oxide pellets for two types of continuos DR processes are probably of the following order magnitude: NG-shaft Coal-rotary kiln Basis: NG (1,000 BTU/cu. ft.) @ 30cts/'000 cu. ft. Coal (12,000 BTU/lb) .. $6/ton Fuel costs ........$3.60 $3.30 Conversion costs ......$4.00 $3.80 Overheads (excl. capital charges) .. $0.40 $0.40 Processing costs........$8.00 $7.50 It can be seen that, at the price of fuels assumed in the above calculations, there is practically an equal choice between the two methods, bearing in mind that capital costs are comparable in both instances. While it is unlikely that the delivered price of coal will be below $6/ton (except in very special circumstances where the steel complex is located in the vicinity of the coal pit), that of natural gas may well be substantially lower than 30 cts./'000 cu. ft., and some developing countries in North Africa and the Middle and Near East could even cost it nominally if gas transmission is within a short distance from the well. In this case, processing costs (excluding capital charges) could be less than $5/ton of sponge iron. Iron ore producing countries can manufacture oxide pellets and sell them at 14-15 cts./unit Fe, fob; this corresponds to about $10/ton of 65-66% Fe product. Assuming 92% metallization and a total iron content of 90% after reduction, the cost of raw material and processing cost per ton of solid iron (100% basis) would be in the neighbourhood of the following levels: NG @ nominal cost: $22/ton Coal @ $6/ton: $24.50/ton to which must be added some $6/ton (15% on fixed capital) to cover capital charges. Adding another $6/ton for gross profit would raise these levels to the selling price of steel scrap in developed countries. Countries in the process of developing their steel industry beyond the infancy stage can be classified as follows with regard to the raw material and fuel situation: TABLE A Iron Coking coal Non- coking Natural oxide* or coke coal, lignite Gas 1. X X X 2. x o x 3. x - o o 4. x ox x 5. x o o x 6. o x x 7. o o x 8. o o o x 9. o o x x 10. o o o where x locally available in sufficient quantity and of suitable grade. where o could be imported at a "reasonable" price. *includes lump ore, oxide pellets, pyrites cinders. Countries possessing iron ore and metallurgical coal resources would be inclined to adopt the BF/LD route to steelmaking, even at a relatively low capacity, as the increase in capital charges per unit of output would tend to be compensated by a reduction in the cost of raw materials. If natural gas is however equally available at low cost, then the preference to BF/LD over DR/EF would be debatable for small units. Such favourable circumstances are exceptional, and the majority of developing countries would fall under categories 2-10, although case 4 would also be uncommon. With each particular set of circumstances, the choice between the BF/LD and DR/EF routes should take into account the following fundamental aspects: 1. Cost of production of raw steel and the true magnitude of each main class of components, namely (i) Cost of raw materials. (ii) Total processing costs, including the cost of fuel and energy. (iii) Capital charges. 2. Long-term reliability of sources of supply for both raw materials and fuel. 3. Long-term profitability of the scheme. 4. Any limiting factors such as the shortage of capital, possible rise in the cost of key elements which may affect adversely the implementation or the profitability of the project. In order to determine the best course of action to be followed under a definite set of circumstances likely to prevail in developing countries embarking upon steelmaking or expanding their raw steel capacity, the following indicative data and considerations might be of assistance to the planning organisations and potential investors. Capital costs The estimated fixed capital costs for the conventional versus the direct reduction method are given in table B. TABLE B Liquid steel capacity, million tpy BF*/LD DR/EF US$ million 0.5 70 35 1.0 85 55 1.5 100 75 2.0 110 100 3.0 150 150 3.5 160 170 * Assuming purchased coke It can be seen that economies of scale can be best achieved with a BF operation above the 2m. tpy level. Processing costs Excluding capital charges, the processing costs can be derived from the following basic data for iron (table C) and steelmaking (table D). TABLE C Blast Furnace Direct Reduction per ton of hot metal per ton of sponge iron Standard Improved* NG-based Coal-based Iron (unit-tons) ..96 96 90 90 Coke .. ..600 kg 380 kg Coal...... 550 kg Fuel oil .. ..40kg 150kg Natural gas.. 12,000 cu. ft. Oxygen .. .. 100 cu. m. Other materials .. $0.50 $0.50 $0.10 $0.10 Other conversion costs .. .. $6 $6 $4.40 $4.20 TABLE D LD EF per ton of liquid steel Hot metal equivalent ......1.1T Sponge iron equivalent...... 1.15T Other materials ........ $8 $7 Electric power ........150 kwh 600 kwh Other conversion costs...... $7 $5 *with maximum fuel oil and oxygen injection. ignoring scrap addition. probable average values on a comparative basis in developing countries; include labour, supervision, maintenance, general overheads. These figures relate to sizes of 0.5-1m. tpy and would be somewhat lower for higher outputs.