While battery metals have largely stolen the world stage, iron ore and steel aren’t far behind; the steel industry has been on a rollercoaster ride since before the pandemic, and it doesn’t appear to be stopping anytime soon. Pellet producers around the world are struggling to keep up and many in the industry anticipate the shortage could be here for a while.
A Perfect Storm for an Iron Ore Pellet Shortage
Benefits of utilizing iron ore pellets are extensive; in addition to lower emissions and a reduced requirement for coking coal, the use of iron ore pellets allows steel producers to lower energy costs and ultimately add to their profit margin, making pellets an increasingly favored feedstock.
This, along with shifting buyer preferences, the growing use of concentrates, and a tightening focus on reducing emissions, have continued to push demand for iron ore pellets for the past several years. But a few more recent trends are also adding to the problem:
Tailings Disasters and the Pandemic
After yet another failed tailings dam put miners on high alert in 2019, pellet production was pulled back, leading to a reduced supply. Since then, global lockdowns, reduced capacity, and crippled supply chains courtesy of the pandemic certainly didn’t do anything to help the situation.
With pellet feed availability a struggle, Vale’s pellet output reduced by nearly 30% in 2020, compared to 2019 levels.
Rising EAF Steel Production Capacity
EAF steel production is overtaking old technology as the preferred approach to steel production, and has already done so by a landslide in the United States. But there is only so much scrap (historically the primary feedstock for EAF facilities) available, and a strained market has put ferrous scrap prices at a premium.
EAF producers have learned they can get around this by incorporating (or using exclusively) other feed types, most notably direct reduced iron (DRI). This, combined with a growing awareness of the benefits of DRI, have put the DRI market on a 7% growth trajectory for 2021, according to Future Market Insights.
DRI production relies on almost a 100% pellet feed. Therefore, an increase in the use of both DRI, as well as hot briquetted iron (HBI), a type of DRI, equates to similar increases in pellet demand.
China Steel Demand Rises
China, the world’s largest steel consumer and producer, has been gobbling up steel at a record pace; ongoing economic growth and a post-pandemic push for recovery have caused a surge in the Chinese – and therefore global – steel market.
On top of this, China has been cracking down on emissions from the steel industry, causing a rise in demand for higher-grade products and increased investment in EAF facilities. And while China has since begun reigning in domestic steel production, the long-term trend toward curbing emissions will continue to favor more efficient production methods, and subsequently, pellets.
The situation is complex, to say the least, but at the end of the day, the outcome is simple: iron ore pellet production is in hot demand. As the shortage persists, producers must bring new capacity online and restore production where it has been cut.
About Iron Ore Pelletizing (Balling)
Pellets are a high-grade source of iron ore and are produced via a type of agitation agglomeration (wet granulation or tumble-growth agglomeration) known as pelletizing, and referred to in the iron ore sector as “balling.”
The balling process is carried out utilizing either a rotary drum or disc pelletizer – otherwise known as a balling drum and balling disc, respectively. In both settings, a tumbling motion, along with a liquid binder and any other additives, forms spherical pellets in the range of ⅛” – ⅜”.
Several process and material variables influence pellet characteristics and quality, often making testing a critical part of pelletizing process development, particularly when it comes to DRI pellets; pellets bound for direct reduction shaft furnaces have specific requirements for parameters such as crush strength, attrition, and more, in order to maximize the effectiveness of the reduction process. Careful control over the pelletizing process is necessary to control these qualities.
The US Department of Energy recently issued a grant to the University of Minnesota’s Natural Resources Research Institute (NRRI) to help fund research on the production of DRI pellets optimized for EAF furnaces and made from Minnesota’s rich sources of iron ore. In a comment on the research, NRRI Associate Director Don Fosnacht had this to say:
“Different mines on the Iron Range have different capabilities for making direct reduced grade pellets. This research will assist Minnesota mines to produce pellets for direct reduced iron. This is a big deal for our Minnesota mining operations. Our goal is to keep all of our mines active and producing the iron ore of the future.”
While the study will focus largely on pellet chemistry, the physical parameters of the pellets, and how their chemical composition influences the desired parameters, will likely come into play.
Iron Ore Pelletizing Plants, Equipment, & Services Needed
Numerous new pelletizing plant projects and expansions continue to be announced as the industry looks to ramp up pellet production. Vale is also working on returning to full capacity.
Not surprisingly, pelletizing equipment OEMs stand to benefit from the trend, with equipment in high demand, as do companies providing support services for the development and maintenance of pelletizing plants.
Pelletizing Feasibility Testing & Process Development Services
As mentioned, feasibility testing and process development services, such as those offered in the FEECO Innovation Center, are a crucial component in the development of many iron ore pelletizing plants.
Through testing, pellet producers can gather the process data necessary to inform decisions on iron ore pelletizing equipment, production parameters, and more.
Parts and Service Support
The high demand for pellets also means that operations can’t afford unnecessary downtime, putting parts and service support in high demand as well. Whether optimizing on-size pellet production, troubleshooting a quality issue, or even replacing worn components, parts and service support is essential in keeping operations running their best.
As the authority on pelletizing, FEECO offers these services and more, including pelletizing training programs for helping operators to optimize production efficiency, enhance troubleshooting capabilities, and minimize downtime.
Conclusion
With several factors contributing, the shortage of iron ore pellets looks to stick around for a while, at least until new production and expansions can catch up on supply. And while this is a struggle for steel producers, OEMs offering iron ore pelletizing equipment and support services are well positioned to benefit from the trend.
FEECO engineers and manufactures heavy-duty, reliable balling drums and discs for pelletizing iron ore. Our Innovation Center is an added value to producers looking to develop or optimize a pelletizing process and define variables for equipment design and process scale-up, as are our parts and aftermarket service support. For more information on our iron ore pelletizing equipment and services, contact us today!