Of all the beneficiaries of the global steel boom, none has been more thankful than Midrex Technologies, a US producer of specialist plant for the industry.
The company – based in Charlotte, North Carolina, and owned by Kobe Steel of Japan – is the world leader in producing steel-making equipment based on the direct-reduced iron process.
The process uses a source of energy such as natural gas to convert iron ore into a material called direct reduced iron (DRI).
This can be used as a highly concentrated source of iron that forms an important part of the “charge” of iron-containing scrap used in arc furnaces.
Such arc furnaces – often called mini-mills – are the most popular alternative to the conventional steel production processes based on blast furnaces.
In a blast furnace, iron ore is converted to a fairly pure form of iron – pig iron – through a reduction process carried out at high temperatures. The pig iron is later converted to steel.
With recent growth in global steel production and more companies running arc furnaces seeking alternatives to scrap as a feedstock, Midrex has experienced “a lot of pent-up demand” for its equipment, says John Kopfle, Midrex’s director of commercial development.
That contrasts with the situation in the late 1990s and early 2000s, when the company was scratching around for project work and the number of schemes it was working on was close to zero.
“At the time, customers were hard to find,“ says Robert Hunter, Midrex’s director of marketing.
Back then Kobe – which bought Midrex in 1983 in an effort to bolster its position in the equipment side of the steel industry – could have been excused for wondering if its investment had been an expensive mistake.
Midrex is now working on about 12 DRI projects, which are likely to be installed in the next three years. The value to the company of these orders is thought to be about $600m. This is on the basis that each new DRI production system – capable of making about 1.5m tonnes of the material a year – represents engineering project work valued at between $10m and $90m.
The total cost of the equipment once it is installed on a production site works out at about $270m per 1.5m tonne-a-year production system. Much of the work in providing this is done by engineering contractors or other equipment companies.
According to Midrex, its equipment is responsible for about 60 per cent of the world output of direct reduced iron used in steelmaking.
Global DRI production last year was about 50m tonnes.
On current projections, based on work under way in setting up the required plant, DRI production in 2010 will be 74m tonnes, rising to 97m tonnes in 2015.
The key to the use of DRI equipment is that this makes sense if the steelmaker concerned has access to plentiful supplies of natural gas.
Use of this technology is also likely to fit in with the aspiration by the steelmaker to produce relatively high-value steel using arc-furnace technology.
Midrex says that making steel based on a DRI feedstock is more environmentally-friendly than techniques based on blast furnaces.
The company says this method creates two-thirds less carbon dioxide – the main gas responsible for global warming – per tonne of iron than the techniques based on blast furnaces.
Several of Midrex’s projects are in the Middle East countries, which have abundant supplies of natural gas.
Among such customers for Midrex are Mobarakeh Steel in Iran, Al-Tuwairqi in Saudi Arabia, Shadeed Iron & Steel in Oman and Qatar Steel.
All are due to start operating their new plants in the next few years.
Among the companies that use Midrex’s DRI equipment in their current operations is Arcelor Mittal, the world’s biggest steel producer, which has several plants using this hardware, including ones in Canada, Trinidad and Tobago and Mexico.