IRONMAN PROJECT at Tjeldbergodden, Norway. A new plant for natural gas based reduction of iron ore the environmental friendly way to make steel

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1 IRONMAN PROJECT at Tjeldbergodden, Norway A new plant for natural gas based reduction of iron ore the environmental friendly way to make steel 1

2 The Market Steel production Raw Materials Reduction Steel making Continuous Forming/ casting processing Coke Plant Blast Furnace BOF Sinter Plant, Pellet Plant DR Plant Flat steel Pellets + gas EAF Billet steel Scrap Metal powder 2

3 The Market Raw material for Steel production 3

4 Technology mix in Steel Industry 65%/35% 30%/70% 73%/27% 57%/43% 30%/70% 92%/8% 78%/22% 52%/48% 82%/18% World average: o 71% BOF o 29% EAF 32% of the world iron units are added as scrap (450 Mton) 4

5 Scrap Availability +3 Mton - 3,5 Mton +2,5 Mton - 8 Mton - 19 Mton - 6 Mton +6,5 Mton +1 Mton +1,5 Mton Total net scrap trade: 36,5 Mton The total gross volume of traded scrap (across country borders) in the world is 100 Mton 5

6 Scrap availability The demand for steel scrap today is met by the recycling of steel products from 20 years ago (Time from steel production to recycling into scrap). Since steel production has increased by 50% over the past 20 years, the scrap available today does not meet demand. Thus, with demand outweighing supply, prices are expected to continue to rise. Mton year gap Steel production Scrap availability Source: Metal Strategies Inc 6

7 Future Scrap Availability EAF capacity has expanded by 75 Mton/y China 28 Mton India 21 Mton Russia 10,5 Mton Turkey 10 Mton Vietnam 4 Mton There are plans for future rapid expansion of EAF capacity worldwide Available tradable scrap has been flat since 2004 (~100 Mton/y) Many countries including China, India and Russia restrict scrap exports Consequences The gap between EAF production and the amount of tradable scrap has grown and will continue to grow USA, EU and Japan may be forced to restrict scrap exports to protect domestic producers 7

8 Raw Material impact on Steel Industry Raw Material Cost for producing 1 ton of Hot Rolled Coil (by BOF technology) USD % Iron Ore Coking coal Scrap Split of total EBITDA in the value chain Steel Coking Coal Iron Ore Source: Eurofer, SBB, McKinsey analysis

9 Metallic sources in the steel industry The market for EAF-based production of identified products in West and East Europe requiring HQM is around 60 Mt/a. About 30 Mt of this is based on High Quality Material. Most of it is new scrap. New scrap and pig iron can be substituted by DRI/HBI. Today these companies have the following split of metallic sources: Local new scrap Imported new scrap Imported pig iron Imported DRI/HBI Recycled scrap Source: Metal Strategies Inc 9

10 Potential customers The potential customers are found widely across the European continent with an approximated yearly production totalling over 60 Mt/a. Origin of main potential customers Number of producers Mt/a Spain 8 6,7 Germany 10 10,0 Benelux 4 4,5 Italy 10 6,7 Scandinavia 4 2,7 Total approximately 30,6 Majority of sales through long term off-take contracts, rest through reputable traders, well established in the market Source: Metal Strategies Inc 10

11 Goals and Challenges Goal: Produce 1,6 Mt/a of HBI at a carbon level of up to 2%. The IRONMAN HBI Plant shall be a green HBI plant meeting very high standards of: health, safety and environmental (HSE) performance, CO 2 capture and low emissions produce high quality HBI products. The plant shall operate at highly competitive cost, be fully automated and designed for high availability and easy maintenance. Challenges: Green Plant meeting the environmental regulations from Norway Briquette DRI with 2% carbon 11

12 Project Promoters Deliver from Kiruna, Sweden ore pellets by sea. The site is located within one day of sailing from the iron ore port of Narvik, Norway. Off-taker of part of the HBI production for the use in its own metal powder production plant in the south of Sweden. Operator of the site, where an existing gas pipeline from the off-shore gas field Heidrun is reaching the shore and a large methanol plant is already in operation. The existing facilities will allow supplying certain utilities to the HBI Plant and both the existing methanol plant and the HBI Plant will be able to share certain services. 12

13 Location Transportation Photo: LKAB Photo: LKAB Photo: Öjvind Hagen/Statoil Photo: Heine Schjölberg//Statoil

14 The Process Direct Reduced Iron / Hot Briquetted Iron CO2 9 7 Process water 3 Iron ore 1 CO2 capture 8 Fuel Gas cleaning 6 10 Oxygen Reactor Natural gas 4 Heater/ reformer Flue gas DRI 12 HBI 14

15 HBI Plant Lay out 15

16 Time schedule 16

17 CO 2 emissions for the two steel making routes CO 2 emission with traditional natural gas based production of DRI/HBI CO 2 emission with the IRONMAN process and the capturing and storing of CO 2 emissions 17

18 DRI/HBI production maximising value contribution of the natural gas The value contribution per kg CO 2 emissions is more than doubled with the use of natural gas for DRI/HBI production compared with Maximising the value contribution of natural gas electricity production (NOK/kg CO2) > 2 NOK/kg CO2 DRI process 500 kg CO2/ton Melting stock for steel production (value addition) NOK/ton Natural gas < 1 NOK/kg CO2 Gas turbine 400 kg CO2/MWh Electricity 350 NOK/MWh 18

19 Business Concept Additional Investor(s) Investors: Sponsoring Partners Iron Ore Natural gas contract Equity/Profit Sales contracts Sales revenues Buyers DRI Buyers Fines Lease and Service Consortium Synergies/ BOO supplies Land lease Pier lease CO 2 disposal NEWCO Asset Owner and Marketing of production 19