Metu university

Department of project management

Postgraduate program
Course project financial management
Project cost estimation of blast furnace implantation and process in Ethiopia
Name Abdu Melka

Submit to Dr seketa
Date june 18,2023
 Introduction
A blast furnace is a type of metallurgical furnace used for smelting to produce industrial metals, generally
pig iron, but also others such as lead or copper. Blast refers to the combustion air being supplied above
atmospheric pressure.

In a blast furnace, fuel (coke), ores, and flux (limestone) are continuously supplied through the top of the
furnace, while a hot blast of air (sometimes with oxygen enrichment) is blown into the lower section of
the furnace through a series of pipes called tuyeres, so that the chemical reactions take place throughout
the furnace as the material falls downward. The end products are usually molten metal and slag phases
tapped from the bottom, and waste gases (flue gas) exiting from the top of the furnace. The downward
flow of the ore along with the flux in contact with an upflow of hot, carbon monoxide-rich combustion
gases is a countercurrent exchange and chemical reaction process.

In contrast, air furnaces (such as reverberatory furnaces) are naturally aspirated, usually by the convection
of hot gases in a chimney flue. According to this broad definition, bloomeries for iron, blowing houses for
tin, and smelt mills for lead would be classified as blast furnaces. However, the term has usually been
limited to those used for smelting iron ore to produce pig iron, an intermediate material used in the
production of commercial iron and steel, and the shaft furnaces used in combination with sinter plants in
base metals smelting.

Blast furnaces are estimated to have been responsible for over 4% of global greenhouse gas emissions
between 1900 and 2015, but are difficult to decarbonize.

Project specification

Modern blast furnaces range in size from 20 to 110 metres (70 to 360 feet), have hearth diameters of 6 to
15 metres (20 to 50 feet), and can produce from 1,000 to about 15,000 tons of pig iron daily

slag powder Specifications: Ca0 : 32-34% Si02 : 32-35% Mg0 : 9-11%

Construction of the blast furnace

The blast furnace is a brick-lined, stainless steel stack, which is heated using pre-heated air. Limestone,
coke and iron ore are placed in the blast furnace and heated. The coke, limestone and iron react in the
presence of heat, producing slag and liquid iron.

How do you calculate the capacity of a blast furnace?

It is determined by the diameter of furnace cylinder, the Angle of furnace waist blast furnace and furnace
waist, etc., and the permeability of slag is proportional to the diameter of furnace waist. The empirical
formula is: D=0.5684 Vu0. 3942=0.5684×30000. 3942=12.981 m, then the value of D can be used as 13.0
m.

Sinter Plant (12m2)

Sinter Plants agglomerates iron ore fines with other fine materials at high temperature to create a product
that can be used in a Blast Furnace. The final product, a Sinter, is a small, irregular nodule of iron mixed
with small amounts of other minerals. The process, called sintering, causes the constituent materials to
fuse to make a single porous mass with little change in the chemical properties of the ingredients. The
purpose of sinter is to be used for converting iron into steel. The Technical Parameters of 12 m2

Raw Materials (Sinter Plant)

Raw material will be required for sintering are Iron ore, Limestone and Coke Breeze. Apart from this,
Flue dust & Returns fines will be generated in the Sinter Plant itself. The requirement of raw materials for
production of iron ore sinter under the proposed technology are:
Manufacturing Process (Sinter Plant)

Iron ore (sinter) is the major raw material required for Blast Furnace. The raw materials (i.e.; Iron ore,
Limestone & Coke Breeze) will be received in the same ground hopper through dumpers. There will be a
Dust Suppression System above the ground hopper. The different raw materials will be received in cyclic
manner to avoid mixing. At the bottom of the hopper there will be a vibro-feeder which will discharge the
material in to a bifurcated chute with a flap gate. Through one leg of the chute Iron ore & Limestone
(flux) will be carried to a belt conveyor through the other leg Coke Breeze will be taken into screen. The
screen under flow will be discharged on a belt conveyor & the other size i.e. (+) 10 mm will be taken into
the Mini Blast Furnace raw material section. This conveyor will discharge into a trifurcated chute with
flap gates. Through one leg of this chute only Iron Ore will be carried to a reversible conveyor & finally
into 2 Raw material storage bin for Iron Ore fines. Through other legs of the chute Limestone & Coke
Breeze will be carried to two (2) dedicated crusher for Lime Stone & Coke Breeze through deflector
gates. Both of the crushed material will be discharged into a common vibrating screen. The undersized
crushed materials (-4mm) will be received in a reversible conveyor to deliver specific materials into their
dedicated storage bunker. The screen over size materials (+4mm) will be recycled through the crusher.
All the storage hoppers/ bunkers will have a weigh feeder at the bottom opening for exact quantity of raw
materials extraction into the conveyor which will discharge the material into a mixer. Little water is added
here to achieve proper micro pelletizing of the raw mix. The raw mix is then transferred to raw mix bin
through a conveyor. There are another two bins for Sinter bedding materials received through a conveyor
& Coke from a hopper. These are fed into the sinter machine through vibro feeder & conveyor.

Mini Blast Furnace (65 m3 ) The purpose of a Mini Blast Furnace is to chemically reduce and physically
convert iron oxides into liquid iron called ‘hot Metal’. The Blast Furnace is a huge, steel stack lined with
refractory brick, where raw material from stock house are dumped into the top and preheated air is blown
into the bottom. The raw materials require 6 to 8 hours to descend to the bottom of the furnace where they
become the final product as liquid slag and liquid iron. These liquid products are drained from the furnace
at regular intervals. The hot air that was blown into the bottom of the furnace ascends to the top in 6 to 8
seconds after going through numerous chemical reactions. Purulia Metal Casting (P) Ltd. (Pig Iron
Division) has decided to install and commission a 65 m3 Mini Blast Furnace. Technical Parameters of 65
m3 Mini Blast Furnace are :

Raw Materials (Mini Blast Furnace)

The raw material required for producing molten metal is iron ore, sinter, limestone, dolomite, coke,
quartz. The requirement of raw-materials for production of steel under the proposed technology are :

Water Re-circulation System

Suitable water circulation system for production units have been duly considered as per
requirement.Water system for Mini Blast Furnace shell cooling, water seal of Sinter Machine, Mixer and
DustSuppression System comes under one circuit because of water quality as well as terminal pressure
also.One separate circuit has been considered for hydraulic valves, blowers for cooling. A common
pumproom measuring 12m X 8m has been planned to accommodate all the pumps, cooling tower
necessary to run the circulation system. All the reservoirs will be of RCC construction and the pump
room will be brick building with R.C. roofing.One (1) PVC construction overhead reservoir has been
considered for feeding water during emergencyto different consuming sectors. Compressors will be
housed in a compressor room. While developing thesystem design for mechanical utilities and electrical
services as mentioned above, various guidingfactors, viz. sources of availability, storage, consumption,
terminal condition and losses in circulation asrequired by individual services have been duly
considered.Water is required for cooling of different equipment and components of the above production
units. Toeconomize consumption of water it is proposed to adopt a re-circulation system for different
circuits,which enables re-use of water in-cycle and replenishing the losses by feeding make up water in
thecircuit. Considering operational requirement, duly condition involved in different re-circulation
systemshave been proposed as raw water for Mini Blast Furnace shell cooling, Sinter Machine, Mixer &
Plant DeDusting Unit and soft water for hydraulic valves & blowers.Source of make-up water supply and
storage of the same for all the above system have been madecommon. Quantity of water in circulation,
quality required, terminal pressure related to different service
points are given in the Table.

Electrical Power Supply & Distribution System

The power supply at 33 kV, 50 Hz. 3 phase overhead supply will be available from utility. 33 kV power
will receive by 2.5 MVA, 33/0.433 kV power transformer. Diesel Generator set of 2 X 250 kVA for Mini
Blast Furnace and 2 X 250 kVA for Sinter Plant are intended to cater to emergency loads during power
failure/ restricted periods. 33 kV supply from utility substation will be received to the blast furnace &
stove unit. Power Transformer of rating 33/0.433 kV, 2.5 MVA will convert power to 433 Volt level &
feed to Main LT panel via LT bus duct.

Main Plant & Equipment

 Project Cost
Indian steel demand rose 4.5 per cent in the financial year 2015-16, a slightly better growth rate than in
the previous year. Accordingly, even though challenges remain, the steel sector’s fundamentals have
started to improve. Purulia Metal Casting (P) Ltd. is presently operating Secondary Metallurgical Unit
having Induction Furnaces, Continuous Casting Machine and Rolling Mill producing finished steel
products. To make finished steel products even more economically viable in the present fluctuating
market, Purulia Metal Casting (P) Ltd. has decided to go for a Mini Blast Furnace (65 m3) and Sinter
Plant(12 m2) to produce Pig Iron which will be used as one of the raw materials in its existing Secondary
Metallurgical Unit to withstand the present market situations.

The technology involved in the proposed project is well recognised and reliable. Such types of plants are
successfully operating all over the country. The combination of dynamic management and experienced
professionals is quite capable of managing the business. Regarding operation and maintenance of the
plant, well experienced professional manpower are available in this region. The proposed project will
have good financial and social benefits to the local people by way of direct & indirect employment.
Preference will be given to the local people considering the requisite skill and qualification criteria. The
unit does CSR activities in the area like supply of drinking water during summer, help to pour peoples,
financial aid to local schools, clubs etc. In future, after commissioning of the proposed project, the unit
will carry out different CSR activities also.There will be complete integration right from the beginning to
finished products. The feasibility of proposed project has been examined from 3 angles, which are
backbone of any sustainable project i.e., Commercial and Financial Feasibility, Pre and Post Project
scenario in which company will operate and

Environmental feasibility and the results show positive feasibility.

The total Project Cost will be Rs. 25.50 Crores. The following is the breakup of the proposed project cost.
Capital Cost for Pollution Control System will be Rs. 2.0 Crores. The Recurring Cost for Pollution
Control System has been considered as Rs. 14.00 Lakhs / annum. Also there will be an adequate fund
towardsCorporate Social Responsibility
 Production Cost Estimate of Sinter

Production Cost Estimate of Molten Metal

Production Budget and Target Costing Summary Production Budget

Year Iron Production (in millions of lbs)

year 0. 0 lbs year 1. 40 lbs ,year 2. 43 lbs,year 3. 46 lbs,year 4. 49 lbs,year 5. 53 lbs,year 6. 57 lbs,year 7.
61 lbs,year 8. 66 lbs,year 9. 71 lbs and year 10. 76 lbs

New Blast Furnace Project – Engineering Summary (Company-wide discount rate: 15%) Product Cost
Savings:

Current product cost, old furnace: $19.00 per lbs of iron

Target product cost, new furnace: $18.00 per lbs of iron

Current (simulated) product cost, new furnace: $21.50 per lbs of iron

New Blast Furnace Costs Initial Investment $159 million Annual maintenance $15 million

Summary of Tuff-It Construction Contract and Cost Projections Contract Summary  Contract type: Cost-
plus-fixed-fee  Fixed fee: $1.19 million  Cost: Direct Costs (materials and labor) + Overhead Rate
(percent of direct cost)  Assurance: Overhead rate trued-up to incurred overhead each quarter. Direct and
overhead costs subject to independent audit. 

Contract cap: none

Cost Projections† Direct Costs $ 14,200,000

Overhead Schedule: Mobilization/Demobilization $ 1,500,000

Insurance $ 90,000 Supervisor salary $ 224,000

Accounting $ 110,000 Equipment rental $ 2,400,000 'Equipment depreciation $ 1,200,000

Hand tools and supplies $ 90,000 Subcontractors: Engineering $ 540,000 Safety/Inspection $ 130,000

Welding‡ $ 1,520,000 Executive compensation (salary + bonus) $ 380,000

Support department allocations $ 1,300,000 Employee morale $ 96,000 Overhead $ 9,580,000

Overhead rate 67.46%