SAIL, NMDC to Set Up Iron-Nugget Plants Using Kobe Steel's ITMK3

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Researched by Industrial Info Resources (Sugar Land, Texas)--Two of India's largest companies, integrated steelmaker Steel Authority of India Limited (BSE:500113) (SAIL) (New Delhi) and miner NMDC Limited (BSE:526371) (Hyderabad, Andhra Pradesh), have announced plans to use Ironmaking Technology Mark Three (ITMK3), the unique, third-generation iron-making technology that is patented by Japanese steel manufacturer Kobe Steel Limited (TYO:5406) (Kobe, Japan), in their joint venture projects in India with Kobe Steel. A feasibility study analyzing the possibility of using the technology is under way.

While SAIL plans to use the technology to set up a 500,000-ton-per-year steel module at an alloy steels plant in Durgapur, West Bengal, at an estimated cost of $1.1 billion, NMDC plans to use it at greenfield units in Andhra Pradesh and Chhattisgarh. In July 2010, NMDC formed a joint venture with Kobe to set up a ITMK3-based, 400,000-ton-per-year iron nugget unit at the Sponge Iron India Limited (Hyderabad, Andhra Pradesh) facility at Palwancha, in the Khammam district of Andhra Pradesh. NMDC is currently exploring land availability in both states.

Ajay Dua, an advisor to several Japanese companies and India's former Secretary of Ministry of Industry and Commerce, said that the feasibility study report was expected in November, when both project plans would be finalized. He said that both companies were optimistic about the technology and planned to use it in more projects.

SAIL and Kobe will sign the joint venture agreement after the detailed project report (DPR) for a larger 3 million-ton-per-year plant is ready. The report is expected in mid-November and the proposed plant would require an investment of about $2.7 billion to $3.4 billion.

Explaining the new technology, Dua said that instead of the conventionally used iron-ore lumps, steelmakers could now use iron-ore fines or dust as well. The fines lie at the mine entrances and are usually wasted as dust. Under ITMK3, the fines are heated to form iron nuggets with a 97% iron content. The nuggets, in turn, are heated to a molten state and used in electric-arc furnaces to make premium-grade steel. Indian steelmakers traditionally convert iron-ore lumps to sponge iron that has an iron content of about 91% to 92%.

"The major advantages of the process are that it uses iron-ore fines, works on thermal coal instead of conventional coking coal, and takes less land to set up a plant," Dua added. He said that ITMK3-based steel projects are modular in nature, and a 500,000-ton-per-year iron nugget plant requires a mere 20 acres to be set up. Other advantages of using the technology to produce iron nuggets include the emission of about 20% less carbon dioxide because of a high-energy efficiency; the elimination of raw material pretreatment facilities (such as coke ovens, pellet plants and sintering plants); the suitability of the technology for mining sites, including small mines; and easy production adjustments. The only other commercial project to have used the environmentally friendly ITMK3 is in Hoyt Lakes, Minnesota. The 500,000-ton-per-year, iron-nugget joint venture was set up earlier this year by Kobe Steel and Steel Dynamics Incorporated (NASDAQ:STLD) (Fort Wayne, Indiana).

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