CHAYI'ER IV ENERGY CONSERVATION IN THE INDIAN IRON AND STEEL INDUSTRY

Transcription

1 CHAYI'ER IV ENERGY CONSERVATION IN THE INDIAN IRON AND STEEL INDUSTRY

2 CHAPfER IV ENERGY CONSERVATION IN THE INDIAN IRON AND STEEL INDUSTRY 4.1 INTRODUCTION The Indian iron and steel industry has been studied as an aggregate macroeconomic sector in the previous chapter. The issues of energy substitution and energysaving technical change in the steel industry have been addressed by an econometric approach. The substitutability of energy as a factor ofproduction vis-a-vis other inputs like capital, labour has been the essence of energy conservation. In this chapter, the same issue has been dealt at a micro-level, with reference to specific technological routes. Emerging technological routes of steel making as well as the existing ones have been studied and compared in the light of their energy-saving potential and substitutability of energy by other factors. Alternative technologies of steel manufacturing have different patterns of energyuse and hence different cost implications. Energy conservation in terms of the physical quantity of use cannot be the end in itself. The trade-off between energy and other factor costs in the longrun is one of the ultimate criteria for the nation's choice of technique. Minimisation of the economy's resource cost in a broader socio-economic sense, is the basis of the choice of technological routes of steel production. A process-wise analysis of alternative steel-manufacturing routes has been carried out to estimate and compare the energy conservation potential of steel making in India at the plant level. This chapter starts with an overview of the technological perspectives of the Indian steel industry. Technical changes which have taken place in the production 4-1

3 process over the last few decades and the emerging technologies have been discussed subsequently. The selected technological models under study along with their energy balances and operational details have been furnished thereafter. The long run marginal costs per unit of final output have been worked out for each model option by linear cost minimisation exercises. Further calculations of capital servicing charge have been carried out to attain the final costs for comparison across options. The ultimate conclusions depend upon the thus obtained optimal cost figures along with the physical energy usage in the respective processes. 4.2 THE INDIAN IRON AND STEEL INDUSTRY: PERSPECTIVES ON TECHNOLOGY The Indian steel industry has gone a long way in the process of development in the twentieth century. First installed in 1907 in Jamshedpur, it has gradually grown as a basic infrastructural sector, later under state leadership. The second five year plan ( ) adopted the strategy of import substitution and industrialisation and the public sector steel plants came up as a result. The technology in these plants has been that of integrated iron and steel manufacturing. Other than the integrated iron and steel plants at Bhillai, Bokaro, Rourkela, Durgapur and Burnpur under the Steel Authority of India Limited (SAIL), there are special steel plant at Salem, alloy steel plant at Durgapur and the Vishakhapatnam Steel Plant as a separate public company. Some of the performance indicators of the Indian steel sector are reported in table

4 Item Thble-4.1: Steel Production in India, Unit Quantity Crude Steel production Finished Steel Production Output of Secondary Producers Domestic Consumption of finished steel 5. Net Import 6. Annual growth rate of crude steel 7. Annual growth rate for finished steel 8. Per capita consumption of crude steel 9. Product-mix (flat to non-flat) 10. Availability of re-rollable scrap (projected for ) '000 'tonnes '000 tonnes '000 tonnes '000 tonnes '000 tonnes % % Kg. per 23.9 ::apita 45:55 '000 tonnes 1253 Sources: ( 1) Statistics of Iron and Steel in India, SAIL, New Delhi, (2) Sengupta R. P., The Indian Steel Industry, Parts I & II, ICRA, 1994 & India's share in the crude steel production of the world stands at a mere 2.30 percent (1991). Domestic consumption of crude steel is million tonnes i.e., 2.73 percent of the world total, giving a per capita consumption of 25.6 kg. In 1991, India's export of steel (finished and semi-finished taken together) was 0.40 million tonnes, giving a 0.3 percent share in the world total, while her import was 1.0 million tonnes i.e., 1.2 percent of the world total (Sengupta 1994). However, the projected domestic demand and export by are estimated at a level as high as million tonnes and 5.2 million tonnes respectively implying an aggregate demand of 31.0 million tonnes (Sengupta, 1994). To what extent will that be possible to achieve would depend on the technical efficiency of brownfield plants as well as green field options and their economic viability. The steel manufacturing process varies in terms of the scale of operation, material and energy-usage and type of fuel across Indian steel plants. The Indian steel industry 4-3

5 has traditionally been dominated by integrated iron and steel plants. The main plants in the country have been within the capacity range of 1.6 to 4.0 million tonnes (mt) per annum, operating under the conventional Blast-Furnace-Basic Oxygen Furnace (BF-BOF) route. The secondary steel sector, on the other hand, operated at small scales with mostly scrap-based electric arc furnace and also used less efficient and out-dated equipments, resulting in lower efficiency in the use of energy and materials. The integrated plants also used outmoded techniques of steel-making, viz., the open-heanh furnace, and consumed more energy than most of the modern steel plants. In steel casting too, lower energy-efficiency was experienced in Indian steel industry because of the adoption of ingot casting instead of the modern methods of continuous casting or thin slab casting. The Indian steel sector thus remained technologically backward till late. The respective proportions of different steel making processes in India's total steel production in were 43.7 percent for basic oxygen furnace, percent for open hearth furnace and 28 percent for electric arc furnace. Only 14.3 percent of total cast steel was manufactured via continuous casting. Technological changes started to come up in the Indian steel industry only after the oil price hike in 1973 and later in The hike in oil prices heralded a new energy price regime, including those of fossil fuels like coal. Energy-saving technical change became necessary for industries as well as other energy-consuming sectors of the economy. The massive energy-using steel industry too had to upgrade the technology in order to reduce its energy consumption. As a lagged effect of the oil shocks of the seventies and eighties, the steel industry along with others, adopted energy conservation measures. Energy saving in iron-making by improving the coke rate and material yield was introduced. In steel making also, the Basic Oxygen Furnace (BOF) has replaced the 4-4

6 open hearth and twin hearth furnaces. Continuous casting in place of ingot casting has further improved the use of energy in the process. Apart from the changes within the integrated plants, there has been an overall change in the technology composition of the sector. Since 1980s, steel melting in modern Electric Arc Furnaces (EAF), followed by continuous casting has come up as an important technology all over the world. While the integrated plants are mostly in old conditions, face threats of high fixed costs and have limited flexibility in technical upgradation, the EAF technology offers process control, flexibility and lower capital servicing charge. Although the EAF technology is practiced mainly as a scrap-based route in the western world, it also has the provision for being Integrated with Direct Reduction of Iron (DRI) backward at the iron-making stage. The scrap-based-eaf or DR-EAF routes have thus become globally attractive for the last two decades. Lower cost of capital servicing or fixed cost, higher flexibility in the choice of scale and energy economy have been the driving forces behind the initiation of technical changes,in the international steel scenario. The other reasons include the environmental concern of the 1990s and the threat from new products as substitutes of steel. The integrated steel plants cause more pollution, mostly from the coke oven plant and sinter plant which give rise to a lot of emission of total suspended particles and other hazardous elements. Moreover, special grades of steel need to be produced if the industry has to face the competition with substitutes of steel. The other factor behind such change in technology is in respect of the raw material quality and preparation of raw material burden for the furnaces. In view of the high ash/low grade coking coal availability in India, it also becomes important to search for technologies based on non-coking coal or other energy resources which may be used 4-5

7 as reducing agents. The coal-based DR-EAF route provides this option. The other new technology which has emerged and deserves special mention is COREX-BOF which uses a smelting reduction process based on non-coking coal. Use of the byproduct gas from the COREX unit in additional power generation has made this new route more attractive. Other reduction processes following the principle of In-Bath Smelting or involving improvements in the Blast Furnace processes in the form of oxygen blowing etc., are also now in the various stages of development. In view of these global technical changes in the steel manufacturing process, it is interesting to study some of them as alternative technological routes of steel production in India as relevant options. For the greenfield capacity of steel making in India, six technological models, comprising the old, new and emerging, have been studied. The focus has been on the relative position and comparison of these alternative routes in terms of energy consumption, potential for conservation and the possible extraction-cumutilisation of byproduct fuel. The traditional and the newly emerging technology options of iron and steel manufacturing have been described in the following section. While the technological routes relevant in the Indian context have been described in detail, mention has been made of some new routes emerging in the world steel scenario. 4.3 THE IRON AND STEEL MANUFACTURING PROCESS The Conventional BF-BOF Route This is the most widely adopted and existing technology of large-scale steel making all over the world. The basic process can be divided into four parts. (a) (b) Mining and preparation of raw materials; Reduction of iron ore to pig iron; 4-6

8 (c) (d) Refining of pig iron to steel; Casting and rolling of steel to final products. Iron ore is extracted in open-pit mines by blasting and then is crushed and sized near the mines. The lump ores are charged directly to the blast furnace while fines go to the sintering plant. Sintering is the process of fusing ore of different fineness and quality into porous and coherent lumps as agglomerates. This results in high-quality and uniformly-sized self-fluxed sinter, ready for charge in the blast furnace (BF). Coke, iron ore and/or sinter and similarly handled limestone, dolomite are charged at the top of the blast furnace. A blast of hot air is forced in through the tuyeres of the furnace near the bottom and forced up through the charge. The ores are thus reduced by chemical reactions i.e., oxygen is removed from the ferrous oxide (Fe ) and the purer iron is separated in molten form. This is the pig iron which may go partly or fully for sale. The molten hot metal then comes to the steel melting shop. Steel making is oxidation while iron-making is reduction. Iron is refined into steel with the help of oxygen blowing in the basic oxygen furnace (BOF), also known as the LINZ-DONAWITZ convener. Some steel scrap and ferro-alloys are also used as coolant. The liquid steel (after 45 minutes of heating time) is cast into ingot moulds to give steel ingots. Conventionally, these are transported to the soaking pits and after successive hot and cold rolling, comes out the finished flat or non-flat saleable steel products. The BF-BOF process uses coking coal as the basic reducing agent. The quality of coal and its ash content decides the productivity of the blast furnace to a large extent. Other hydro-carbons such as furnace oil, light diesel oil, low sulphur heavy stock etc. are also used. Electricity requirement is met partly by the captive plant and partly by 4-7

9 the grid. The byproduct gases from the coke oven, blast furnace, LD-converter (BOF), viz. Coke Oven Gas (CO-gas), Blast Furnace Gas (BF-gas), and LD Gas respectively meet the energy demand of the plant to a large extent. The average energy consumption in a typical BF-BOF plant in India is 9.2 GCal per tonne of crude steel. The above description shows that this route of iron and steel making not only consumes a lot of energy but also generates in the form of byproduct gases. This makes the process significant from the viewpoint of energy conservation. The byproduct energy can be usefully utilised throughout the plant, their wastage minimised and further used for additional generation of power, if possible. However, it remains more appropriate for large-scale production in terms of the technical considerations and capital-intensity. Although new routes have come up as competitors of the traditiopal route, the integrated plant still retains its strong candidature in terms of the quality of product, wider range of output and engineering base The Gas or Coal-based Direct-Reduction Electric Arc Furnace Route (DR-EAF) This technology is based on the production of sponge iron in the OR-plant by direct reduction of iron ores and pellets. The reductant used is natural gas or non-coking coal. This gives a definite advantage over the BF-BOF route by totally replacing coking coal especially in a country like India. The sponge iron is melted in the electric arc furnace (EAF) along with a charge of steel scrap. The molten steel output is cast into crude steel and rolled accordingly to fiat or non-fiat products, as in the integrated plants. The use of pellets in the gas-based DR plant is customary. The share of steel scrap in the EAF is higher than that in the BF-BOF route. The same fuels used as reductants can also be used throughout the plant. The power demand can be met partly by the outside 4-8

10 supply and partly by in-house generation. The chief advantage of the DR-EAF technique is its flexibility in scale and replacement of coking coal by non-coking coal or natural gas. It is the availability and price of energy resources that will decide the economic size of the plant. Because of these various advantages, DR-EAF has become a worldwide established technology of steel production The Scrap-based EAF Route This technology of secondary steel production has become dominant in the developed countries during the nineties. Purchased sponge iron or hot briquetted iron is used in the EAF along with rerollable steel scrap. The downstream operations may be continuous casting as in the earlier two routes. The power requirement is met by the utility system. However, this may not entirely be comparable with the other routes which include both iron making and steel melting The COREX-BOF Route The basic feature of this process is smelting iron ore into hot metal using noncoking coal and oxygen as fuel in the shaft furnace. This process has a pre-reduction shaft furnace which is vertically fitted above a melter-gasifier. Coal is burnt with oxygen in the melter-gasifier. Any combination of iron ore, pellets and/or sinter is charged in the pre-reduction shaft. The pre-reduction takes place in the shaft where heating is done by the outlet gas of the melter-gasifier after gas cleaning and dirt separation. The remaining reduction takes place in the melter-gasifier, giving the outlet gas and the liquid sponge iron. The hot metal output of the COREX-unit, which is similar to that of the blast-furnace, is then ready fur the steel shop. The byproduct COREX gas of high heat content is the specific energy-advantage of this process. It can be used in the rest of the plant and can also provide energy for other uses. The COREX gas may be used for 4-9

11 alternative purposes, such as, power generation in the conventional route or combined cycle, use in fertiliser plant, use in a DRI plant etc. The other advantage of this process lies in the use of non-coking coal as reductant and energy resource. The steel making process is the same BOF technology, followed by continuous casting. The scale option is flexible too, thus giving another economic advantage. The COREX-BOF and DR-EAF routes involve lower environmental cost by avoiding coke-making and sintering which are the prime sources of pollution. These are associated with lower emission of pollutants and provides a cleaner atmosphere surrounding the plant Other Emerging Technologies (a) In-bath Smelting Reduction Process Processes such as Hismelt, Cyclone Convener Furnace etc. are the newly coming up routes of in-bath smelting reduction. After the pre-reduction of ore, the final reduction takes place in the bath of the converter. These techniques offer greater heat efficiency because of the two tier process which utilises the maximum available heat from the given fuel. Coal and/or natural gas is injected into the bath and burnt with oxygen, often with hot air for post-combustion. These routes do not use coke and optimises the energy-use. However, this is not yet practiced commercially. (b) Full Oxygen Blast Furnace Process (FOBF) Improvements in the iron-making process in the blast furnace require reduction of coke consumption, improvement of energy efficiency and use of oxygen-enriched blast. The FOBF process is. based on the use of pure oxygen and high degree of prereduction. This route too is yet to be operational. 4-10

12 (c) Balanced Oxygen Blast Furnace Process (BOBF) In the BOBF route, oxygen-enriched blast is injected to the blast furnace along with coal dust. Similar to FOBF, this process also has pre-reduction of ore but avoids extreme temperature fluctuations between the top and the bottom of the blast furnace. The proportion of oxygen to nitrogen in the blast is crucial for the efficient operation of this technique and its techno-economic viability. Since these three aforementioned emerging technologies are yet to be established as commercial options even at the global level, they have not been considered in the Indian context. With more mature research and development, these may develop as practicable options. Accordingly, their notional cost estimates may also stabilise along with the operational parameters. Therefore, as alternative greenfield options in India today, it is only the BF-BOF, DR-EAF, scrap-based EAF and COREX routes which seem to be more appropriate and hence have been studied here. The specific technological models studied in the thesis are presented in the next section along with their material flow, energy balance and operational parameters. 4.4 TECHNOLOGICAL DETAILS OF THE MODELS UNDER STUDY As has already been mentioned, six models of steel making have been analysed from an energy-economic point of view. Each model defines a technological option of longrun supply of steel from new/greenfield plants. The manufacturing technique, scale of operation and energy requirement as reductant a~ well as fuel for the plant play the crucial roles in deciding and choosing the technology. A typical steel plant at a greenfield site refers to the process from iron-making to steel melting and finally to finished steel rolling. Only the scrap-based EAF route does not have the first part of an integrated plant, viz., reduction of iron ore. All the 4-11

13 options are &nsidered with the same annual final output of hot rolled coil (HR coil), in order to avoid the non-comparability due to product-mix and operational difference in the rolling mills. It is not only the choice of reductant but also the use of byproduct gases in the downstream shops that differ across techniques. Therefore, a uniform finished product has been taken for all the alternative options. However, the scale option is not the same for all. For the purpose of comparison, all analyses have been made per unit of final output. Table 4.2 summarises the six options for alternative steel-making technologies in greenfield sites of India. The following sub-sections describe the technical parameters and assumptions of the models under study. Table 4.2: Description of Options for Steel-Making at Green-field Plants in India Model Route Reductant Annual Final No. Capacity Product 1 BF-BOF Coking coal 1.0 mt HR Coil 2 DR-EAF Natural gas 1.0 mt HR Coil 3 DR-EAF Natural gas 0.5 mt HR Coil 4 DR-EAF Non-coking coal 0.5 mt HR Coil 5 EAF (Scrap- 0.5 mt HR Coil based) 6 COREX-BOF Non-coking coal 0.5 mt HR Coil Note: (1) All models are considered with continuous thin-slab casting facility. (2) 100 percent imported coking coal for BF-BOF route is assumed The BF-BOF Technology (Model 1) Model 1 describes an integrated iron and steel manufacturing process along the conventional BF-BOF route. The net hot metal production of one 2000 m 3 blast furnace is million tonnes per annum. The coke oven complex comprises of one battery of 69 ovens, each 5 meters tall and produces mt per year of gross coke. The 1 x 180 m 2 sinter plant produces mt of sinter for the blast furnace. Out of every 1 mt hot metal tapped from the furnace, mt is diverted for pig casting to be produced and 4-12

14 sold as pig iron. The rest of the hot metal goes to the steel melting shop after desulphurisation. The two 120 tonne basic oxygen furnaces, working one at a time, and one 120 tonne ladle furnace for refining, produce 1.04 mt of liquid steel. The model assumes a single strand thin slab caster and a six-stand hot rolling mill. The plant finally produces 1 mt of HR Coil and mt saleable cold pig. The auxiliary services include boiler house for steam generation, oxygen plant for air separation, water treatment plant, air compression unit, lime Calcining plant and raw material handling plant. The model also allows for a captive power plant of 2 x 30 MW capacity, operating at 0.68 plant load factor. The byproduct gases from the coke oven, blast furnace and LD-converter are used as fuel for steam behind power generation. Purchased power from the grid is also available over and above the in-house supply. The detailed material flow is presented in chart The model is based on the assumption of 100 percent imported coking coal in view of the low quality of indigenous coking coal, with a maximum ash content of 10 percent and volatile matter of 26 percent. Limestone (BF'grade) is taken as the major fluxing matenal. Table 4.3 provides the detailed input coefficients for the usage of the materials. All the input usage coefficients for each and every material to the production process in every shop have been computed in the framework of industrial activity analysis. 4-13

15 Iron ore U'I'Clll Iron ore.,_ Coal Coal~' 123,900 Limp Ore , ,00 1, Sinter plrll 1 )( 180 M' I Coke <Min Complex 1 )( 69 Ovens, 5.0 M Tall l BF Sin&er Skip SinlBf 1,500.cxx Blast furnace 1 )( 2000 M' Gross hoi mecal 1,239,000 Net hoi metal Coke breeze to sinter plant Oxygen plant 1 >< 400 Vd AMP plant 2 x 50 Vd I Oesulphurized metal 1,019,000 Lime 50,000 Dolo C,OOO Desulphurillllion &mixer I Basic oxygen tvrnace 1/2 )( 120 t 1,040,000 Thin slao caslef and six s!tand hot rolling finishing c:omple 1 HA coils ,00) Pig casting machine 2 )( 1700 tid Cold pigs 42,000 ~ TOial.:rap 63,500 Purchased ''------~ SCiliP Return scrap 28, , CHART 4.1 Flowchart of the I mt/yr BF-BOF-TSC Route (Model I J (All figures 111 ton/yr on net ur dn basis) 4-14

16 Table 4.3: Material Inputs and Energy Usage in the BF-BOF Route of Steel-Making Particulars Unit Input Coefficient 1. Usage of Raw Materials (a) Imported coking coal for coke (b) Iron ore fines for sinter (c) Limestone, dolomite, manganese and quartzite (d) Iron ore lump for BF (e) Steel scrap and ferroalloys for the steelmelting shop 2. Consumption of Energy (a) Boiler coal (b) Steam (c) Electricity (d) CO-gas (e) BF-gas (f) LD-gas (g) Gross Energy consumption 3. Recovery of Energy (a) CO-gas (b) BF-gas (c) LD-gas (d) Crude Tar and Benzol (e) Total Recovery of energy 4. Net Energy Consumption Ton/ton of gross coke Ton/ton of sinter Ton/ton of sinter Ton/ton of gross hot metal Ton/ton of LD-steel Ton/ton of steam Ton/ton of HR coil MWH/ton of HR coil GCal/ton of steam GCal/ton of steam GCal/ton of steam GCal/ton of HR coil GCal/ton of coke GCal/ton of hot metal GCal/ton of LD-steel Ton/ton of coke GCal/ton of HR coil GCal/Ton of HR coil Note: The calorific values of various fuels are as follows: Coking coal MCal/Kg.; Boiler coal MCal/ K~.; CO-gas-4.3 MCal!Nm 3 ; BF-gas-0.83 MCal!Nm 3 ; LD-Gas-2.0 MCal/Nm ; Steam M.Cal/Kg; Electricity" MCal/KWH. The fuel inputs to the process include coking coal and coke breeze to the ironreducing process in the blast furnace. Low-grade boiler coal is used for steam generation along with CO-gas, BF-gas, LD-gas which are recovered as byproduct energy 4-15

17 sources. Electricity is captive as well as purchased from the grid. Some amount of crude tar and benzol also come from coke making. The input and recovery of energy have been given in Table 4.3 along with the usage of raw materials Models for DR-EAF Technology (Models 2, 3, 4) Models 2 through 4 describe technology of iron-making in the direct reduction plants and steel making in the electric arc furnaces. Thin slab casting and hot rolling mills follow the production of liquid steel. These models do not use coking coal as the reductant. Natural gas or non-coking coal is used for that purpose. The basic shop activities therefore reduce to only four, namely, direct reduction of iron. EAF-steel making, thin slab casting and hot rolling. In other words, this technology replaces cokemaking, sintering and hot metal production by a single process, viz., direct reduction of iron. The other facilities remain the same except for the absence of the oxygen plant. The oxygen requirement is met by its purchase from outside. Electricity is still allowed to be partly captive and partly purchased. Model 2 refers to a natural'gas-based technology with 1 mt HR coil production per annum. The two mt OR-plants produce 0.88 mt of OR-iron (ORI) with the only inputs of iron ore (lump and pellet) and natural gas. The EAF unit has two tonnes Ultra High Power (UHP) Furnaces followed by two ladle furnaces of similar capacity. The EAF charge requires a total scrap (purchased and return) of mt. The single strand thin slab caster has a capacity to produce mt of slab. The on-line tunnel furnace will join this to the hot strip mill which produces mt of HR coil. The material flow is given in chart

18 763,000 Iron ore pellet Iron ore lump OR plant 2 X 440,000 t Natural gas Purchased scrap R e t u r n s c r a p -~ 1 I I EAF unit 2 X 100/105 t UHP F/C Ladle furnace 2 X 100/105 t 880,000 ORI 1,000, 000 liquid steel Scrap arising 19,200 Thin slab caster 970,000 CC slab ' i I l Online tunnel furnace J 5,800 ' Scrap arising Hot strip mill five strand HR coils CHART 4_2 Flowchart of the I mt/yr Gas-Based DI~-EAF-CC Route (Model 2) (All figures in ton/yr on net or dry basis) 4-17

19 The basic energy source to the process is natural gas, required in the tune of 345 Nm 3 /ton of DRI. The EAF requires merely ton of coke per ton of liquid steel and ton of electrode for the same. Power consumption is MWH per ton of HR coil, including both purchased as well as captive. The captive power plant capacity is taken to be 2 x 30 MW. The net recovery of energy from the process is nil. Model 3 describes a similar technology at a lower scale, namely, 0.5 mt of liquid steel. Unlike the former, it consists of one mt DR plant, one 100 ton Ultra High Power (UHP) furnace in the EAF unit and a 100 ton ladle furnace. The output of the single strand conventional slab caster is mt of slab per annum. Finally, the steckel mill will produce mt of HR coil. Chart 4.3 summarises the material flow for the process. The energy requirements and input usage are the same, as in model 2, if considered at a per unit basis. The power plant size is however smaller, namely, 1 x 30 MW. This model too gives no recovery of energy from the process. Model 4 is similar to the previous one in scale and steel-making facilities. However, the difference lies in the use of non-coking coal in direct reduction of iron. The DR plant involves two rotary kilns each of mt annual capacity. Moreover, this technology does not allow iron ore pellets in the DR plant and uses only lumps along with coal. The material flow, presented in chart 4.4, shows an almost similar process diagram to the previous. 4-18

20 381,500 I ron ore pellet 176,500 Iron ore lump OR plant 1 X 440,000 t 1 I Natural gas 97,100 Purchased scrap DRI 440,000 R e t u r n s c r a p EAF unit 1 X 100 t UHP Ftc Ladle F/C 1 X 100 t liquid steel 31, l Slab custer 1 x 1 Strand 475,000 slab Steckel mill HR coils 451,000 slab CHART 4.3 Flowchart of the 0.5 mt/yr Gas-Based DR-EAF-CC Route (Model 3) (All figures in ton/yr on net or dry basis) 4-19

21 Iron ore lump Coal 356,<XXJ 2 X DR plant -, 150,(X)() t KLIN i 229,100 Purchased scrap ORI (lump + briquettes) R e t u r n s c r a p I EAF & LF 1 X t UHP F/C 500,000 li quid steel j., X 1 strand slab caster 475,(XX) Cast slab Steckel mill I j HR coil CHART 4.4 Flowchart of the 0.5 mt/yr Coal-Based DR-EAF-CC Route (Model 4) (All figures in ton/yr on net or dry basis)

22 The energy balance changes with the use of coal in the DR plant and fuel oil in all the main shops. The coke requirement in steel making is higher too while that of power in direct reduction is less. However, consumption of electrode, steam etc. remain the same. This model too, assumes a 30 MW captive power plant and a net energy recovery of the order of GCal per tonne of HR coil. The material input usage, energy consumption and recovery for the three aforementioned DR-EAF routes are summarised in Table 4.4. A simultaneous presentation of coefficients would make the comparison clear. Table 4.4: Material Inputs and Energy Usage for the DR-EAF Technology Particulars Unit Input Coefficients Model 2 Model 3 Model 4 1. Usage of raw materials (a) Natural gas in DR GCal/ton of DRI (b) Non-coking coal Ton/Ton of DRI (c) Iron ore lumps Ton/Ton of DRI (d) Iron ore pellets Ton/Ton of DRI (e) Ferro-alloys addi- Ton/Ton of Steel tives and scrap (f) Lime stone for lime Ton/ton of lime Consumption of Energy (a) Coke Ton/ton of steel (b) Electrode Ton/ton of DRI {c) Electricity (d) Steam (e) Fuel oil (f) Gross energy consumption MWH/ton of HR coil Ton/ton of HR coil Ton/ton of HR coil GCal/ton of HR coil Note: Calorific values of the various fuels are as follows: Natural gas MCal/Nm 3 ; Non-coking coal MCal/kg; Electrode-8.0 MCal/kg; Fuel Oil MCal/kg. The others are as given in the note of Table

23 4.4.3 Purchased DRI and Scrap-based EAF Technology (Model 5) This route does not refer to integrated iron and steel making. However, a modern steel making process, similar to those in models 2 through 4, is provided in model 5. It uses purchased DRI and scrap for charge in the EAF in a ratio of 80:20. One 100 tonne UHP furnace and the ladle furnace produce 0.5 mt liquid steel from which finally comes mt of HR coil through a process same as earlier. Chart 4. 5 describes the material flow chart of the process. The energy balance of this model is different from the earlier in the sense that DRI now becomes a congealed source of energy, and charged with scrap to the EAF. Purchased DRI is assumed to have a calorific value of MCallkg and a high DRI to scrap ratio of 80:20 implies a high energy intensity of the process. The other significant point in this model is the absence of captive power plant. All electricity requirement of the process is met by power purchased from the utility. Table 4.5 gives the input parameters and energy details of model

24 Purchased DRI 450,000 Purchased scrap 87,100 EAF & LF 1 x 100 t UHP F/C I Slab caster I 1 x 1 strand 500,000 liquid steel 475,000 cast slab R e t u r n s c a p Conditioning Two strand steckel 1, Mill 451,000 HA Coil Cl:!ART 4.5 Flowchan of the 0.5 mt/yr Scrap-Based EAF-CC Route (Model 5) (All figures in ton/yr on net or dry basis) 4-23

25 Table-4.5: Material Input and Energy Usage for the EAF Technology (Purchased DRI and Scrap-based) Particulars Unit Input Coefficient 1. Usage of raw materials (a) Steel scrap Ton/ton of EAF steel (b) Limestone for lime Ton/ton of lime calcining Consumption of Energy (a) Purchased DRI (b) Coke (c) Fuel oil (d) Electrode (e) Electricity (f) Steam (g) Gross energy consumption Ton/ton of EAF steel Ton/ton of EAF steel Ton/ton of HR coil Ton/ton of EAF steel MWH/ton of HR coil Ton/ton of HR coil GCal/ton of HR coil Note: Calorific value of DRI is taken as MCal/kg. The others are as given in the preceding tables The COREX-BOF Technology (Model 6) The COREX process of iron-making, using non-coking coal is a comparatively new technique. Only iron ore lump is charged into the melter-gasifier since the process doe,s not require any sinter and can do without iron ore pellets. The net hot metal production from the COREX unit is mt per annum, of which mt is diverted for pig casting and mt for desulphurisation and steel melting. The steel shop is the same basic oxygen. furnace although of a lower capacity. For 0.5 mt annual production of final output, it is one 65 tonne BOF and a 65 tonne ladle furnace which produces tonnes of liquid steel per annum. The model assumes one single strand conventional slab caster and a two stand steckel mill for hot rolling. Model 6 provides for 0.5 mt of HR coil per annum. Chart 4.6 represents the material flow of the 0.5 mt COREX-BOF technology. 4-24

26 Fluxes 194,000 Umestone Dolomite Quartzite (Gross) 1,073,000 NorKx>king coal (Gross) 1 1 j COR EX C-200) J Iron ore (Gross) Gross hot metal 640,000 Net hot metal 627, MGCAL 1.69 MGCAL Export gas Export gas to outside Oesulphurization & mixer 542,000 Metal PCM 0.51 MGCAL Export gas consumption inside plant BOF 1 X 65 I Desulphurized metal 534, Cold pigs Total y--- Purchased lf _ scrap X 65 t 1, liquid steel Slab casts 1 x 1 - strand 16, ,000 slab Steckel mill two stand 14, ,000 HR coils CHART 4.6 Flowchart of the 0.5 nh/yr COREX-BOF-CC Route (Model 6J (All figures in ton/yr on net or dry basis) 4-25

27 Table-4.6: Material Inputs and Energy Usage for the COREX-BOF Technology Particulars Unit Input Coefficient 1. Use of Raw Materials (a) Non-coking coal Ton/ton of hot metal (b) Iron ore lumps Ton/ton of hot metal (c) Dolomite, lime- Ton/ton of hot metal stone, Quartzite 2. Consumption of Energy (a) Electricity MWH/ton of HR coil (b) Oxygen '000 Nm 3 /ton of HR coii (c) Steam Ton/ton of HR coil (d) CO REX gas GCal/ton of HR coil (e) LD gas GCal/ton of steam (f) Gross Energy GCal/ton of HR coil consumption 3. Recovery of Energy (a) COREX gas GCal/ton of hot metal (b) LD gas GCal/ton of liquid steel 4. Net Energy GCal/ton of HR coil Consumption Note: Calorific value of CO REX gas is MCal/Nm 3. The others are as given in the notes of Tables 4.3 and 4.4. A distinct advantage of route is the high arising of byproduct COREX gas. The 0.5 mt COREX plant generates about 1.69 million GCal of export gas with a high calorific value of MCal!Nin 3. Based on this rich surplus gas, the plant can run the power plant for own requirement and can also generate exportable surplus power. The model assumes a total of 100. MW power generation capacity, one of 40 MW and 4-26

28 one of 60 MW, operating at 68 percent plant load factor. The other source of energy recovery is the LD-gas from the steel-melting process. The auxiliary services include the oxygen plant for air separation, air compression unit, water treatment plant, and the lime calcining shop. The material and energy balances for this route has been summarised in Table 4.6. All the material flow sheets, energy balances and related data have been collected from the Metallurgical and Engineering Consultants of India Limited (MECON), Ranchi. The detailed input coefficient matrix for linear activity analysis has been computed for each model on that basis. 4.5 THE LONGRUN MARGINAL COST OF SUPPLY: COST OF ENERGY, LABOUR, MATERIAL AND CAPITAL INPUTS The long run marginal cost of supply is the primary basis of comparison across alternative techniques of production. As has been discussed earlier, it is the comparison of cost due to the basic factors of production, viz., capital, labour, energy and materials, which helps in deciding about the energy-economic technology and substitutability of energy vis-a-vis other factors. However, the real choice question is not only in terms of the cost, but also the physical usage pattern and the fuel type to be used. Thus, the choice of technique would also depend on the choice of fuel from among coking coal, non-coking coal, gas or oil, especially in a country like India. The purchase of utility power as against captive generation is another element in the choice decision. The comparison in terms of overall energy consumption, recovery of energy, especially power, also becomes significant for assessing the scope of energy conservation in steelmaking technology. While the energy-use pattern has been discussed in a later section, the following section develops an optimisation model to work out the efficient works cost 4-27

29 of producing 1 ton of HR coil along each of the six aforementioned technological routes. The works cost accounts for those of raw materials, labour and energy. The cost of fixed and working capital has been dealt separately. The total cost is a sum of these components. The substitution possibility among these factors and the possible trade off.. if at all, in terms of their cost implications, has been analysed in this study Works Cost Calculation by Linear Optimisation The works cost has been estimated by a linear optimisation exercise (Kambo) for each model option of steel making at greenfield sites in India. Detailed input coefficient matrices matrix of shop activities have been constructed from the industrial process flow sheets and made use of in formulating the objective function and constraints of all the models. The complicated flows of materials and energy balances have been utilised to build up the activity matrices along each model option. The optimisation exercises have been based on an activity analysis framework. However, the scope of intra-process optimisation has been limited and the linear optimisation technique has been mainly computational. The optimisation models have been run for estimating cost and energy use in a typical plant for each technological option separately. Model 1, describing the BF-BOF route, consists of twenty shop activities, of which the main production departments are ~ coke making, sintering, iron-making, pig casting, steel melting, slab casting and hot rolling. The other activities arise from the auxiliary services and their sale and/or purchase, if required. The primary raw materials to the coke ovens, sinter plant, blast furnace and LD converter comprise the cost of material inputs, given 'their prices. The cost of fuel includes those of primary purchased fuels like boiler coal for steam. The costs of purchased power from the utility and raw water have also been taken into account as cost of utility items. The cost of reductant 4-28

30 has been treated as a raw material to the blast furnace. The byproduct arisings of the process, viz., coke breeze, granulated slag, scrap, benzol and tar products etc. have been given credit at their respective sale prices. The credit items in that sense constitute a negative cost. The other component of cost is that due to the operation of the plant, which includes labour, overheads and other operating costs. The total works cost has thus been formulated as a sum-total of (a) (b) (c) (d) primary materials cost; fuel and utility cost; labour and operating cost; net of the credit due to byproducts arising and saleable intermediary (say, pig iron). The optimisation problem has been framed as one of minimisation of the cost thus defined. The constraints have been generated from the inter-shop balances of (a) (b) (c) intermediate materials; intermediate fuel items including byproduct gases like CO-gas, BF-gas, LD-gas etc. ; and,, intermediate utility services such as air separation in the oxygen plant, steam raising, air compression, water treatment, self-generation and distribution of power etc. Apart from the inter-shop balances of material and energy (constraints of less than or equal to type) there also exist (d) a final output demand; and (e) a capacity constraint of the power plant operating at a load factor of The optimisation problem can thus be summarised as: Minimise costs of materials plus fuel plus utilities plus operations net of credit due to byproduct arising subject to constraints due to input -output balances for intermediate resources of the plant, capacity and nonnegativity of the activity levels. 4-29

31 Symbolically, minimise C = Pm Mx + Pu Ux- Pe Ex+ p 1 Fx +Po Ox Subject to Bx :=::;; 0, Hx :=::;; 0, Ax:=::;; 0, Gx;:::: I, (1) X;:::: (2) where C: Cost of producing 1 ton of HR coil; x:. Vector of shop activities; M: Input coefficient matrix of raw materials usage; U: Input coefficient matrix of purchased non-fuel utilities usage; F: Input coefficient matrix of purchased fuel usage; E: Input coefficient matrix of credit arising; 0: Input coefficient matrix of operating items; Pm: Price vector of raw materials; > Pu: Price vector of utilities; P( Price vector of fuel items; Pe: Price vector of credit items; p : 0 Price vector of operating items; B: Input coefficient matrix of intermediate materials; A: Input coefficient matrix of intermediate utilities; H: Input coefficient matrix of intermediate fuel items; G: Final output coefficient matrix. 4-30

32 The elements of the matrices mentioned are input coefficients to particular shop activities. An intermediate shop output is represented as a negative input coefficient in such matrices. The final output is represented as a positive entry. The elements in the objective cost function represent the cost components relating to materials, utilities, fuel, operation and maintenance and a negative cost for credit arising. The first three constraints refer to the inter-shop balances, the fourth to the demand for final output and the fifth implies non-negative levels of activity in the shops. Similar optimisation problems have been formulated for the other five models as well. The similar composition of cost according to the respective input and energy usage and credit arisings has been worked out for each model. The constraints have similarly been formulated according to the inter-shop balances, final demand and capacity. However, all the problems have been formulated for the final output at the level of I ton of HR coil irrespective of their total capacity. The total number of shop activities also differ from one technology to the other, depending on the type of iron reduction unit and steel melting shop. The utility services are also not the same across the technologies and the cost and/or constraints have been modified accordingly. For example, models 2 through 5 use purchased oxygen, the cost of which is added to the cost of purchased primary non-fuel utilities while in models 1 and 6, own oxygen plants are allowed. Similarly, power also varies in its role as a wholly purchased item (model 5) or a partially purchased and partially captive item (models 1 through 4) or an entirely in-plant item (model 6). The constraints modify accordingly. The per unit purchase prices of raw materials, fuel items, utilities and sale prices of credit items are evaluated at mid 1994 prices. Table 4. 7 shows the unit rates of the major raw materials and other items used in the various routes. 4-31

33 Table 4. 7: Unit Rates of Materials, Services and Auxiliaries (Mid 1994 prices) Item 1. Primary Materials Including Reductants Unit Unit Price (Rs/uni t) (a) Coking coal for BF-BOF (imported) tonne (b) Non-coking coal for DRI tonne {c) Non-coking coal for COREX(imported)tonne (d) Iron ore fines for BF-BOF tonne (e) Iron ore fines for DRI (f) Iron ore lump for BF-BOF tonne tonne (g) Iron ore lump for DRI (gas-based) tonne (h) Iron ore lump for DRI (coal-based) tonne (i) Iron ore lump for COREX (j) Iron ore pellets tonne tonne (k) Dolomite for BF-BOF and COREX tonne (1) Limestone for BF-BOF and COREX tonne (m) Limestone for DRI (coal-based) tonne (n) Manganese ore for BF-BOF (o) Quartzite for BF-BOF tonne tonne (p) Quartzite for DRI-EAF tonne (q) SMS Ferro-alloys and additives (r) Natural gas for DRI (gas-based) tonne '000 Nm Fuel, Services and Auxiliaries (a) Electrode (b) Power (c) Raw water (d) Fuel oil (e) Oxygen (f) Boiler coal 3. Credit Items (a) Coke breeze (b) Granulated slag (c) Scrap iron (d) Scrap steel (e) Ammonium Sulphate (f) Benzol Products (g) Tar products (h) Cold pig tonne MWH '000 Nm 3 tonne '000 Nm 3 tonne tonne tonne tonne tonne tonne tonne tonne tonne The linear optimisation programmes for all of the six models, formulated as explained above, are provided in Appendix A-4. The specific constraints referring to 4-32

34 various primary and intermediate inputs and shop activities for the six models will be clear from a look at the optimisation problems. The linear programmes were solved using the computer package LINDO (Linear Interactive and Discrete Optimiser) Results of the Optimisation Exercise and Sensitivity of Cost with Fuel Prices The solutions of the optimisation problems provide the minimum value of the objective function, viz., the works cost of producing one tonne of HR coil for each route separately. The levels of shop activities necessary for sustaining the unit level of production are also obtained from the results. The cost figures have been presented in Table 4.8. It is important to study the sensitivity of the obtained optimal costs to variations in fuel prices. Sensitivity data are a valuable qid to the evaluation of the robustness of the results to such fluctuations. Furthermore, the sensitivity analysis has been carried out with the objective of studying the variation in merit ranking of the technological options due to variations in fuel prices against the merit ranking as per the base prices. For the purpose of this study, variations in all the fuel prices between ±20 percent of the base prices have been considered which may incorporate the possible future fluctuations in fuel prices. This also accounts for any possible variations/errors that might have occurred in the notional fuel prices used in the optimisation. Sensitivity has been considered with respect to the prices of the fuels (i) coking coal, (ii) natural gas, (iii) non-coking coal and (iv) the tariff for purchased power, which are used as fuels in the different technological routes. 4-33

35 Variations in the fuel prices lead to changes in the coefficients of the objective function. Large variations may result in a change in the solution basis, in which case the optimal solution must be re-evaluated. Within a small range of variation, the basis remains unchanged and it is sufficient to recompute the objective function with the changed coefficients (Kambo). The recomputed cost figures for the augmented and diminished fuel price scenarios have been presented in Table 4.8 along with those at the base prices. The percentage variations in cost due to variations in the prices of various fuels and their relative contributions have been presented too. Table 4.8: Fuel-Price Sensitivity of Cost Models Optimal Value of cost (Rs/Tonne) Merit Rank Optimal Value at augmented fuel prices (Rs/Tonne) Merit Rank Optimal Value at S diminished fuel prices (Rs/Tonne) Merit Rank Variation in cost due to fuel price variation (%) ±7.5 ±4.6 ±5.9 ±3.3 ±2.8 ±7.4 Contribution of various in total variation (%) Coking coal ±6.6 Natural Gas ±2.2 ±3.2 Non-coking coal ±7.6 Coal for DRI ±1.5 Purchased Power ±0.9 ±2.4 ±2.7 ±1. 8 Note: (-) indicates non-usage of fuel in the particular technology. ±2.8 +o