Venezuela’S Role In The Merchant Dri Market

VENEZUELA’S ROLE IN THE MERCHANT DRI MARKET By Oscar Dam, Roy Whipp & Carlos Osborne ORINOCO IRON Venezuela

For presentation at Metal Bulletin’s Latin American Steel and Iron Ore Conference Rio de Janeiro – March 22-24 , 1998

VENEZUELA’S ROLE IN THE MERCHANT DRI MARKET

By Oscar Dam, Roy Whipp & Carlos Osborne ORINOCO IRON -Venezuela

Introduction The use of scrap substitutes for EAFsteelmaking worldwide, is rapidly increasing. Although it is generally conceded that there will not be a scrap shortage due to the large amount of obsolete scrap available, this type of scrap is of poorer quality than is generally required for higher grades of steels, and scrap substitutes will have to be used to control residuals for these grades. There are a number of new EAF steelmaking projectsthat are planned, this additional EAF capacity will further increase the demand for both scrap and scrap substitutes. At present, direct reduced iron in the form of DRI and HBI is the major source of scrap substitutes worldwide. As an example in the United States, about 1.56 million mt of DRI and HBI were used in 1994, of which 1.12 million mt were imported, principally from Venezuela. The amountof additional scrap substitutes required for the North American market is estimated to be in the range of 5 to 8 million mt/y by the year 2000. US Pig iron imports have been on a dramatic increase, this indicates that pig iron is filling the deficit between demand and supply for DRI in North America at present. However, it is unlikely that that pig iron will be a long-term competitor in the scrapsubstitute market due to its inherently higher production cost when compared to DRI and HBI. North American steelmakers are actively evaluating how to acquire the additional scrap substitutes they will require. This includes evaluation of construction of their own plants, joint ventures with producers, and long term contracts with suppliers. In addition, both iron ore mining companies and scrapsuppliers are interested in this growing market. The United States is now being considered for new direct reduction (DR) ventures. Venezuela currently produces around 4 million mt/y of steel, all through EAF steelmaking processes. The percentage of scrap used in the production of steel is about 25% overall, with the rest being provided by direct reduced iron. The steelmaking industry dependsheavily upon direct reduction as a source for metallics units, and over the years the direct reduction industry in Venezuela has also become export oriented, making the country a principal exporter of HBI. Venezuela has more experience with direct reduction processes than any other country in the world due to the diversity of processes, which have been installed

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there. Its experience coversmore than 30 years, and the country now has over 6 million mtpy of installed DR capacity. This paper will present a summary of the present situation in the Venezuela DR industry, the status of new projects, and the direct reduction development activity in order to play an important role as a reliable supplier of HBI. Direct Reduction Capacity in the Americas There are a total of 32 direct reductionplants located in North and Latin America ranging in capacity from 30,000 to 830,000 mtpy as shown in Figure 1. The total design capacity of these units is 13.18 million mtpy. All are gas-based with the exception of the 3 SL/RN units operated by Siderperu in Peru and the Piratini SL/RN plant in Brazil. The design capacity is broken up by process as follows: MIDREX®, 47.8%; HYL, 45.8%; FIOR®, 3.0%;Iron Carbide, 2.3% and SL/RN, 1.1%. At present time only 2 of the 32 plants are fully merchant based; the FIOR de Venezuela and OPCO plants located in Venezuela.There are two plants partially exporting HBI, Venprecar located in Venezuela and DRI from Ispat in Trinidad. The Nucor iron carbide plant in Trinidad is mainly for export to Nucor mills in the USA, but is not expected to supply product...