In 2004, Nucor Corporation purchased the American Iron Reduction (AIR) plant, a 1.4 million tons-per-year direct-reduced iron (DRI) facility in southern Louisiana, dismantled it and, in 2005, transported it, piece by piece, to Point Lisas, Trinidad.
In March, six years after the AIR relocation, Nucor broke ground on another DRI plant. This one is in, again, southern Louisiana, literally within shouting distance of the old AIR plant.
John Ferriola, president and COO of Nucor, struggles to explain the seemingly contradictory moves. “You may ask, 'Are you crazy?'” he suggests.
Why would Nucor move a DRI plant to Trinidad, at a cost of hundreds of millions of dollars, then, a few years later, build a new one on the same spot vacated by the first one? There is calculation to Nucor's planning.
The DRI technology — subjecting iron ore to superheated natural gas before mixing it with scrap in a steel mill furnace — has been experimented with, used in pilot projects, and put into operation in commercial iron processing plants in the United States since 1970. But the idea has never caught on in a big way. Last year, for example, while India turned out 20.6 million tons of direct-reduced iron, with 11 other nations producing more than 36 million tons, the United States produced zero.
Five American DRI plants that were up and running in 2000 have either gone under or moved overseas, like the AIR plant. The mortality rate for American DRI plants is a result of volatile natural gas prices, Ferriola says. A graph of spot gas prices between 2000 and 2010 looks like a jagged seismic chart of a big earthquake, jumping radically up and down, with the price per cubic meter of natural gas dipping below $2 in 2001 and surpassing $14 in 2005. Currently it's about $4.30. “For a successful DRI plant, you need to be assured of a 20-year supply of natural gas at an economic price,” Ferriola says.
That's what Nucor has in Trinidad, where there are ample supplies of natural gas. Before Nucor moved the AIR plant to the Caribbean, it had been running there an inefficient iron carbide plant, using a granular form of ore and treating it with hot methane and hydrogen, which it planned to replace with a traditional blast furnace. But trends in the world market in the early 2000s dictated otherwise. With China and India marching aggressively into steel production, the demands on the world supply of coking coal, a mainstay of the blast furnace, were heavy. “There was a drain on the supply and there was pricing pressure,” Ferriola says.
So Nucor shifted to DRI. Since the Trinidad plant, Nu-Iron Unlimited, fired up in 2006, it has supplied Nucor's 21 electric arc furnaces around the United States with high-grade iron ore while serving as an on-site DRI lab. Using a continuous supply of $2 per cubic meter Trinidadian natural gas, as well as iron-rich Brazilian ore, Nu-Iron has far surpassed the industry standard of 8% utilization in the steelmaking process; that is, the mix employed to make high-grade steel was 8% DRI, along with 60% scrap and 32% pig iron. Because of the higher iron content of the DRI, Nucor is now able to use its “virgin iron” from Trinidad at better than 35% of the mix, Ferriola says.
“That's why we're so confident in moving forward with DRI,” he adds.
The planned $750 million Louisiana facility has a lot of the same advantages. The Mississippi River meanders across the middle of St. James Parish, where Nucor's 4,000-acre riverfront site is located, providing easy access to barges with iron ore from Brazil and elsewhere. Ferriola won't say who will supply the new plant's natural gas, other than that it's an onshore natural gas exploration company. “Without telling you the exact price, I can say that the gas will be supplied at a price such that the cost of the DRI delivered to our mills from Louisiana will be the same price as the DRI delivered to our mills from Trinidad,” he adds.
Another asset: The new plant will use the cost-saving, emissions-reducing technology of Tenova HYL. Tenova HYL, with offices in Monterrey, Mexico, is a worldwide metals technology company that has been offering its DRI technology to steelmakers since 1957. For the past 13 years, its marketing efforts have focused on a compact, pressurized reactor that uses Tenova's high-efficiency “ZR,” standing for “zero reformer,” technology. Forcing super-heated natural gas through layers of iron ore, the reactor turns out iron pellets or briquettes or, in the case of an integrated steel plant, hot iron that can be fed directly into the mix in the steelmaking process.
Thomas Scarnoti, Tenova's marketing and sales manager, says the ZR reactor is less capital intensive than competing technologies. It saves fuel costs by recycling byproducts and operating under pressure, with a lower volume of gas required, and it's virtually emissions free. “I once boasted that I was fairly sure we could get a permit to build a plant in Disneyland,” Scarnoti says.
In the Tenova scenario, the process begins with a tapered cylindrical chamber, where the DRI action takes place; in the planned Nucor plant the chamber will be 6.5 meters in diameter, promising to be Tenova's largest reactor.
Iron ore — mostly from Brazil or the upper U.S. Midwest — is transported by a conveyor, in a continuous flow of about 20 tons per work cycle, to the top of the cylinder — the reactor. There it's loaded into an airtight chamber and pressurized to about six times atmospheric pressure. This makes the ore more conducive to chemical change. Then valves feed it into the reactor chamber, which is also pressurized.
Meanwhile, gas is preheated in a separate unit, sealed and oxygen free, so that the combustible gas will not burn or explode. The gas-heating process, raising the temperature to 975 degrees Celsius, “cracks” the gas, separating it into hydrogen and carbon monoxide, which is directed into the bottom of the chamber.
The gas then billows upward as the ore, controlled by a rotary valve, settles to the bottom. Ferrous ore, which often has a reddish or rust colored hue, is high in oxygen content. As it descends through the reactor, though, the gas peels away its oxygen molecules, replacing them with carbon. An exactingly calibrated valve controls the amount of time the ore spends in the chamber, allowing the plant to determine the carbon content of the final product.
Carbon is, of course, crucial to the steelmaking process. Not enough, and the metal is soft and pliable; too much, and it chips or breaks. The just-right carbon zone is between a fraction of a percent and somewhere below 2.5%, depending on the kind of steel that's being manufactured, Ferriola says. Nucor's Trinidad DRI actually comes out at a buffed-up 3%. “Any excess carbon that's not required for the steel product is burned as chemical energy,” he says.
The final DRI product rolls out of the bottom of the reactor, where it can be sent directly to an adjoining steel mill's meltshop for use in making steel. It can also be diverted to a storage vessel for transport to another facility. DRI pellets, the reddish hue now a dark gray, are something like irregularly-shaped marbles. “They look like the stuff you buy in the Home Depot garden supply section to cover the dirt in a large potted plant,” Scarnoti says. DRI briquettes are pillow-shaped slugs of iron, each weighing anywhere from a half pound to six-and-a-half pounds.
What about the emissions? Spent gas leaves the reactor through a valve. It is cleaned in the heating unit, and then it's recycled back into the reduction process. Water is drained. The carbon dioxide is captured in a separate scrubbing unit. Some is stored for other industrial uses — a potentially big step for an industry that accounts for about 5% of the greenhouse gases in the world's atmosphere.
The captured CO2 can mean extra millions for the plant operator, Scarnoti contends. For example, a Tenova-affiliated steel mill in Mexico sells carbon dioxide to the local Coca-Cola and Corona Beer bottling plants. An Emirates Steel Industries plant in Abu Dhabi sells it to an oil company to pump into wells to improve petroleum flow. The Nucor plant will remove anywhere from 45% to more than 80% of the carbon dioxide for commercial uses or for permanent sequestration in subterranean storage (or both in the case of the oil drilling function). At least some of the CO2, however, is released into the atmosphere.
Louisiana's Department of Environmental Quality (DEQ) says that Nucor has met state air quality standards. In a January announcement when the plant was certified, DEQ secretary Peggy Hatch said, “The facility will be an economic boon while not creating any adverse environmental impacts.”
Tenova's principal competitor in DRI technology is Midrex. The two companies account for more than 90% of the world's DRI plants. Like Tenova, Midrex touts its green technology, including a sophisticated CO2 collector, which captures some of the greenhouse gas and recirculates it for use in the de-oxydizing process in its reactors. Tenova, by giving its technology the label “zero reformer,” as Tenova doesn't use a reformer, takes direct aim at Midrex, whose plants use bulky reformers to recycle gas. Ferriola says the capital costs of the two systems are about the same.
Some of Midrex's DRI plants function as a part of an integrated steel mill, such as Hadeed in Saudi Arabia and Lion in Malaysia. In that case, the DRI arrives hot at a plant's melt shop, reducing the cost of boiling the steel mix.
Direct-reduced iron, because it's up to 98% pure, dilutes the inevitable impurities that come with scrap steel. Elements like copper, chrome or tin, when they're awash in liquid iron, can be rendered statistically insignificant. Add enough virgin iron units and their parts per million of impurities are so low that it doesn't matter.
Nucor says its new Louisiana plant should be in operation by mid-2013.