🏭 The Economics of Making Iron

🏭 The Economics of Making Iron

After diving into iron ore value chains, I've analyzed several different pathways from raw ore to molten iron.

Key Findings:
🏆 Most Cost-Effective Routes:
Fluidised Bed DRI → EAF: $300/t
Direct Smelting (HIsmelt/Corex): $315/t
DRI Shaft → EAF: $320/t
Traditional BF + Lump Ore: $340/t
💡 Major Insights:
✅ EAF-based routes dominate the cost-efficient end - 5 of the top 6 routes use electric arc furnaces
✅ Lump ore still wins - saves $15/t vs pelletized fines in blast furnace operations
✅ Integration matters - Direct hot metal production beats pig iron remelting by $100+/t
✅ Technology evolution - Newer DRI processes are becoming cost-competitive with traditional blast furnaces

The Surprising Winner? 🥇
Fluidised bed DRI edges out even direct smelting! No pelletizing required, direct fines feed, and lower total processing costs.
But here's the reality check: while emerging technologies show promise on paper, the traditional BF + lump ore route at $340/t still powers most of the world's steel production for good reason - proven scale, reliability, and massive throughput capacity.

Strategic Takeaways:
🔸 Raw material selection has major cost implications
🔸 Process integration captures more value than individual optimizations
🔸Technology choice depends on scale, geography, and risk tolerance
🔸 Energy costs drive 50-60% of total ironmaking economics

The iron and steel industry is at an inflection point. While traditional routes remain dominant, the economics increasingly favor cleaner, more flexible technologies - especially as carbon pricing and ESG factors gain prominence..