So why have companies in the past not been able to set-up steel plants, even though their country has been importing steel and moreover the demand for steel has kept on growing?
A conventional steel plant requires multiple raw materials such as iron-ore, limestone and coal and a blast furnace to create molten steel. There are 2 limiting factors in this process which have inhibited the production of steel in many parts of the world.
The blast furnace limits the minimum capacity possible for steel plants to be in the order of 500,000 ton. Such high plant capacity requirement has been the biggest limiting factor for steel production in many parts of the world.
Capital Requirement - The minimum capacity requirement for the plant leads to significant increase in the capital investment required for the project. Projects of such magnitude are usually difficult to finance and have much longer pay-back periods. In addition, excessive requirements and costs for Mill equipment, Power supply, Land, Utilities and workforce have rendered the steel projects as inviable in many places.
Market/Sale Requirement - High capacity steel plants require a large market to sell their finished products. In many places, even though the demand for steel exists in the local market, in most scenarios, it is a very small fraction of the total production quantity of the steel plant. Further, transportation of the finished products to other markets has a significant impact on the cost of end product due to additional cost for transportation and handling. Large market/sale requirement has presented a huge obstacle to steel production in many places.
The conventional steel plants require iron-ore as one of their primary raw materials. The availability of iron-ore has been a major factor preventing steel production in many places.
Many places just don't have iron-ore - There are many places in the world which do not have local supply of iron-ore. In such a scenario, importing iron-ore becomes a necessity and results in significantly higher raw material cost due to transportation and handling costs.
What about places where known iron-ore reserves do exist? - There are several locations in the world which have known unmined iron-ore reserves. The timeline and large capital requirement to set up mining infrastructure in those locations has left those locations as unfeasible for setting up steel production.
Despite such challenges, the demand for steel has kept on increasing over the years. The average consumption of steel throughout the world has grown by 152 million tons in the last 5 years, to reach a total of 1665 million tons. Further, the consumption of steel is projected to reach 1751 million tons by 2020. For places where steel production has been unfeasible, this has meant a significant increase in import expenditure to meet the needs of their local market.
On the contrary, the growth in the steel industry presents an exciting opportunity. If places where steel production has been unfeasible till now are empowered with technology to setup steel production to cater to the capacity requirements of their local markets and simultaneously not have to depend on the availability of iron-ore in the area, it could lead to disruptive growth....More importantly, the low cost of the final product would enable accelerated growth of their local economies.
Steel mini-mill technology is able to eliminate the requirement for both blast furnace and iron ore from the steel production process. Instead, the steel mini-mill technology uses the electric furnace to convert scrap steel directly into molten steel. By doing so, not only does it bypass multiple steps required in a conventional steel plant, but it is able to remove the 2 factors that have inhibited steel production in many parts of the world - blast furnace (contributing to minimum capacity requirement) and iron-ore (contributing to raw material requirement). Companies now have the ability to set up small and medium sized production plants to cater to their local markets and use easily available scrap steel as their raw material instead of having to import iron-ore from far off places. The advent of mini-mill technology has revolutionized the long standing steel industry and opened doors to opportunities that never existed before.
The steel mini-mill plant requires significantly lower capital investment as compared to conventional steel plants. This makes it easier to finance and allows faster pay-back periods.
The capacity of steel mini-mills can range from 40,000 Ton to 120,000 Ton. The capacity is optimized based on local market opportunity. This provides sales assurance and reduces the transportation cost as the entire production quantity can be sold in the local market. As local markets grow, the plant capacity can be expanded further in the future with minimal expenditure.
Steel mini-mill technology uses scrap steel as raw material. In addition to being a sustainable raw material, scrap steel is easily available in all parts of the world.
The steel mini-mill technology requires significantly lower utilities and resources. This helps to reduce the cost and requirement for land, construction, water, power and workforce.
Mild Structural Steel is the most common type of steel being extensively used for Steel Structures, Steel Fabrication, Bridges, Roads, Railways, Ports, Ship Building, Power Projects, Fertilizer projects, Steel plants, Refinery projects etc. There are tremendous opportunities in many markets around the world, where companies have been forced to resort to importing steel in order to meet growing demands. Together, we can change this and bring steel production to these markets.
To learn more about the process and component requirement for Steel mini-mill technology and how it's different from conventional steel plants, please visit the Steel mini-mill process flow section.