Other steelmaking raw materials

London

July 2011

Other steelmaking raw materials

Manganese

LimeSilicon

Electrodes

Chromium

USED IN ALL STEELS

USED IN MOST STEELS

Chromium

Nickel

Zinc

Cored wire

TinMolybdenum

Tungsten

Vanadium

Titanium

USED IN SOME STEELS

MINOR ALLOYING ELEMENTS

Other steelmaking raw materials –Fairly

low % of steel production costs

Manganese avg. $20/tonne

Lime avg. $20/tonne

Silicon avg. $10/tonne

Electrodes avg. $7/tonne

Iron avg. $300/tonneIron avg. $300/tonne

Chromium avg. $200-400/tonne (stainless)

Nickel avg. $500-1000/tonne (stainless 300)

80% of ferroalloy revenues are driven by steel

Aluminium

AlloysSilicones

Electronics

& Solar

Iron

Castings

CRUDE

STEEL

Aerospace &

Superalloys

40% 5%55% 65%25% 100% 95% 5% 100%

Silicon FeMn

SiMn Chrome

End

Uses

Quartzite Manganese

Ore

Chrome

Ore

Silicon

Metal

$5.3bn

FeSi

$10.5bn

SiMn

Mn metal

$17.4bn

FeCr

$9.0bn

Chrome

Metal

$0.5bn

$8.5bn $3.3bn

Ferro-

Alloys

Ores

Estimated revenues for 2010

USED IN ALL STEELS - Manganese

• Manganese is the world’s fourth most heavily consumed metal

• Global mine output of 14 million tonnes in 2010 – over 90% goes into steel

• All steels contain manganese

• Manganese is used to remove sulphur from liquid steel

(sulphur causes steel to crack)(sulphur causes steel to crack)

• There is no viable substitute for manganese as a de-sulphiriser

• Manganese is also used to improve the strength of certain steels

(structural steels, high strength flat steels)

• Non-steel consumption of manganese includes de-polarisation of dry-cell

batteries, and as an additive in certain aluminium and copper alloys

Manganese – consumption in steel

• Manganese content of steel ranges from 0.4% to 2.5%. Average is 0.8%

• Manganese is added to steel in the form of one of four types of ferroalloy:

• Silicomanganese (SiMn)

• High-carbon ferromanganese (HC FeMn)

• Medium and low-carbon ferromanganese (MLC FeMn)

• Manganese metal (Mn metal)

• The choice of manganese ferroalloy is driven by the chemistry of the steel

(Mn, Si and C specifications)

• Ferroalloys are added to steel in the ladle furnace after decarburisation in the

BOF / EAF, so their carbon content can be critical

Manganese – ore into ferroalloy

• Manganese ore is usually concentrated at the mine site. Sintering of fines is

commonplace, sometimes at mine sites and sometimes at smelters

• Grades of manganese ore range from 20% to 50% Mn content

• Manganese ore is smelted in an EAF, with metallurgical coke as a reductant, to

produce silicomanganese and ferromanganese

• SiMn typically contains 66% Mn , 17% Si, 2% C, balance Fe

• HC FeMn typically contains 76% Mn , 7% C, balance Fe

• MLC FeMn typically contains 82% Mn, <2% C, balance Fe

• The production of Mn metal involves dissolving manganese ore into sulphuric

acid, and extracting the Mn metal from the solution using electrolysis

• Mn metal typically contains 99% Mn

Manganese – ore production

• Manganese ore is a highly

concentrated industry. The top 5

producers account for 60% of world

output. The top 10 producers account

for 75% of world output

• Production is dominated by blue chip

Manganese ore output by company in

2010 (million tonnes contained Mn):

Company OutputMkt

share

1. BHP Billiton 3.5 25%

2. Eramet 1.5 10%

3. Assmang 1.4 10%

4. Privat 1.4 10%• Production is dominated by blue chip

mining groups such as BHP Billiton,

Vale and Eramet. In this regard, it has

great similarity to iron ore

• High grade manganese ore (>40% Mn)

is even more dominated by the blue

chip companies. BHP Billiton, Eramet

and Assmang together account for

85% of high grade production

4. Privat 1.4 10%

5. Vale 0.7 5%

6. UMK 0.5 4%

7. MOIL 0.5 3%

8. ENRC 0.4 3%

9. OM Holdings 0.4 2%

10. Buritirama 0.3 2%

Others 3.5 25%

Total world 14.1

Manganese – ore reserves

South

Africa

16%

Ukraine

19%Gabon

7%

China

6%

Other

countrie

s

18%

Other

countrie

s

25%

Reserves Resources

• Around 75% of the world’s manganese resource is in the Kalahari basin in South

Africa. Most of this is not explored sufficiently to count as reserves

• Ukraine, Brazil, Australia and west Africa also have significant manganese

reserves. China has a small reserve of low grade ore which is depleting fast

Brazil

15%

Australi

a

12%

India

7%

7%

South

Africa

75%

Manganese – ore vs ferroalloy output

South

Africa

25%

Brazil

7%

India

6%

Ukraine

4%

Other

countrie

s

12%

China

52%S.Africa

6%

Norway

4%

Japan

4%

S.Korea

3%

Other

countrie

s

15%

Mn ore output Mn ferroalloy output

• China accounts for 52% of the world’s production of Mn alloys, but just 16% of

the output of Mn ore. Thus there is a huge import of Mn ore into China. Other

major importers of Mn ore are India and Ukraine

• S.Africa, Australia, Gabon and Brazil are the largest net exporters of Mn ore

Australi

a

19%China

16%

Gabon

11%India

9%

Ukraine

7%

6%

Manganese – prices

12

16

20

Mn ore prices, US$/dmtu

5000

6000

7000

Mn ferroalloy prices,

US$/tonneSiMn

HC FeMn

0

4

8

12

0

1000

2000

3000

4000

Manganese – points to watch

• Manganese reserves are plentiful. There are enough world resources to satisfy

demand for the next 50-100 years

• Nevertheless, with 75% of world resources, much of future demand will have to

come from South Africa

• Logistical constraints in South Africa are chronic. Rail and port links to Kalahari

are at capacity levels, unlikely to be eased before 2018-20are at capacity levels, unlikely to be eased before 2018-20

• Price bottom of >$5/dmtu, with upside based on potential logistical bottlenecks

in South Africa, but as yet these have had little impact

• Grades are deteriorating. High grade premium will most likely increase

• Manganese can be very harmful to health. Exposure linked to brain disease and

Parkinson’s Disease. Pollution and exposure will become bigger issues,

especially for Mn metal production in China

USED IN ALL STEELS - Lime

• Limestone is calcium carbonate

(CaCO3)

• Calcium is used to remove silica, the

major impurity in iron ore, out of

molten iron into slag

• Limestone is added into the blast• Limestone is added into the blast

furnace at the iron-making stage.

The heat decomposes the limestone into lime and CO2

(CaCO3 CaO + CO2)

• The lime reacts with silica to form calcium silicate

(CaO + SiO2 CaSiO3)

• Calcium silicate rises to the top of the blast furnace and is removed as slag

• On average, 500kg of limestone is used to produce one tonne of pig iron

Lime – Consumption in BOF/EAF

• Lime is also used in the steel-making process, in both the BOF and EAF routes,

to remove remaining silica impurities

• At the steel-making stage, lime is usually added as dolomite and quicklime

• Dolomite is calcium magnesium carbonate (CaMg(CO3)2). As well as removing

impurities into slag, the magnesium helps to separate the slag from the liquid

steel, and helps reduce wearing of the lining of the BOF / EAFsteel, and helps reduce wearing of the lining of the BOF / EAF

• Quicklime is lime which is bought having already been reduced from limestone

• At the BOF / EAF stage, between 35-50 kg of lime is added per tonne of steel

• Fine limestone and dolomite are also used as a binding agent in the production

of iron ore sinter

Lime – Cost

• Lime is a very abundant material. Calcium is the fifth most common element in

the earth’s crust

• Consequently lime is relatively cheap. The prices of limestone and dolomite

are mostly within the range $20-120/tonne

• The price range is wide, reflecting the fact that transportation is the main cost

componentcomponent

• Many steel plants are quite close to a domestic lime source, and consequently

pay a price at the lower end of the range

• International trade in these products being relatively low, prices fluctuate in US

dollars from country to country in response to exchange rate changes

USED IN MOST STEELS – Silicon

• Silicon (Si) is the second most abundant metal in the earth’s crust. It exists

naturally in the form of clay, sand, granite and quartzite. It is so abundant that

reserves and resources are not worth calculating

• Most steels contain Si, in order to deoxidise liquid steel after tapping from the

BOF / EAF. A minority of steels are deoxidised by Al instead of Si

• Si also adds electrical conductivity to steel. On average, steel is 0.3% Si, whilst • Si also adds electrical conductivity to steel. On average, steel is 0.3% Si, whilst

electrical steels contain up to 7% Si

• Si is added to steel either as SiMn (already discussed), or as ferrosilicon (FeSi)

• FeSi is a ferroalloy usually containing 75% Si, 20-25% Fe. It is produced in an

EAF by smelting quartzite together with coke and iron ore

• 75% of FeSi is consumed in steel production. Most of the rest is consumed in

the production of foundry castings and magnesium metal

Ferrosilicon – production

• China produced 71% of the world’s

FeSi in 2010. Its share of global

consumption was 55%, hence China

remains a major net exporter of FeSi,

mostly to other Asian countries and

the USA

• The major cost component for Brazil

Norway

3%

USA

2%

Iceland

2%

India

2%

Other

countries

9%

FeSi output

• The major cost component for

producing FeSi is electricity

• With high electricity prices and

government closures of small

ferroalloy plants, it is questionable

whether China can continue to

export large volumes of FeSi.

Exports have fallen substantially

already between 2007 and 2010

China

71%

Russia

7%

Brazil

4%

Total: 6.9 million tonnes

Ferrosilicon – prices

1500

2000

2500

FeSi prices, US$/tonne

0

500

1000

1500

USED IN SOME STEELS – Electrodes

• Around 30% of global steel output takes

place in electric arc furnaces

• Electric arc steelmaking uses electrodes to

pass electrical current through the EAF

• The most common form of EAF uses

alternating current (AC), in which there are alternating current (AC), in which there are

three electrodes in the EAF

• A typical modern AC EAF would be rated at

60 million volt amperes (60 MVA),

producing 650,000 tpy of liquid steel

• Electrodes for steel EAFs are made from

synthetic graphite

Electrodes – Consumption in EAF

• Electrodes for EAF steel production are

produced by mixing petroleum coke with

petroleum pitch, then shaping and baking

the mixture at over 3000 degrees celsius

• This turns the material from carbon into

synthetic graphitesynthetic graphite

• Currently, between 1-2 kg of electrode is

consumed per tonne of EAF steel produced

• World consumption of electrodes in

steelmaking is around 600,000 tpy

Electrodes – prices

• Electrode prices are linked, on a

lagged basis, to the prices of oil

and coal/coke

• Prices in first half of 2011

averaged US$5000/tonne

• At this price, the electrode cost 4000

5000

6000

7000

Graphite electrode prices,

US$/tonne

• At this price, the electrode cost

per tonne of liquid EAF steel

produced is around $7/tonne

• Electrodes are much more

important to the steelmaker than

the low proportion of operating

costs suggests, as electrode

malfunction can result in a large

amount of lost production

0

1000

2000

3000

4000

USED IN SOME STEELS - Chromium

• Chromium (Cr) is the 13th most abundant metal in the earth’s crust

• Global mine output of 8 million tonnes of contained Cr in ore (2010)

• Around 75% of Cr is used in steel. Its main properties in steel are its supreme

resistance to corrosion, temperature and wear

• Cr is used intensively in stainless steel and in some special rebar grades. • Cr is used intensively in stainless steel and in some special rebar grades.

Stainless steel typically contains 18% Cr

• Cr is added to steel as ferrochrome (FeCr). FeCr is a ferroalloy containing

50-65% Cr, 0-8% C, balance Fe. It is produced in an EAF by smelting chrome ore

together with coke. Due to the high quantity required, FeCr is sometimes

added to stainless steel in the EAF, as opposed to the ladle furnace

• Non-steel Cr consumption takes place in a variety of applications – including

welding, superalloys, iron castings, chemicals

Ferrochrome – ore vs ferroalloy output

South

Africa

39%

Turkey

Oman

4%

Russia

4%

Brazil

3%

Other

countrie

s

12% South

Africa

41%

India

Russia

7%

Finland

3%

Other

countrie

s

6%

Cr ore output FeCr output

• China is the major consumer of FeCr. It is a net importer of both FeCr and Cr ore,

of which its reserves are very small

• The major producers in the chrome sector are in South Africa, Kazakhstan, India,

Turkey and Russia

Kazakhs

tn

17%

India

13%

Turkey

8%

China

20%

Kazakhs

tn

13%

India

10%

Ferrochrome – prices

300

400

500

Cr ore prices, US$/tonne

400

500

600

FeCr prices, US c/lb

High-

Carbon

FeCr

0

100

200

300

0

100

200

300

USED IN SOME STEELS – Nickel

• Nickel (Ni) is a base metal, around 60% of which is used in stainless steel

• Global mine output of 1.5 million tonnes of contained Ni in ore (2010)

• Nickel is used extensively in stainless steel, but not in other steels. Its main

usefulness in stainless steel is its extreme corrosion resistance. Stainless steels

in the 300 grade family are 8-10% Ni. Other stainless steels have a much lower

Ni contentNi content

• Nickel is mostly added to steel in pure metal form. A minority of steel

producers prefer to add their nickel as ferronickel (FeNi)

• Nickel is characterised by low ore grades (mostly <2% Ni content), and a long

and complicated process chain. Nickel metal is traded on the LME

• The 40% of nickel consumed in non-steel applications goes into a variety of end-

uses, including aerospace superalloys and batteries

Nickel – ore vs refined metal output

Russia

19%

Canada

18%New

China

5%

Other

countrie

s

25%

China

22%

Russia

Cuba

3%

Other

countrie

s

30%

Ni ore output Refined Ni metal output

• China is the leading consumer of nickel, and is a major net importer both of nickel

ore concentrates and refined primary nickel

• The major nickel mining regions are Russia, Canada and Australiasia

18%

Australi

a

13%

Indonesi

a

13%

New

Caledon

ia

7%

Russia

19%

Japan

11%

Australi

a

9%

Canada

6%

3%

Nickel – prices

40000

50000

60000

Nickel LME cash prices, US$/tonne

0

10000

20000

30000

USED IN SOME STEELS - Zinc

• Zinc (Zn) is the 24th most abundant metal in the earth’s crust, but is the fifth

most heavily consumed metal in terms of tonnes mined

• Global mine output of 13 million tonnes of contained Zn in concentrate (2010)

• Around 60% of Zn is used in steel. Zn is used to “galvanise” steel sheet, to

improve corrosion resistance. Galvanised steel sheet is used extensively for

vehicle body panelsvehicle body panels

• Zn is added to steel in pure metal form downstream of the rolling process, using

one of two methods – electrogalvanising and hot dip galvanising

• Zn ore is concentrated, smelted then refined into pure metal form. Zn metal is

traded on the LME

• The 40% of Zn consumed in non-steel applications goes mostly into diecasting,

and into the production of brass and bronze

Zinc – ore vs refined metal output

China

29%

Canada

Kazakhs

tn

5%

Other

countrie

s

24% China

39%

Australi

Spain

4%

Other

countrie

s

33%

Zn ore concentrate output Refined Zn metal output

• China is the leading consumer of zinc, and is a net importer of zinc concentrate to

smelt and refine into primary zinc metal

• The major zinc mining regions are China, Australasia and South America

Australi

a

12%Peru

12%

USA

6%

India

6%

Canada

6%

S.Korea

6%

Canada

5%

India

5%

Japan

4%

Australi

a

4%

Zinc – prices

3000

4000

5000

Zinc LME cash prices, US$/tonne

0

1000

2000

3000

USED IN SOME STEELS - Cored wire

• Alloy additions need to be made to some

steels at the ladle furnace stage, just prior

to casting, especially for special steels

• In the ladle furnace the steel is covered by

a thick layer of hot slag; adding alloys in

lumps yields recovery to metal of less than lumps yields recovery to metal of less than

5%. Over 95% of the alloy fails to

penetrate the slag and is wasted

• By putting the alloy into hollow cored wire

in powder form and pushing it through the

slag using a wire feeding machine, recovery

increases to 20-25%

• Around 50% of cored wire additions to steel are of calcium silicon. Cored wire is

also sometimes used to add other metals to steel just before casting

- such as vanadium, magnesium, selenium, niobium and boron

USED IN SOME STEELS - Tin

• Tin (Sn) is used in tinplate steels

• Tinplate is a niche product with a small

global production volume. Only 20% of

global tin consumption is for tinplate

• The other 80% of Sn goes into non-steel

applications – notably producing solderapplications – notably producing solder

• Tin plating adds corrosion resistance to steel, but not as effectively as zinc

coatings. Galvanised steel has therefore displaced tinplate in most non-food

applications. Zinc is too toxic to use in food cans, which is now the main use for

tinplate

• As with galvanised steel, tinplate coatings are applied to treated cold-rolled

steel by either hot-dipping or electroplating. Sn is traded on the LME

Minor alloying elements

• Molybdenum (Mo)

Used in grade 316 stainless steels and a few alloy steels

Intensely heat resistant

• Tungsten (W)

Used in a few alloy steels

Very hard and heat-resistantVery hard and heat-resistant

• Vanadium (V)

Used in some high strength steels

Improves hardness

• Titanium (Ti)

Some application in steel, often through cored wire

Intense deoxidisation and grain refining properties