‘To grow in this market, you have to get into DRI’

Peter Clevenstine, Minnesota Department of Natural Resources Lands and  Minerals assistant director of minerals, holds direct reduced iron.

Within a nondescript, gray, steel-sided building near Greenway High School’s Dixon-Barle football field, the future of direct-reduced iron production in Northeastern Minnesota and the nation is about to take shape.

The Natural Resources Research Institute’s (NRRI) Coleraine laboratory is finalizing designs for construction of a $1.1 million direct-reduced iron (DRI) simulator. When operational in September 2018, the simulator will analyze, test and advance the quality of DR-grade pellets used for the production of direct-reduced iron.

“Our goal is to be able to provide the entire (steel industry) supply chain with an innovative simulator so they can optimize the quality and productivity of making DRI,” said Kevin Kangas, NRRI Coleraine lab site manager. “It will be one-of-a-kind. Our goal is that there will be nothing like it of its kind in the world.” 

DRI is the next step in solidifying Northeastern Minnesota’s future in the domestic mining and steel industry. Integrated producers such as U.S. Steel, ArcelorMittal and AK Steel use iron ore pellets as the primary ingredient in blast furnaces to make high-quality steel. However, modern mini-mills melt scrap and metallic iron such as DRI in electric arc furnaces (EAF’s) to make steel.

Mini-mills, which in 1991 produced about 39 percent of the nation’s steel, have grown to produce about 67 percent today. To make high-quality steel, they need clean scrap and virgin value-added iron such as DRI, hot briquetted iron (HBI) or pig iron. To meet current demand, about 7 million tons of DRI and other value-added iron products are being imported into the United States annually.

“We still consume steel as a country,” said Peter Clevenstine, Minnesota Department of Natural Resources Lands and Minerals assistant director. “The United States is one of the largest consumers of steel in the world. But the iron ore pellets we produce can only be used by the blast furnace segment, and electric arc furnaces continue to take a larger part of the steelmaking business. To grow this market, you have to get into DRI.”

Therein lies the opportunity for Iron Range mines.

Iron ore pellets made in northeastern Minnesota will continue to feed blast furnaces for decades to come. But the number of blast furnaces in the nation is shrinking. And making a value-added iron product in northeastern Minnesota would be more cost effective for domestic EAF operators than imports, and not have a significant impact on the production of iron ore pellets.

“It’s absolutely needed,” said Donald Fosnacht, NRRI associate director. “In the last 10 years, 12 blast furnaces that consumed 12 million tons of iron ore pellets each year have closed in the U.S. As the smaller blast furnaces continue to go down, they’re going to be replaced by electric arc furnaces.”

Two value-added projects are currently taking center stage in the region. 

Cleveland-Cliffs, Inc., which in 2015 began producing about 100,000 tons of DR-grade pellets per year at Northshore Mining Co. in Silver Bay, is investing $75 million to expand the plant’s DR-grade production to 2.6 million tons annually.  Those pellets will be shipped to a new $700 million Cleveland-Cliffs HBI plant being built in Toledo, Ohio, and turned into HBI for shipment to electric arc customers.

“Cliffs building in Toledo is great news for Minnesota,” said Clevenstine. “With Cliffs being the pellet supplier, we are going to have the mining jobs, the concentrating jobs and the pelletizing jobs in Minnesota. If Cliffs had built the plant in Louisiana or somewhere else in the Gulf Coast, a foreign source of pellets would be more likely, which would not be good for us.”

In expanding DR-grade pellet production at Northshore Mining, Cleveland-Cliffs is proving itself to be an industry leader, said Fosnacht.

“Cliffs is locking themselves in strategically in how they can serve the industry and diversify their mix to customers,” he said. “I think a lot of other companies follow a leader, and I think by Cliffs making that move, you will see others do similar things.” 

 The ideal ore for producing DRI has a coarse grain size and low silica (waste). That type of ore is found predominantly at Northshore’s Peter Mitchell mine in Babbitt and on the western Iron Range, said Clevenstine.

On the west Range, ERP Iron Ore, LLC, is in the process of raising about $1.5 billion to finish the former Essar Steel Minnesota project. The plant would produce 7 million tons of iron ore pellets annually. Of that, 2.4 million tons would become DR-grade pellets. They would be turned into 1.8 million tons of HBI at the plant.

“Overall, the main thing we think about is that the overall utilization of the blast furnace has continued to go down,” said Robb Bigelow, ERP Iron Ore managing director. “Over time, the EAF’s just keep knocking down the path of producing the same products as blast furnaces for less money. They’re starting to produce just about anything, and our speculation is they will be even better.”

HBI production at the ERP Iron Ore facility is planned to begin in 2020, close to the time when the company would begin producing pellets, said Bigelow. “We’re trying to push those two to be very near in time to each other,” Bigelow added. 

With electric arc furnaces capturing a larger portion of the steelmaking industry and imported DRI feeding domestic mini-mills, Bigelow said ERP Iron Ore wants to be on the cutting edge.

“It’s an emerging market right now,” said Bigelow. “We’re going through a transformation much as we did when we went from natural iron ore to pellets and you just have to be prepared for it. They’re going through a similar transformation in China where, because of (poor) air quality, they are moving away from using sinter to pellets that don’t have the negative emissions. Here, we’re moving ahead from pellets to DRI-grade products. The worst thing we can do as a nation is sit back and do nothing.”

 Research and processing advancements to encourage DRI development is occurring, largely behind the scenes. Groups such as the Minnesota Minerals Coordinating Committee, Governor’s Mining Sub-Cabinet and a Value-Added Coalition are developing technical information for companies interested in Minnesota DRI production. Active participants include state agencies, NRRI, the mining industry, labor and private companies.

“We’ve looked at the stress in the industry and what kind of stress can be relieved,” said Fosnacht. “We’ve also looked at what type of state support is needed to locate that type of plant and developed information that is useful in decision making to help decide direction.”

DRI products can be made at any Iron Range taconite plant, he said. However, reaching the required lower silica content and higher iron content requires more capital investment at some plants than others due to the type of ore in each mine. That’s where the NRRI, a research arm of the University of Minnesota Duluth, comes in. DR-grade pellet suppliers and steelmakers with electric arc furnaces will, under agreement with NRRI, be able to have up to 15 kilograms of DR-grade pellets analyzed in each simulator test.

U.S. Steel owned the lab and also used the site for locomotive repair until 1986, when NRRI acquired the facility. Since then, NRRI has conducted research and development on a wide range of iron ore industry technological advancements.   The simulator, funded from part of a $2.6 million Mining Innovation Grant to NRRI by the Minnesota Legislature, will allow DRI developers to gain valuable data in making DRI development decisions.

 “We will be the only lab in the world that can assess everything from crude ore to enhanced value-added products,” said Kangas. “We will have the capability to do work for clients across the whole spectrum.”