Ironmaking Technology - Steel Dynamics, Inc.

I R O N M A K I N GFigure 12. Mesabi Nugget rotary hearth furnace building (left) and material preparation building (right), late 2008.Strategic BenefitsThe LSDP provides numerous strategicbenefits for SDI and Kobe. Steel Dynamicsoperates five EAF mini-mills producingstructural steel, rebar, SBQ products, and flatrolledproducts, with total capacity of 6.5million tpy of finished products. Thisrequires the use of over 7 million tpy offeedstock, a combination of ferrous scrap,market pig iron, and high value liquid pigiron provided from the company’s IronDynamics operation in Butler, Indiana. In2008, Iron Dynamics supplied 176,000 tons ofSDI’s pig iron requirements and theremaining 174,000 tons were purchased onthe open market.The open market pig iron is purchased fromBrazil, Russia, and Ukraine, putting SDI atrisk when the market is tight or prices arehigh. In 2008, the price of pig iron reachedover $1,000/ton.SDI’s objective is to control the supply ofmore of its charge materials. One step was topurchase OmniSource, one of the largestprocessors and distributors of scrap andsecondary metals in North America.The LSDP is another step and will provideSDI’s minimills a domestic source of highgrade pig iron.Kobe Steel is Japan’s fourth largeststeelmaker, with an annual capacity of about8 million tpy. It also has a large engineeringgroup that designs and builds facilities foriron and steelmaking, infrastructure,environmental treatment, and otherapplications.Kobe’s Iron Unit Group works closely withMidrex Technologies to supply MIDREX ®Direct Reduction Plants and FASTMETPlants worldwide.To date, there have been 69 MIDREX Plantsbuilt or under construction in 21 countries,with a total annual capacity of 50 milliontons. In addition, KSL has supplied orcontracted five FASTMET Plants in Japanwith a total feed capacity of 0.8 million tpy.The FASTMET facilities recycle iron-bearingby-products from Japanese integrated steelmills.Kobe and Midrex see the potential of theITmk3 Process and are actively pursuingprojects worldwide. The LSDP is an idealproject to demonstrate the technology atscale and pave the way for future contracts.Midrex is a partner for engineering,equipment supply, and field services andboth companies will gain valuable experiencein the design and startup of the plant.ConclusionsThe Mesabi Nugget ITmk3 Project willprovide an environmentally responsible andsafe facility on the Minnesota Iron Range.The plant will make history as the first toconvert taconite to a value added reducediron product on the range and the world’sfirst commercial scale ITmk3 Plant. Thenuggets will provide Steel Dynamics avaluable source of high quality electric arcfurnace feedstock. The project promisesstrategic benefits for SDI as a means tocontrol a portion of its raw material supply.For Kobe Steel, successful start-up andoperation will pave the way for future plantsales, nugget sales, and technologylicensing.REFERENCES1. J.M. McClelland, “A Layman’s Guide tothe Midrex and Kobe Steel RotaryHearth Furnace Technologies,” Directfrom Midrex From the Hearth, Winter2007/2008, pp. 4-7.2. H. Tanaka, K. Miyagawa, and T.Harada, ”FASTMET ® , FASTMELT ® , andITmk3: Development of New CoalbasedIronmaking Processes,” Directfrom Midrex From the Hearth, Winter2007/2008, pp. 8-13.IMPORTANT: After this paper was presented in May 2009, the project’s timeline and cost estimates changed. Completion of the project andthe start of commissioning were delayed until late 4th quarter 2009. The cost of the project is expected to be higher than estimated in May.All predictive statements about the completion and performance of the operation are intended to be made as “forward-looking” within thesafe-harbor protections of the Private Securities Litigation Reform Act of 1995. Refer to SDI’s 10-K and other SEC filings. 12/30/20096! Mesabi Nugget