USA: DR market whose time has finally come

AMM-SSS XXVIINew York, NYPablo E. DuarteJune 2012

Technology & Market Conditions

In the world of Direct Reduction, it has often been true that technologies existed but that market conditions weren’t adequate.

4M-Monterrey1998

ESI-UAE 2006

• The ENERGIRON ZR (reformerless) process, perhaps the biggest breakthrough in the DR industry to date, was developed by HYL and was slow in taking off due to market conditions

• Tenova HYL successfully implemented the HYTEMP System and High-Carbon DRI production, yet years passed before additional units were put into use, due to downturns in the industry.

• Developed DR modules from 200 kt/y to provide metallics to small mills to 2,500 kt/y to enter into the size range of integrated steel mills

Technology & Market Conditions

While in some areas of the world, DR technologies flourished, in others such as North America, it wasn’t even a consideration.

Every DR plant the USA & Canada was eventually shut down because they became too uneconomical to run.

• And then, something changed…

Current Scenario for North American DR Plants

Environmental considerations – Gas vs. Coal Need to upgrade or replace aging integrated facilities Scrap prices relatively high, quality is limited DRI is a clean source of virgin iron

200,000

Current Modules

(tons annual capacity)

800,000 1,600,000 2,500,000

2.5 – 5 million tpy BF

2,000,000

GSPI ESI 1 & 2 SUEZ &

EZZ

NUCOR &JINDAL

DR plant sizes continue to grow

Improving DR quality products: Hot DRI to EAF Metallization: 94-

96% with high Fetot

DRI Carbon ~ 4%

Current Scenario

A big plus for industrial users and utilities: switching where possible from coal to natural gas for power plants

North America is now “king” in terms of natural gas: Shale gas

phenomena “Fracking” is

remaking the global energy scenario

Prices at a 10-year low, and falling

Keying the Technology to the Market

Tenova HYL and Danieli have joined know-how and technology for the design and construction of gas based Direct Reduction Plants, offered worldwide, under the ENERGIRON trademark.

HYL and Danieli can offer any project approach – from any size DR plant to a complete integrated minimill facility; from technology packages to EPC turn-key projects.

Keying the Technology to the Market

For the North American market, our technology advances have made us the perfect choice for the new market conditions in terms of virgin iron supply:

PROCESS: Simpler, same scheme for all energy sources available, smaller in size yet larger in capacity than any competing technology.

PRODUCT QUALITY: Unique DRI quality: hot/cold with 94-96% Metallization and Carbon ~4%

ENVIROMENTAL IMPACT: The most environmentally friendly: lowest NOx, and selective elimination of CO2 as integral system to our technology, with lucrative by-product options (being currently commercialized in various DRP’s), makes ENERGIRON the greenest.

Keying the Technology to the Market

EFFICIENCY: The ENERGIRON ZR scheme is the most energy efficient in the market.

The overall efficiency of the ZR scheme (83-87% vs. 75% of others) can be noticed when making a benchmarking comparison:

For just 2.3 Gcal/t DRI !!!!

Higher DRI Energy content;94%Mtz; high-C DRI (≥ 3.5%C)

High DRI temperature Selective CO2 removal

Other DR Technology (1)

ENERGIRON ZR Technology

ENERGIRON ZR Technology (Non-

selective Carbon-free Metallisation 93% 94% 94%Carbon 2.0% 3.6% 3.6%

Nat. Gas (Gcal/t) 2.35 2.30 2.30Electricity + Oxygen injection (kWh/t) 110 70 100

Included No Yes (60% of CO2 emissions) Yes (90% of CO2 emissions)as energy savings (Gcal/t) 0 -0.20 -0.28

(1) based on published data available

CO2 selective removal

Product Quality

Energy Consumption

Energy Efficiency of DR Processes

Why ENERGIRON Technology?

Flexibility Economy Environmentally sound Trend Quality iron for quality steel: DRI Value

ENERGIRON ZR: Flexibility

Reducing gases sources Natural Gas Reformed Gas Coal Gasification COG others

Wide range of raw material quality (Sulphur in Iron Ore is not a limitation)

Minimum iron ore losses in top gas: <1%

H2O

fuel

CO2(+H2S)

O2

Iron Ore

Simultaneous:- in-situ CH4 reforming- Reduction of iron ore- Carburisation

Flexibility for using different sources of

Reducing gases with the SAME Basic Scheme

Selective removalof oxidants

(H2O & CO2): Energy Optimisation & CO2 as by-product

-High-Carbon DRI-Hot DRI-HBI

Flexibility to process any Natural gas quality Low NOx emissions

Overall energy integration (waste energy recovery for steam production, required for CO2 removal)

DRI with Metallisation≥94% and 1.5%-4% Carbon, mostly as Fe3C (>90%)

Flexible, reliable and safeHYTEMP System to pneumatically transport DRI to EAF’s

High Temp: >1050°C High Pressure: 6-8 bar

• Most of Carbon in DRI from ENERGIRON DR process is Fe3C.

• The Carbon in DRI is source of energy by the following main reactions:

2C + O2 ------> CO + Heat Fe3C ---> 3Fe + C + Heat

• This provides ~ 33 kWh/tls per each 1% Carbon in the DRI and increases EAF productivity.

• Necessary to use Oxygen; around 10 Nm3 of O2 / each 1% additional Carbon.

450

470

490

510

530

550

570

590

610

630

650

1 1.5 2 2.5 3 3.5 4 4.5 5

DRI Carbon (%)

Pow

er (k

Wh/

TLS)

0

10

20

30

40

50

60

Oxy

gen

cons

umpt

ion

(Nm

3/TL

S)

Electrical EnergyOxygen

• The benefits of high-carbon hot DRI have been demonstrated in the Ternium Monterrey meltshop while feeding up to 100% of hot DRI with about 94% metallization and close to 4% Carbon.

High Carbon DRI to EAF

High Carbon - hot DRI to EAF

In general, as compared to scrap, melting DRI in EAF demands more power because of the DRI gangue content. However; the difference in power consumption almost become null when comparing melting 100% scrap vs 100% high-Carbon, Hot DRI in the EAF. For both cases, the power consumption

ranges from 360 - 400 kWh/tls.

The combination of high-Carbon at high temperature DRI yields power decrease of >160 kWh/tls and productivity increase of up to 22% for a practice of 90% hot-10% cold DRI (as compared to cold, low-C DRI).

Power Savings

300

350

400

450

500

550

0 100 200 300 400 500 600 700

Power SavingsEAF #2 at Ternium Monterrey steelmaking facility; 100%

hot high-Carbon DRI with 94% Mtz & 3.7% CarbonHYTEMP System ESI DRP UAE

ENERGIRON DR : OPEX estimateIn general due to lower NG cost, the DR route offers a much lower OPEX as compared to HM production.

When compared to other DR process, the ENERGIRON ZR presents OPEX benefits for EAF steel production, basically due to:

Overall lower Energy consumption in terms of NG and power*,

Less fines losses= less ore consumption*, Higher benefits in EAF due to High-Carbon

DRI,

* Due to high-pressure operation

Oper. figures based on published data, NG @$3/MMBTU, Iron ore @$160/t; all others int. prices

100

125

150

175

200

225

250

275

300

325

350

375

400

425

450

US$

/t

OPEX Comparison HM vs. DRI

US$/t HM-DRIUS$/t LS

ENERGIRON DR: Environmentally sound CO2 Emissions:

• There is an implicit difference in terms of CO2 emissions between BF-BOF and DR-EAF routes simply because of the nature of the primary energy being used: NG vs. Coal.

• Besides overall lower emissions, while other DR schemes configurations simply vent non-selective CO2 through the flue gases, the ENERGIRON process-based DR plants selectively remove CO2.

-300

0

300

600

900

1,200

1,500

1,800

BF-BOF (HM:100% Mtz;4.2% C)

Other DRtechnology (94%

Mtz;1.5% C)

ENERGIRON(94% Mtz;3.7% C)

ENERGIRON(94% Mtz;3.7% C)Non-selective C-free Emissions

Scheme

kg C

O2/t

LS

Total CO2 Emissions: BF-BOF vs DR-EAF routes(location: 0.52 kg CO2/kWh)

Carbon addition to EAF

Net Power & O2 requirements in BOF/EAF

Electricity & O2 to DR plant

Iron ore (production) + fluxes

Non-selective CO2 in flue gases

Selective CO2

If CO2 is commercialized /sequestrated

For NOx Emissions, the ENERGIRON ZR technology is of only 25 ppmV without the need of specific/additional equipment.

Sized to Compete With Integrated Iron Production

Two plants at 1.6 and seven plants from 1.9 to 2.5 million tons each, using both Natural Gas and Syngas. Client Country Mtpy

Welspun Maxsteel Ltd. 2 India 0.60Emirates Steel I (revamp project) UAE 1.60 → 2.0Gulf Sponge Iron UAE 0.20Emirates Steel II (revamp project) UAE 1.60 → 2.0Sidor Venezuela 0.80Ezz Rolling Mills Egypt 1.90Suez Steel Egypt 1.95PT Krakatau expansion Indonesia 0.75Nucor Steel USA 2.50JSPL (4 plants committed @ 2.50; 1-contracted/Eng.) India 2.50 x 4

DR Market Preference Change in Recent Years

Based on tpy contracted capacity

ENERGIRON51%

Competing Technology

28%

Iran Clones21%

New DR Plants Contracts since 2006Gas-based DR technologies

Gulf Sponge Iron, Abu Dhabi

First HYL Micromodule 200,000 tpa ZR plant for high carbon

DRI Started up 2010

Ideal for US/Can small steel producers due to low cost natural gas supply

Emirates Steel I and II, Abu Dhabi

Twin plants• 1.6 mtpa nominal capacity

each• Both use HYTEMP System

to meltshop• Module I started 2009• Module II started 2010• Project underway to

increase capacity to 2.0 mtpa each, for 4 mtpa total capacity

Ezz RMS and Suez Steel, Egypt

Suez Steel-Egypt• ENERGIRON ZR scheme • 1.95 mtpa nominal capacity 94% Mtz; 3.5% Carbon

• HYTEMP System to meltshop• Start-up scheduled end 2012

Ezz Rolling Mill Steel-Egypt• 1.90 mtpa nominal capacity• Cold, high-Carbon DRI 93% Mtz; >3% Carbon

• Start-up scheduled: pending

Nucor Steel Louisiana, USA

World’s largest single DR module under construction

• 2.5 million tpy capacity• ENERGIRON ZR scheme• 96% metallization• ≥ 3.0% carbon

Startup set for 2013

• World’s largest single DR module with COG/Syngas (BOFG as fuel) under Engineering• 2.5 million tpy capacity• ENERGIRON ZR scheme• 94% metallization• ≥2.5% carbon

• DRP can also operate with 100% NG if convenient

• Startup set for 2014

Jindal Steel & Power, India

© 2012 HYL Technologies, S.A. de C.V. No elements or content may be used without permission and source reference. All Rights Reserved.

Final Remarks

Shale gas has changed the world energy scenario, specifically for USA.

ENERGIRON ZR Technology offers the most flexible, efficient and environmentally friendly option for metallics production in NA.

The use of hot high-Carbon DRI in integrated ENERGIRON DRP-EAF for steel production provides the lowest OPEX and GHG emissions scheme available in the market.

DR market trend reflects the current worldwide scenario favorable to ENERGIRON.