Cost of production Probable variations in unit costs of key elements as per the circumstantial assumptions made in table A are given in table E. For the sake of simplicity, fuel oil is costed at $20/ton throughout. TABLE E Iron oxide Metallurgical coke Non-coking coal, lignite Natural gas Electric power Lump ore Pellets ton unit-ton ton ( 12,000 BTU/lb) '000 cu.ft. kwh 1. llcts 15cts $20 $6 0.51.2 cts 2. llcts 15 cts $25 $6 0.51.2 cts 3. llcts 15 cts $25 $12 0.51.5 cts 4. llcts 15 cts $25 $6 3-30 0.51.0 cts 5. llcts 15 cts $25 $12 3-30 0.51.0 cts 6. 15-16 cts 18-20 cts $20 $6 0.51.2 cts 7. 15-16 cts 18-20 cts $25 $6 0.51.2 cts 8. 15-16 cts 18-20 cts $25 $12 3-30 0.51.0 cts 9. 15-16 cts 18-20 cts $25 $6 3-30 0.51.0 cts 10. 15-16 cts 18-20 cts $25 $12 0.51.5 cts On the basis of the data shown in tables B to D, variations in the cost of production have been com-puted and are presented in table F. TABLE F BFjLDf DR/EF Case NG-based Coal-based US % per ton of liquid steel (a) (b) 1. 46.7049.50 39.8044.00 2. 50.1053.00 39.8044.00 3. 50.1053.00 43.7049.70 4. 50.1053.00 36.8043.60 39.8042.80 5. 50.1053.00 36.80-43.60 44.9047.90 6. 51.5054.30 39.8044.00 7. 54.9057.80 39.8044.00 8. 54.9057.80 40.9047.70 48.0051.00 9. 54.9057.80 40.9047.70 44.1047.10 10. 54.9057.80 48.0054.00 Assuming lump ore/sinter BF charge and no pellets. The above data indicate that up to a capacity of 2m. tpy of raw steel (table B) DR-based processes have a distinct advantage over the BF/LD method, particu-larly if natural gas or a suitable carbonaceous reductant is available in the country. If, however, the highest cost under the coal-based DR column (b) of table F is compared with the corresponding lowest figure under the BF column (in other words taking a pessimistic view on the efficiency of DR processes), it is found that both are of comparable order of magnitude in cases 1, 3, 5, 10 and to a lesser extent, 8, especially as the cost of production through the conventional steelmaking process will tend to decrease when the TABLE G Capacity of new Process sequence Specific unit, million tpy to be limiting Cases raw steel preferred factors l to l0 0.30.5 DR/EF 1, 3, 5b, 10 0.51.0 BF/LD or DR/EF 2,4 5a,6to9 0.51.0 DR/EF 1,3,5b, 10 1.01.5 BF/LD Unduly high cost of coke; fi-nancing difficul-ties 8 1.01.5 BF/LD or DR/EF 2,4.5a, 6,7,9 1.01.5 DR/EF 1,3,5b, 8,10 1.52.0 BF/LF Unduly high cost of coke 2,4,5a, 6,7,9 1.52.0 DR/EF Unduly high cost of coal and-power 1 to 10 except 2.03.0 BF/LD possibly4&5 if NG is costed nominally capacity increase Cases 1, 3 and 5 are characterised by the local availability of iron ore, and 8 and 10 by the lack of this raw material. The lack of non-coking coal is common to all these cases except 1. Summarising the above considerations, the best course of action to be taken for various individual new steelmaking capacities to be installed is shown in table G. To illustrate the effect of macro-variables on the total cost of production of liquid steel in developing economies, the following data has been compiled for extreme-type cases for capacities of 0.5m. and 2m. tpy. The total costs shown in the tabulations include an allowance of 15% p.a. on fixed capital to cover capital charges. TABLE H Probable Order of Magnitude of Total Cost of Production Capacity: 0.5m. tpy BF/LD DR/EF Case NG Coal US$ per ton of liquid steel 1. 70 53 3. 73 58 4. 73 51 52 7. 78 53 10. 78 62 TABLE I Probable Order of Magnitude of Total Cost of Production Capacity: 2m. tpy BF/LD DR/EF Case NG Coal US$ per ton of liquid steel 1. 56 50 3. 59 55 4. 59 48 49 7. 64 50 10. 64 59 Within the degree of accuracy of the estimates, it can be visualised that the differential costs between DR/EF and BF/LD are quite appreciable for 0.5m. tpy, and only marginal for 2m. tpy, except in cases 4 and 7. In case 4, iron ore, non-coking coal and natural gas are available, and in case 7 iron ore is imported and reduced with indigenous coal. At a DR/EF capacity of 0.5m. tons, liquid steel can be transferred to a continuous casting unit at cost plus, say, 15% gross return on fixed capital, namely within the range of $51 plus $10.50 and $62 plus $10.50 per ton for the cases shown in table H. Billets can be produced and sold remuneratively against a conversion charge around $2.50/ton, bringing the minimum selling price to $64/ton and $75/ton respectively, a range which is in line with levels prevailing under normal circumstances in major steel producing countries 18 MB MONTHLY