Endorsement about proving Direct Reduced Iron (Sponge Iron) to be raw

material for rebar and wire rod

i
 Table of Content
1 Direct reduction of Iron (sponge iron) Product Description.............................................................................1
2 History of the DRi processes...........................................................................................................................2
3 Benefits of Sponge Iron..................................................................................................................................2
4 Applications of Sponge Iron...........................................................................................................................2
5 Global Trade of DRI.......................................................................................................................................3
5.1 Drivers....................................................................................................................................................4
5.2 Major Exporters......................................................................................................................................4
5.3 Major Importers......................................................................................................................................6
6 Ethiopia’s Context of DRI..............................................................................................................................7
6.1 Imports....................................................................................................................................................8
7 Conclusion......................................................................................................................................................9
8 Recommendation..........................................................................................................................................10

ii
List of tables

Table 1 Global Exports of DRI - Last 5 Years...........................................................................................3

Table 2: Major Auto Parts Exporting Countries in 2022...........................................................................4

Table 3: Major DRI Importing Countries in 2022.....................................................................................6

Table 4: Direct reduction of Iron HS Code Details....................................................................................8

Table 5 import trend of ferrous products obtained by direct reduction of iron ore and other spongy

ferrous products..........................................................................................................................................8

iii
List of Figures

Figure 1 sponge iron..................................................................................................................................4

Figure 2 Iron ore exposed to koree.............................................................................................................7

Figure 3: Growth Trend in World Exports of DRI (Ton)...........................................................................7

Figure 4: Market Share of Major World DRI Exporters in 2022...............................................................9

Figure 5: Market Share of Major DRI Importing Countries in 2022.......................................................10

iv
v
1 Direct reduction of Iron (sponge iron) Description

Direct reduced iron (DRI) is the product which is produced by the direct reduction of iron ore or other
iron bearing materials in the solid state by using non-coking coal or natural gas. Processes which
produce DRI by reduction of iron ore below the melting point of the iron are normally known as the
direct reduction (DR) processes. The reducing agents are carbon monoxide (CO) and hydrogen (H2),
coming from reformed natural gas, syngas or coal. Iron ore is used mostly in pellet and/or lumpy form.
Oxygen (O2) is removed from the iron ore by chemical reactions based on H3321a3wsd2 and CO for
the production of highly metalized DRI.

In the direct reduction process, the solid metallic iron (Fe) is obtained directly from solid iron ore
without subjecting the ore or the metal to fusion. Direct reduction can be defined as reduction in the
solid state at O2 potentials which allow reduction of iron oxides, but not of other oxides (MnO, and
SiO2 etc.), to the corresponding elements. Since reduction is in the solid state, there is very little chance
of these elements dissolving (at low thermodynamic activity) in the reduced iron, so the oxides which
are more stable than iron remain essentially unreduced.

DRI has a porous structure. This is because DRI is produced by removing O2 from iron ore. It is also
known as sponge iron since its structure is just like sponge with a network of connecting pores. These
pores results in a large internal surface area which is around 10,000 times greater than the internal
surface area of solid iron.

DRI is produced in many forms. These are lump, pellets, hot briquetted iron (HBI), fines, and cold
briquetted iron (CBI). HBI and CBI are densified forms of DRI to facilitate its handling and transport.
HBI is produced by compacting DRI under very high pressure at temperatures in excess of 650 deg C.
This closes many of the pores and limits the contact area which is available for reaction with air. It also
increases its thermal conductivity.

1
Figure 1 sponge iron

2 History of the DRi processes

The first patent for the production of DRI was in 1792 in United Kingdom. It presumably utilized a
rotary kiln. The development of the modern DR process began in the middle of nineteenth century.
Since 1920 more than 100 DR processes have been invented and operated. Most of them have not
survived. The modern era of DRI production began on December 5, 1957 when the HYL process plant
started production at Hylsa. The first plant of Midrex process came into operation in May 17, 1969 at
Oregon Steel mills in Portland, Oregon. The coal based rotary kiln process combines the Republic
Steel-National Lead (RN) process developed in 1920s for beneficiating low grade ores, and the Stelco-
Lurgi (SL) process conceived in the early 1960s for producing high-grade DRI.

3 Benefits of Sponge Iron

Given below are some of the benefits of sponge iron:

o The sponge iron is a superior substitute of steel scrap for steelmaking through the EAF/IF
courses.

o A sponge iron has indistinguishable iron content from the pig iron; therefore it is an excellent
feedstock for the electric furnaces utilized by smaller factories. It enables them to use lower
grades of scrap for whatever remains of the charge or to create higher grades of steel.

o it allows dilution of metallic residuals in scrap during the steelmaking,

o since it is a manufactured product, it has a uniform composition,

2
 o it has a uniform size,

o it has low sulphur and phosphorus content as compared to the scrap,

o if it is charged in blast furnace along with other burden materials, it improves the productivity
of the blast furnace.

4 Applications of Sponge Iron

Sponge iron has a wide number of applications. Here are some of the significant ones:

o Sponge iron is a standout amongst the most imperative and the fundamental raw materials
required for the generation of different steel/iron based items like TMT bars, D.I Pipes and so
forth.

o Sponge Iron is a part– substitute for steel scrap. It is necessary for assembling steel by induction
furnaces and electric arc furnaces.

o Steel-melting scrap is essential and acts as a feed material in all mini steel plants that uses this
piece for dissolving in electric arc furnace/induction furnace to fabricate steel.

o Sponge Iron is likewise an appropriate material for utilizing as a coolant in LD converters of

the Integrated Steel Plants.

5 Global Trade of DRI

Direct Reduced Iron are one of the most valuable and important products in international
trade. DRI aggregate exported quantity stood at 9.8 million in 2022. The growth trade in DRI
has grown consistently from 2020 to 2022 ore declining before in 2020. The last five years
exports of DRI in global trade are as follows:
Table 1 Global Exports of DRI - Last 5 Years

Description 2018 2019 2020 2021 2022

World Exports 4,437,70 7,648,97 5,131,74 6,898,00 9,817,38
(Ton) 8.00 5.00 3.00 1.00 7.00
Growth
Base Year 72.36% -32.91% 34.42% 42.32%
(%age)

Source: Trade Map

3
 Figure 2: Growth Trend in World Exports of DRI (Ton)

9,817,723.33

7,648,973.75
6,898,001.53

5,131,742.31
4,437,708.00

2018 2019 2020 2021 2022

1 2 3 4 5

Source: Trade Map

The decline in global exports in 2020 is due to COVID- 19.

The global direct reduced iron market size is projected to grow from $52.27 billion in 2023 to $96.78
billion by 2030, at a CAGR of 9.2%

The report on the Global Sponge Iron Market gives an estimation of the development of the market
based on historical studies and also provides forecasts on the basis of a comprehensive research. The
report gives a complete market analysis for the forecasted period from 2021 to 2027.

The market is divided into various segments with an in-depth outlook of the competitors
and a listing of the profiled key players. The market size in terms of revenue and volume
(Million tons) is calculated and provided for the study period along with the dynamics of
the market such as the drivers and the restraints.

5.1 Drivers

 Increasing demand from end user industry.

 Rising application areas of sponge iron.

4
 The Harmonized Commodity Description and Coding System (referred as HS Codes) designated for
trade of Direct Reduction of Iron is 7203. The brief description of sub categories falling in this
product category mainly includes the following;

5.2 Major Exporters

During 2018-2022, the exports of DRI have been dominated by Oman followed by Russian
Federation. The export value and market share of the five biggest exporting countries in 2022 are
provided in the table and figure below.

Table 2: Major Auto Parts Exporting Countries in 2022

Sr.No. Country Exports ( TON) Annual growth in

value between
2018-2022 (%)
1 Oman 3,460,796.0
0 83.50
2 Russian Federation 3,054,239.0
0 (0.62)
3 India 1,027,207.0
0 0.16
4 Malaysia 754,663.0
0 0.15
5 United Arab Emirates 466,066.0
0 0.23

Source: Trade Map

5
 United Arab Emirates
5%
Malaysia
9%

India Oman
12% 39%

Russian Federation
35%

Figure 3: Market Share of Major World DRI Exporters in 2022

Source: Trade Map

5.3 Major Importers

During the year 2022 - the largest importer of DRI was Saudi Arabia, followed by United
States of America and Italy respectively. The import quantity in 2022 and annual growth in
quantity between 2018- 2022 (%) of the five biggest importing countries are provided in the
table and figure below.
6
 Table 3: Major DRI Importing Countries in 2022

Annual growth in
S.N Country Imports (Ton) Quantity between 2018-
2020 (%)

1 Saudi Arabia 9,621,613.00 0.87

2 United States of America 1,477,925.00 (0.03)

3 Italy 955,620.00 (0.05)

4 China 920,801.00 3.05

5 Germany 873,980.00 0.04

Source: Trade Map

Saudi Arabia United States of America

Italy China
Germany

Figure 4: Market Share of Major DRI Importing Countries in 2022

Source: Trade Map

7
6 Ethiopia’s Context of DRI
There are many steel producers in Ethiopia, with only few companies involved in the production of
steel billet in-house using melting furnaces through utilization of steel scrap collected mainly from the
local market. The local steel producer’s main product is steel rebar, and wire rode. The main drawback
of Ethiopian steel producers is their import oriented business model, which depends on import of high
value steel billet exposing them to international market fluctuation of steel billet, since there is a little
local value addition of still billet to steel rebar and wire rode production.

Companies with their own melt factory for the production depend on the local scrap market exclusively,
in spite of the fact that there is DRI available in the international market which is rapidly expanding
both in terms of production and international trade due to the fact that it is an ideal replacement of steel
scrap for small and medium steel melting factories.

As it is clearly depicted in the above market study section of this document major steel producing
countries are shifting to processing DRI as an input for steel production. Considering this fact, DRI as
input this will enhance their local value addition capacity as it is significantly cheaper than imported
Steel billet, and locally sourced steel scrap.

Despite the fact that there isn't a current trend in the production of sponge iron, Ethiopia is capable of
producing it due to the availability and potential of key inputs like iron ore and other inputs in various
parts of the country. Information from the Steel Institute and some steel producers indicates that some
domestic steel manufacturing firms rarely use sponge iron by import from international market
6.1 Imports
Industry dynamics including demand – availability of iron and steel in the country are largely
determined by market forces and gaps in demand-availability are met mostly through imports.

Table 4: Direct reduction of Iron HS Code Details

Product Category
HS Code Product Description
Ferrous products obtained by direct reduction of iron ore and other spongy ferrous products, in
7203 lumps, pellets or similar forms; iron having a minimum purity by weight of 99,94%, in lumps,
pellets or similar forms

720310 Ferrous products obtained by direct reduction of iron ore, in lumps, pellets or similar forms

Spongy ferrous products, obtained from molten pig iron by atomisation, iron of a purity of >=
720390
99,94%, in lumps, pellets or similar forms

Table 5 import trend of ferrous products obtained by direct reduction of iron ore and other spongy
ferrous products

2018 2019 2020 2021 2022

Imported Imported Imported Imported
Exporters Imported
quantity, quantity, quantity, quantity,
quantity,
Tons Tons Tons Tons

World 1000 2708 3 0

Italy 0

Sri Lanka 1

China 548 2

Czech Republic 1

India 999 2160

Source ITC
7 Conclusion
Smelting reduction is an alternative approach to iron making which uses non coking coal to reduce iron
ore in the forms of lump ore, pellets or fines to molten iron. It is the only alternative to the blast
furnace. The purpose of smelting reduction is to produce liquid hot metal similar to the blast furnace
but without any dependency on coke. Hot metal, produce from alternate ironmaking processes, can be
charged to an adjacent EAF/ IMF (within plant) to reduce scrap as well as electric power consumption
As has been widely discussed, Despite the fact that there isn't a current trend in the production of
sponge iron even Ethiopia is capable of producing it due to the availability of key production inputs like
iron ore and other inputs in various parts of the nation.
DRI is a commonly used alternative raw material for the production of steel billets worldwide, despite
the fact Information obtained from metal development institute and some steel producer firms indicates
that it is not being practiced well enough even though It has been observed that a few domestic steel
manufacturing firms rarely use sponge iron mix with steel scraps in order to produce wire rod and
reinforcement bars.
8 Recommendation

Sponge iron, or direct reduced iron (DRI), is commonly used as a raw material in rebar production. It is
recommended for rebar production due to several reasons:
Controlled and Consistent Quality: Sponge iron offers a controlled and consistent iron content, which
can contribute to better steel quality and mechanical properties of the rebar. The production process of
sponge iron allows for better control over impurity levels, resulting in a cleaner and more uniform
product.

Flexibility in Composition: Sponge iron allows for better control over the composition of the steel used
in rebar production. Steel mills can adjust the levels of carbon and alloying elements to meet specific
requirements and desired properties of the rebar.

Availability and Supply: Sponge iron is produced from iron ore through direct reduction processes, and
it is widely available in many regions. This ensures a reliable and consistent supply for rebar
manufacturers.
Environmental Considerations: Compared to traditional iron ore-based steelmaking, using sponge iron
in rebar production can have environmental benefits. The direct reduction process typically consumes
less energy and produces fewer greenhouse gas emissions, contributing to sustainability efforts.
While sponge iron is recommended for rebar production, it's important to note that the choice of raw
material can vary based on factors such as regional availability, cost, and specific steel mill capabilities.
Some steel mills may also use a combination of sponge iron and scrap steel to optimize cost-
effectiveness and quality. Ultimately, the decision on using sponge iron or other raw materials is based
on a combination of technical, economic, and environmental considerations specific to each steel mill's
circumstances.
All things considered, the DRI is a superior substitute for steel scrap globally. Therefore, the research
team recommends using DRI in place of or combined with steel scrap.
9 References

o Metal development institute of Ethiopia

o International Research Science and Development Journal Vol. 1, No. 2, 2020, pp. 48-60.

o Direct Reduced Iron and its Production Processes – IspatGuru

o The Application and Benefits of Sponge Iron - PK Steel (kankani.co.in)

o Pardon48-60.pdf (irsdjournal.com)

o https://www.fortunebusinessinsights.com/direct-reduced-iron-market-107381