New Business Horizon with ITmk3

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New Business Horizon with ITmk3Producing the
Pig Iron from the Oxidized Iron Ore
Concentratein one Technological Process

• Working Paper for the ITmk3 Family Conference
• Kyiv, April 3, 2009
• Prepared by Razaz Younes
• Managing Director
• Hares Engineering GmbH.

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Iron and Steel Industry Main Problems

• In addition to several issues, the Iron and Steel
  Industry is facing the following main problems
• The BF and BOF are facing the serious problem in
  the supply of its raw material, which it is
• Iron Ore pellets produced from the magnetite ore
  with sufficient iron content (about 67)
• Metallurgical coke
• EAF is facing the shortage in the Scrap supply
• The environmental situation in world starts to be
  in position that it is not possible to produce
  more steel with current emissions level serious
  solution should be developed to avoid more harms
  to our nature
• At the same time, a stable demand on the steel
  will always exist due to increase of the world
  population. The new coming generations will be in
  need of steel to build their civilization

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Oxidized Iron Ore in the Nature

• Usually the Oxidized iron ore Hematite exists
  in the upper layer because of the oxidization
  reaction with the atmosphere and below the
  Hematite layer the Magnetite is lying down.
• Beneficiation of the Hematite is difficult and
  expensive comparing with the Magnetite, therefore
  the mine company that has the both types usually
  prefer to extract the hematite and to store it in
  order to reach the Magnetite that will be more
  efficient to beneficiate. This will lead to
• Huge amount of the Hematite to be stored that
  creates environmental problem
• Considerable costs should be born to extract the
  Hematite and to store it without any direct
  investment relation to this natural resource
  usually, these costs to be calculated on the
  magnetite mining cost.
• The iron content existing in the Hematite will
  stay without its value account, since the
  investment into the Magnetite will always be more
  efficient somehow, it is national resource which
  is not relevantly capitalized.

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Pig Iron Production by ITmk3 comparing with the
Classic Technologies

•  The below calculation is typical and it is
  considered the market indicators of 2007 to avoid
  the market turbulence caused by the current
  crisis that provides unreadable factors
• ITmk3 is producing the pig iron nuggets
• The raw material of ITmk3 is the iron ore
  concentrate
• Pig iron is producing in Blast Furnace
• The raw material of BF is the pellets
• Pellets are produced from the iron ore
  concentrate
• Summarized calculations
• Production of the pig iron by classic technology
  (blast furnace) costs 300-325 USD per ton, the
  sales price of pig iron is 340-360 USD per ton
  and capital investment is equal to 300 USD per
  ton of production. To produce the pellets it is
  required to invest 50-60 USD per ton of capacity.
  Therefore, investment capital for each ton of pig
  iron starting from concentrate (as ITmk3) is
  equal to 30060 360 USD
• Production of the pig iron by ITmk3 technology
  costs 150 USD per ton, the sales price is 340 USD
  , and the capital investment is equal to 300 USD
  per ton of production.
• As summary production cost per ton of pig iron
  nuggets by ITmk3 is less by 50 from the
  production cost in Blast Furnace, and capital
  investment per ton in case of ITmk3 is less by
  20 of the investment required in case of Blast
  Furnace.

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Production cost for Pig Iron by Blast Furnace
    Blast furnace route Blast furnace route  
Parameter Units Units/t HM Cost /unit /t HM
Coke t 0.33 200.00 65.00
Coal t   -
Pellets t 1.60 100.00 160.00
Concentrate t   -
Bentonite t   -
Raw Materials   225.00
     
Labor M-H 0.70 20.00 14.00
Natural gas GJ 7.68 7.00 53.76
Limestone t 0.05 20.00 1.00
Oxygen Nm3 104.90 0.04 4.20
Blown air Nm3 1.08 2.60 2.80
Steam to stoves t 0.02 5.50 0.11
BF gas GJ 2.30 0.54 1.24
Power kWh 133.00 0.050 6.65
Water Nm3 0.70 0.65 0.46
Electrodes kg    
Energy (DRI melting) kWh    
Na2CO3 de-P/de-S t 0.23 70.00 15.89
Oxygen for de-P Nm3 32.87 0.04 1.31
Nitrogen for de-P Nm3 6.40 0.037 0.24
Maintenance Cap 0.02 130.435 2.61
Consumables   104.25
Misc. supplies Var 0.05 104.25 5.21
ConsumablesSupplies   109.47
     
By product credits    
Top gas GJ 8.29 0.80 (6.63)
Slag t 0.25 7.75 (1.94)
Sub-total Credits   (8.57)
Conversion Cost       100.90
Conversion Raw Mat'ls       325.90
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Production cost for iron nuggets by ITmk3
Case Study
Item Cons. Price Cost
Item /t-Ng
Iron Ore (t) 1.56 25.0 39.00
Reductant Coal (t) 0.37 90.0 33.30
Binder (t) 0.02 320 6.23
Fluxes(t) 0.19   14.80
Hearth Material (t) 0.11 57.0 6.27
Fuel (MMBtu) 6.6 4.6 30.40
Electrical Power (kWh) 200 0.050 9.93
Water (m3) 2.0 0.01 0.03
N2 or Inert Gas(Nm3) 20.0 0.04 0.80
Chemicals     1.00
Royalty     5.00
Variable Cost Total     146.8
       
Labor Managment (men) 40   2.5
Maintenance     5.0
Fixed Cost Total     7.5
       
Total Cash Cost     154.25
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ITmk3 Experience with Oxidized Iron Ore

• Kobe Steel has tested several types of hematite
  iron ore in the box furnace in Kobes Laboratory
• Some of them were tested by a continuous
  operation at the bench scale test facility in
  Kobes Kakogawa works
• One US hematite was tested in Mesabi Nugget Pilot
  Demonstration Plant in Minnesota
• Recently and as result of the cooperation between
  Kobe Steel, Hares Engineering and Ministry of
  Industrial Policy of Ukraine on evaluation of the
  possibility to produce the iron nuggets from the
  Hematite concentrate beneficiated at KGOKOR
  laboratory using the High Intensive
  Electro-Magnetic beneficiation method designed
  for the KGOKOR, the iron Nuggets have been
  successfully produced
• Tables below show the experience of the ITmk3 in
  production of Iron Nuggets from several
  international resources of Hematite, including
  the Ukrainian Hematite from KGOKOR

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Real Example KGOKOR Project in Ukraine

• The KGOKOR Project has been designed to produce
  the pellets from the hematite iron ore by the
  following technological steps
• Crushing milling the hematite iron ore, or the
  raw material preparation section
• Beneficiating the oxidized iron ore by High
  Intensive Electro-Magnetic method to produce the
  hematite concentrate up to 61-64 Fe content.
• Pelletizing the concentrate into pellets
• Roasting the pellets into roasting plant
• General remarks on the current process at KGOKOR
  
• The process will consume high energy, especially,
  the gas
• Ukraine needs and works on developing new energy
  saving policy, especially, in the metallurgical
  and chemical industry, the biggest energy
  consumer sector in Ukraine
• The result of this process is the pellets with
  low iron content what will provide relevantly
  with a product with low added value
• Improvement of the beneficiation by using new
  technology like floatation would mean another
  investment capital and high beneficiation cost
• The produced pellets should be treated in the BOF
  to produce the pig iron this means another
  energy consumption, especially, the gas and more
  off gas emission, although Ukraine needs and is
  working on improving its environmental situation.
• The complete investment cycle starting the
  hematite iron ore and finishing with the produced
  pig iron does not show a high efficient
  investment scheme.

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Kobe Steel - Hares Engineering Suggestion for
KGOKOR Project Solution

• Kobe Steel and Hares Engineering are cooperating
  with the Ministry of Industrial Policy of Ukraine
  to develop technical and economical solution for
  KGOKOR Project by using the ITmk3. It is based
  on the following principles
• Completing the existing facilities in raw
  material preparation and beneficiation plant to
  produce the hematite iron ore concentrate with
  62-64 Fe content (60 Fe content is workable for
  ITmk3)
• Using this hematite concentrate to produce the
  pig iron as Iron Nuggets avoiding the BOF and
  Blast Furnace process
• General remarks on this solution
• Technically the plant will produce new upgraded
  product with superior technical specification
• Economically the plant will produce high added
  value product that is demanded worldwide the
  plant will start to enjoy feasible economical
  indicators
• Environmentally the plant will enable to produce
  the pig iron nuggets with less energy
  consumption and less emissions, especially, the
  CO2 (ITmk3 reduces Co2 emission up to 20 per
  each ton of produced pig iron)
• Financially the project will open new horizon
  for investors and the possibility to attract
  several international financial facilities due to
  the following main factors the project is
  Feasible, its products are of International
  demand and upgraded to commodity level product,
  and the project is environmentally friendly
• Kobe Steel and Hares Engineering are now in
  process of developing investment opportunity for
  KGOKOR Project, based on ITmk3 technology, by
  implementing international financing scheme

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Conclusions

• By ITmk3 and Oxidized Iron Ore it is possible to
  generate the Money stocked in the Oxidized Iron
  Ore Mines
• The ITmk3 opens new investment opportunity to
  exploit the hematite iron ore, especially, in
  Ukraine where almost all mining companies
  stocking this raw mineral resource without good
  capitalization, creating another environmental
  problem and loosing good investment opportunity
• ITmk3 produces the pig iron nuggets with less
  energy consumption and less environmental
  emissions
• In Ukraine, exploitation of the hematite by
  efficient technology like ITmk3 will support the
  national income and will improve the investment
  in the national resource
• In addition, The ITmk3 and EAF as Ukrainian
  Strategy to produce the Steel using the national
  resource of energy will lead to
• Reduction in consumption of the NG and forwarding
  its saved volume to other consumers
• Energy saving in production of one ton of steel
• More efficient use of the national resource of
  the energy
• Improvement of the environment with keeping the
  steel productivity of the country
• Will generate additional national income

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Projects of Hares Engineering in the CIS
Countries

• Confirmed Projects

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In Kazakhstan

• SBS Group
• Hares Engineering agreed with SBS Group to build
  three ITmk3 Plants in Aktobe City by formula of
  12. The engineering works to be started in April
  2009
• SBS Group is interested to build the first plant
  as soon as possible. This could request to start
  some of the construction works by SBS very soon
• SBS Group has contracted Hares Engineering for
  the Engineering Works

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In Russia

• Aricom Group
• Hares Engineering worked with Aricom for one year
  to evaluate the project
• Aricom has contracted the company Hatch as
  independent consulting engineering company to
  decide about the best technology for their mine.
  Hatch reported that ITmk3 is the best available
  solution
• Aricom also has contracted Hares Engineering to
  fulfilled Preliminary Plant Specification and
  Pre-Feasibility Study to install five plants at
  its Kimkano-Sutarsky Mine
• Hares Engineering has fulfilled the
  above-mentioned study and the results were
  positive. Aricom confirmed in its strategic plan,
  published on its website, its intention to build
  five plants at its KS Mine until 2016. Aricom
  intends to start the development of
  pre-contracting engineering and bankable
  feasibility study in 2009

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• EuroChem Project
• EuroChem has contracted Hares Engineering to
  prepare PPS Study to install two plants at its
  mining company called Kovdorsky GOK. The study
  should be accomplished in April 2009 and two
  companies will decide on the next stage
• The laboratory testing of the iron ore
  concentrate of Kovdorsky GOK showed positive
  results

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• OMK Project
• OMK is one of the biggest producer of the steel
  pipes in Russia and Europe
• It is one of the main suppliers of pipes for the
  North Stream Project to build the gas pipe line
  under the sea between Russia and Germany
• The Iron Nuggets product provides OKM with the
  possibility to produce the goods of higher
  quality with less energy consumption which will
  provide OMK with higher efficiency for its
  industry
• OMK has contracted Hares Engineering to prepare
  PPS study to install two ITmk3 plants
• The study will be accomplished in May, 2009
  

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In Ukraine

• Metinvest is the biggest iron ore miner in
  Ukraine, it owns three mines in the country
  called SEV-GOK, C-GOK and IN-GOK
• Hares Engineering is working with Metinvest for
  the last two years to prepare the PPS for its
  mines and accomplished two study for SEV-GOK and
  C-GOK
• Metinvest requested Hares Engineering to use
  Hatch company as independent engineering company
  to evaluate the PPS study for SEV-GOK and C-GOK
  and to decide about the best technology comparing
  ITmk3 with other nine technologies. Hatch
  confirmed the accuracy of Hares Engineering study
  and recommended Metinvest that ITmk3 is the best
  technology for its mines
• Metinvest is thinking about production of 2.5
  million tons of Iron Nuggets, which means five
  ITmk3 Plants
• Hares Engineering and Metinvest is still working
  on the last PPS study before the final decision
  

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KGOKOR Project

• ITmk3 is the only technology that could offer to
  this Project a real technical solution that
  provides the plant with the workable efficiency
• Hares Engineering and Kobe Steel is creating
  consortium for the common investment in this
  Project
• The Consortium contacted the Ukrainian Authority,
  who decided to cooperate in developing technical
  and economical solution for the KGOKOR Project
• The Consortium is fulfilling preliminary
  engineering study to confirm the main objectives
  and the efficiency of the project (PPS Study)
• The Consortium is working with the Governments of
  Japan and Ukraine to include this project under
  GIS Agreement between the two countries
• The Consortium is discussing this project with
  potential investors and financiers. The results
  are encouraging