China’s Shanxi Taihang Mining Co. Ltd, known as CSTM, is now taking operational steps to apply the Iranian direct-reduction technology called PERED, or Persian Reduction, invented and patented by Mines and Metals Engineering GmbH, an Iranian engineering company registered in Germany.
Speaking to Financial Tribune in an exclusive interview, the engineering manager of MME, Hossein Aziztaemeh, explained that the contract with CSTM to import the Iranian technology was signed in May 13, 2013. However, the implementation of the project was delayed over the years due to several reasons.
"The Chinese did not find production of direct-reduced iron economically viable, but things changed after the Chinese government imposed heavy taxes on ‘unclean’ industries," he said.
Therefore, they decided to move toward more clean industries, as they seemed more viable.
CSTM is China's first company to use coke oven gas as an alternative to natural gas to produce DRI. Using MME’s production technology, service and equipment, the company aims to increase its iron ore processing and reduce emissions.
Aziztaemeh said the project will become operational by the end of 2019.
"MME has several main responsibilities here, namely offering engineering services, selling equipment [completely manufactured in Iran], supervision and offering relevant training," he said.
The deal is said to be Iran’s first PERED project implemented overseas.
PERED technology helps optimize energy and raw materials, and reduce production costs with the added advantage of being more environment-friendly compared to other direct reduction methods.
Aziztaemeh explained that there are generally three methods for DRI production: HYL process, presently marketed under ‘Energiron’ trademark, jointly developed by Tenova and Danieli; MIDREX Process patented by Midrex Technologies Inc. along with its parent company Kobe Steel Ltd; and PERED.
The replacement of MIDREX and Energiron with PERED will cut production costs by lowering the required initial investment and operational costs. Moreover, it is more eco-friendly.
Benefits, Domestic Use
According to Aziztaemeh, a majority of DRI plants in Iran utilize the MIDREX reduction technology.
But now, with the adoption of the new, indigenous DRI production process, the country’s steelmakers can count on increasing competitiveness.
MME Managing Director Morteza Aqajani enumerated PERED’s advantages compared to other iron reduction methods, in an article published on Iran Steel Producers Association’s news agency Chilanonline.com.
In PERED, the reduction process is more efficient, employs improved cooling methods and cuts on pollutant gas emissions. With less heat, more homogeneous gas reduction, more controllable pellet feed and use of centrifugal compressors, PERED requires less water, electricity and gas to operate, which lower operational and maintenance costs.
According to MME’s website, PERED can also produce cold and hot DRI, hot briquetted iron and combinations of all three.
Aziztaemeh said PERED has been used in three DRI plants in Iran, namely Shadegan in Khuzestan Province, Mianeh in East Azarbaijan Province and Neyriz in Fars Province. In addition, Kerman Province’s Baft Steel Complex plans to utilize the technology in the near future.
Shadegan Steel Company started the hot commissioning of its DRI module in May 2017 as the first plant to utilize PERED.
Mianeh Steel Company’s DRI plant was the second producer to utilize PERED, which came on stream on October 15, 2017. The plant has an annual sponge iron production capacity of 800,000 tons with content reaching 95%, according to Iranian Mines and Mining Industries Development and Renovation Organization.
The DRI plant of Neyriz Ghadir Steel Company was inaugurated in January 2018. Located in Fars Province, Neyriz Steel Company's construction started in 2010. Ghadir Investment Company is the project’s main investor and owns a 65% stake in the Neyriz plant, with IMIDRO controlling the rest. Neyriz’s DRI plant is capable of producing 800,000 tons of sponge iron per year.
According to Aziztaemeh, firms from Oman and India expressed interest in importing the Iranian technology at the SteelVia conference held in Dubai, the UAE, on Sept. 25-27, which was also attended by MME representatives.
DRI, also known as sponge iron, is produced from direct reduction of iron ore in the form of lumps, pellets or fines by a reducing gas. It can be processed to create wrought iron.
Crude steel is dominantly produced using two methods: making cast iron in blast furnaces or using DRI and scrap in electric arc furnaces.
More than 70% of the world’s steel are made using blast furnaces, while Iranian steelmaking is mostly dominated by EAFs.
The selection of each production method depends on various parameters, namely raw materials and energy costs.
Blast furnaces require large quantities of coking coal, a product hardly available in Iran and costly to import. This is while the country enjoys huge gas and iron ore reserves, making EAFs the more desirable route to take. The shortage of scraps has consequently driven steelmakers to use DRI.
With such a sizable production, cutting costs would give a considerable boost to the industry. And PERED is designed to do just that among others, MME claims.
DRI Production, Consumption, Exports
According to the latest report released by World Steel Association, global direct-reduced iron output increased 6.9% year-on-year to 6.87 million tons in October, while production for the first 10 months of 2018 grew 11.8% year-on-year to 69.43 million tons.
Iran was world’s second biggest producer with 2.11 million tons of DRI production in October, registering a 16.3% rise YOY while its DRI production reached 20.59 million tons during the first 10 months, up 31.6% compared to the same period of 2017.
India, Iran's primary rival in DRI output, increased its 10-month production by 4.4% YOY to 25.46 million tons.
According to WSA, there are 12 DRI producers in the world, namely Canada, Mexico, Argentina, Venezuela, Egypt, Libya, South Africa, Iran, Qatar, Saudi Arabia, the UAE and India.
Iran was the world’s second largest DRI producer in 2017 with an output of 20.5 million tons, up 28.3% year-on-year. The country trailed India in DRI output by producing 25.8 million tons in 2017, down 4.2% YOY.
The Iranian Steel Producers Association’s latest figures show Iran produced 15.19 million tons of DRI during the first seven months of the current fiscal year (March 21-Oct. 22) to register a 21% increase compared with last year’s corresponding period.
However, Iran’s DRI exports during the seven months declined by 21% year-on-year to 374,000 tons.
Iran’s apparent DRI consumption reached 14.82 million tons in seven months to mark a rise of 22% YOY.
