more than 5.5 million tons), the overall level of world production in 2006 reached nearly 60 million tons. DRI is especially produced by countries with cheaper natural gas, so it is believed that the excellent prospects for the development of the output of this product belong to Russia. Moreover, the world's needs for various types of DRI is satisfied at present only at 40%.

Russian projects

Indeed, production of DRI in RF has already been established at two companies of the "Metalloinvest" - Oskolsky Electrometallurgical plant and Lebedinsky mining and beneficiation plant (LGOK). LGOK needs special attention, where DRI plant operates since 1999 and, in March 2007, start of hot briquetted iron production is scheduled at a new line of Midrex-VAI with capacity of 1.4 million tons per year.

Early in 2005, the Russian iron ore holdings - "Metalloinvest" - named the construction of facilities for the production of directly reduced iron as the main task for the 2005-07 years, from which you can make extra clean steel with minimum environmental damage. The latter is especially important for Russia with Kyoto Protocol coming into force, which obliges the countries of the world and especially big industrial states to reduce harmful emissions into the atmosphere.

It is therefore not surprising that in the summer of 2006, Mikhailovsky Mining and Concentration Plant (MGOK is also part of "Metalloinvest" group), has announced its plans to build two plants to produce briquetted iron with annual output of 1.6 million tons each. First product is expected in October 2009, the second module must be launched in December 2012. In the future the productivity of each installation can produce up to 2 million tons. "The experience of launching facilities shows that they quickly reach the productivity, exceeding the guaranteed 13-15%. Design capacity of modules is about 1.8 million tons, the economic impact for the enterprise - in fact, doubling of gross income from sales. New product with iron content of 89%, 93% degree of metallization and carbon content of 1.5% - excellent raw material for electric smelting and electric steel becomes more and more popular today "- says the managing director of MGOK Sergei Kretov.

Ukraine's prospects

Similar projects exist in Ukraine. Thus, in 2006 it became known that the promotion of DRI projects at the domestic market is performed by Hares Engineering Company, which purchased a license from Japanese Kobe Steel to use the newest technology - ITmk3 - in Ukraine, Russia and some other countries. In July this year, Ingulets Mining and Concentration Plant (InGOK) (supervised by "Smart Group" company), Kobe Steel and Hares Engineering have signed a protocol of intention to build DRI plant at InGOK with annual capacity of 0.5 million tons. Formerly General Director Vladimir Piven intented to develop and build a pilot direct reduction of iron plant at InGOK with the capacity of 1-2 tons per day.

The agreement on the exchange of information necessary for the construction of a similar production is concluded with Poltavsky mining and beneficiation plant (PGOK). At this mill, development of business plan was completed to construct a metallurgical plant on its base with the capacity of 3 million tons per year. According to a senior interlocutor of "UkrRudProm at PGOK, the plant will consist of two lines of the annual output of 1.5 million tons of slabs each. Location of the plant will provide the supply of about 4.9 million tons of pellets per year and natural gas of more than 1 billion cubic meters annually. In the medium term increase of production of pellets is scheduled at up to 11.4 million tons a year - so diverted part of pellets for the production of slabs did not weaken PGOK position in foreign IOC markets.

Estimated cost of construction of the plant - at least 0.5 billion dollars (according to Hares Engineering estimation, the cost of new capacity to manufacture 0.5 million tonnes of metal raw materials per year will be 150 million dollars in Ukraine). Shareholders of PGOK are investors attracting foreign investment funds. For example, in October 2006 information was that the Ferrexpo, which controls GOK, will attract 275 million pre-export financing for four years. According to the source of "UkrRudProm, the main purpose of the loan - financing the construction of the plant under the working title "Vorskla Steel".

DRI technology is advancing in the Northern and Central mining and beneficiation plants, which, until mid-January 2007, together with foreign partners must prepare feasibility study for construction of one ITmk3 plant at each mill.

Table 1. World production of DRI from January to October of 2006, thousand tons

Table 2. Production of DRI in Russia in March and September of 2006, thousand tons