BHP's New Direct Reduced Iron project - reported
Chris Brown, General Manager Strategic
Development BHP Iron Ore
CIP presentation Wednesday 21 February 1996 (recorded
by Chemlink Pty Ltd.
After thirty years of mining iron ore in the Pilbara, a new phase of value
adding was beginning in WA. Chris Brown, General Manager Strategic Development
BHP Iron Ore was speaking to the 10th CIP breakfast seminar to an audience
of over 80 professionals.
The technology required for the direct reduction of iron ore to produce
hot briquetted iron (HBI) has been known for many years but is only now
becoming commercially viable for the Pilbara.
Chris outlined the contributing factors to BHP's decision to invest
$1.5bn at Port Hedland.
Direct reduced iron (DRI) can be used in electric arc furnaces or mini-mills,
used for recycling steel, are growing at around 4 per cent per year. DRI
serves to allow higher grades of steel to be produced using scrap steel
extending the profitability of electric arc furnaces and minimills.
Fine ore is co-produced with lump ore. While most DRI processes can use
fine ore, blast furnaces preferentially use lump ore, creating a world
surplus of fine ore depressing its price and created a surplus. Though
fine ores may be pelletised, this is costly. BHP instead is creating an
additional market for its fine ore with a HBI process that therefore enables
additional production of the more saleable lump ore.
Chris commented that BHP considered alternative applications for fine
ore, including pelletising and sinter plants before adopting the HBI process
Gas prices have fallen due to WA market deregulation. (The HBI process
can use gas containing inert gases normally requiring purification prior
to sale and export. Purification cost savings, and of course the avoided
cost of its transport in cryogenic vessels, provides for competitive gas.)
The WA Government was attributed with two influences - stipulating obligations
to invest and add value, and promoting the deregulation of the gas market
that reduced energy costs.
BHP Iron Ore's increasing infrastructure in the Pilbara has reduced the
cost of investment.
DRI can be produced using coal (rotary or fluidised bed) or gas as the
energy source. Gas-based DRI can be produced by a fluidised bed (Finmet,
Iron Carbide and Circored) or in a shaft furnace (HYL and MIDREX). In considering
alternatives, BHP adopted gas-based fluid bed process developed in Venezuela
as the FINMET process. For BHP the FINMET technology developed (by FIOR
Venezuela and Voest-Alpine Industrieanlagenbau of Austria) represents a
proven process, able to use the fine ore without prior pelletising and
gas as the energy source.
BHP is capable of internal financing the project reducing its cost. This,
plus a strong iron ore and steel market presence, reduced market risks.
A vote of thanks by Alan Lees representing the Institution of Chemical
Engineers concluded this professionally presented seminar.
|The project includes an 1.2 km 4.5 metre round tunnel/conveyor system capable
of carrying 10 000 tonne per hour of ore beneath Port Hedland Harbour and
a 7.5km overland conveyor to the Boodarie HBI plant site and HBI in opposite
|The HBI Plant and associated facilities will process some 5mtpa of ore
to produce 2.5mtpa of HBI. The HBI plant is 100 metres high on a site occupying
an area of the Perth CBD.|
|The highest possible Australian content is aimed at through competitive
purchasing. Some sophisticated components, such as gas turbine generators,
will be imported.|
|Up to 1200 personnel will be employed during construction with around 225
required for plant operation. Plant maintenance, at six weekly intervals,
will require a further 250 maintenance personnel.|
|Having commenced tunnel construction in September 1995, HBI production
is planned to commence in December 1997 with a projected 30 year life.|
|Some details of technology efficiency were provided. The process would
use about 12.8 gigajoules of gas per tonne of HBI plus 225 Kwh of power
(say 5Gjs - a total of 14.3Gjs/tonne).|
|Interesting insights into BHP's policy on safety were provided. For example
successful tenderers are required to maintain a project specific safety
management plan. This will require provision for training, hazard identification
and elimination, drug and alcohol testing, and compliance audits.|
also Iron and DRI
Update for 20 November 1996.
From the West Australian newspaper "Two-year delay for $1bn HBI
expansion". BHP announced today that it would defer the A$1bn stage 2 phase
that would expand production from 2.5 million tonnes to 3.75 million tonnes
or 5 million tonnes per year of HBI. BHP said construction would not start
before stage one was commissioned and probably not until a year after that.
Meaning it would not operate before 2001.
Update for September 1997
BHP announced a construction cost blowout
of around 50 per cent increasing cost of stage 1 to A$2.2bn. Poor contracts
with subcontactors was cited.
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