MidtownGuy wrote: (Long post for a lazy day.)
Pyrogenesis’ pending contract news is in regards to negotiations with iron ore mining and processing companies, specifically those who conduct the process known as “iron ore pelletization”. It cannot be understated how key it is that PYR has created a niche in this activity – an area of extremely fast-growing importance and demand globally.
To explain…
Iron Ore = Steel
Iron ore is more integral to the global economy than any other commodity, except perhaps oil. Why?
Steel.
Steel represents around 95% of all metals produced, and used, by humans, and demand is growing. The basic ingredient of steel is iron ore, which is dug by mining firms, reduced to manageably sized pieces, and sold to steel makers, who convert the ore into various types of iron or steel through several processes, the most common of which is the use of a blast furnace.
High Quality Ore is Harder to Find and Dirty to Process – Enter Sintering
Historically, “lump ore” (literally rocks in lumps or chunks, from ¼ “ to 1 metre in size), was the main product fed into a blast furnace. However, the reserves of high-grade ore have been depleting for decades, forcing steel makers to turn to lower grade ore and processes to feed their furnaces, so the process of “sintering” was established.
“Sintering” – fusing particles together into one solid mass by using a combination of pressure and heat without melting the materials – has been the dominant process for some time.
Sintering Creates Heavy Pollution – Enter Pelletization
However, while sintering allowed the use of lower grade ore, the big disadvantage is that it’s a very dirty process that involves mixing low-grade iron ore with other products including coking coal (“coke”), resulting in what is considered the most polluting of all the steelmaking processes.
So, those mining companies over time developed the “pelletization” process. Iron ore pelletizing, or balling, is the process of transforming ore rocks into small and hardened iron balls or spheres anywhere from 8 – 16mm in size.
Most modern steel plants use a basic oxygen furnace to create steel. In these furnaces, oxygen blows through the molten iron, lowering carbon, silicon, manganese and phosphorous levels (steel is basically iron with reduced carbon).
Using iron ore pellets as packed spheres in the blast furnace allows air to flow better between the pellets, decreasing the resistance to the air that flows up through the layers of material during the smelting, and improving blast furnace productivity.
For this, and because pelletization reduces the use of “coke” (thus lowering pollutants), using pellets in steelmaking consumes only one-third of the energy that using sintered ore does, while also offering improved handling and transportation options.
Other benefits of pelletization include: uniform size, high metallization rate, increased permeability in blast furnaces to optimise fuel consumption rate, lower dust compared to sintering, reduced loss of product, mitigation of particle crushing and subsequent blocking of the furnace (when pellets are properly produced), and better in-furnace performance (pellets transfer heat better than powder).
It is in this pelletization process where PYR plasma torches are to be used to replace existing gas or electric heat burners.
Growing Demand for Pelletization
PYR’s timing in this area couldn’t be better, as there exists a number of key factors that are driving increased market demand for pelletized ore.
1/ The Increasing Demand for Steel.
Two of the largest uses of steel are construction and automotive manufacturing.
As a result of the Coronavirus pandemic, the construction industry was hit by a general freeze in consumption, shutdowns, and disrupted supply chains. The World Steel Association said June 4 it expected annual demand for steel to fall by 6.4% to 1.65 billion metric tonnes this year.
However, the recovery has already started, and demand is expected to be close to pre-pandemic levels in 2021, led by China and the rest of the global construction sector.
In the automotive industry, while steel has always been preferred for its stiffness, strength, and durability, which ensures safety and improves the way a car drives and handles, emissions and fuel consumption rules were tightened over the past 30 years, resulting in a move to lighter cars. While aluminum, magnesium, carbon fiber and plastic composites provide that weight reduction, they are more expensive than steels. And with driverless cars, car sharing and electric mobility gaining traction, vehicles need to be durable enough to withstand constant use and consumers need to be reassured that their safety is ensured. Thus, the demand for newer, more advanced, high-strength steels in the automotive industry is expected to increase significantly in the coming years, while the price advantage over other materials continues.
Higher-grade steel for use in automotive manufacturing requires higher-grade iron ore products, of which pellets are considered the optimum and highly preferred ingredient.
2/ Shifting Trend Towards Carbon-Reduced or Carbon-Free Steelmaking
Steel production has a number of impacts on the environment, including air emissions (CO, SOx, NOx, PM2), wastewater contaminants, hazardous wastes, and solid wastes. Greenhouse gas emissions associated with steel production are from the carbon dioxide emissions related to energy consumption.
Numerous governments have instituted unfavorable government policies related to sintering activities, the most important of which is China.
As China looks to surpass the United States as the world’s largest economy, China is dealing with an enormous amount of industrial-related air pollution. The heavy smog rampant in many of its major industrial hubs is having a huge impact on Chinese citizens’ health as well as crop yields.
As a result, the Chinese government is offering financial assistance and tax breaks to incentivize steel manufacturing plants to complete the upgrades required to meet the new emissions standards. China’s goal is to have 80 percent of existing plants make this transformation by 2025.
For this reason, and according to Reuters, pellet imports to China are expected to increase by 70 million tonnes over the next decade.
As with many industries, an increasing focus on sustainability has prompted producers to look at every available resource as a potential raw material. When it comes to iron ore, the pelletizing of “fines” produced at mine sites (the smallest pieces of rock and dust, previously considered a waste), as well as flue dust from blast furnaces, allows these materials to be integrated into the steel production process, reducing waste. This is especially true in production areaa like India, where the region’s softer iron ore sources are much more prone to breakdown into fines.
Similarly, pelletizing allows for the reuse of Electric Arc Furnace dust. Electric arc furnaces produce steel from scrap metal. The dust produced in these furnaces is a considerable by-product and can bepelletized for reintegration into the process.
3/ Cost Competitiveness and Industry Consolidation
Given that iron is the fourth most abundant element on Earth, comprising about 5% of the Earth’s crust by weight, global iron ore market is highly competitive and has dropped drastically at several times over the past decade.
Prices peaked at $187 per metric ton in February 2011, then plunged to about $41 per ton in December 2015. An oversupply of iron ore, combined with China adding more steel-making capacity than it needed, resulted in a slump in the iron ore spot prices earlier this decade, including a 47% decline in 2014 and a further 18% retreat in 2015.
Having access to low-cost iron ore deposits and benefitting from economies of scale, the big four producers BHP Billiton (BHP), Rio Tinto, Vale, and Fortescue ramped up production to meet Chinese demand, and the market went into oversupply – which forced higher-cost iron ore mines to scale back production or fold. For years, nearly all iron ore production in China was uneconomic under market conditions, and many local mines closed or were suspended, increasing importing (and consolidation) from the big four.
As a result, a number of high-cost iron ore mines closed or were suspended throughout the world in 2014, with up to 30% of low-grade iron mines shut down in China in 2014 alone.
Some experts argued that higher-cost producers fell victim to a strategy pursued by the big 4 producers of iron ore to drive the price down intentionally and eliminate competition. Accounting for more than 60% of global iron-ore exports, those iron giants have been relentlessly increasing lowest-cost production output.
As the economy improved, industry consolidation occurred, and a massive number of high-cost and Chinese mines closed, supply growth was lower than expected. This, combined with a significant infrastructure spending boost in China, saw iron ore prices revived.
In 2020, iron ore prices have risen back over $115. Having driven out smaller inefficient producers, the world’s giant iron ore companies (Vale, Rio Tinto, BHP, Fortescue) are best positioned to capitalize on a rising price environment, while also expanding into steel production for vertical integration. In fact, one of PYR’s announced pending contracts is with a pelletization company that is “also a major player in the steel industry”.
As stated above, using pellet ore in steelmaking consumes only 1/3 of the energy that using sintered ore does, while also offering improved handling and transportation options. Plasma torches are also known to significantly reduce energy output even further. PYR's role in ore processing competitiveness therefore is even more clear.
4/ Continued Reduced Availability of High-Quality Lump Iron Ore
Diminishing high-grade iron ore sources have left behind lower grade ores that necessitate concentration to be economically recovered. Through crushing, grinding, and various other techniques, low-grade iron ore can be upgraded and utilized in furnaes, including to a concentrate product in the form of a powder.
While powdering can be used, it’s not nearly as efficient as pelletization, and can cause problems such as clogging of furnaces. If processed directly, this powder would reduce the efficiency of the overall steel making process, including blast furnace performance; therefore, pelletizing is essential to process efficiency.
All told, PYR's entry into the field of iron ore pelletization represents a massive opportunity as the demand for ore pellets grows exponentially, and the desire for reduced environmental impact and cost competitiveness increases in step.