Iron Ore and it's future

The magnetic properties of Magnetite make it easier to concentrate than haematite. Magnetite’s exothermic conversion to Fe2O3 is a significant energy input (saving) in sintering and in pellet making. However, the key thing for both magnetite and haematite concentrates is to have high iron grades and low deleterious impurities in the concentrate - then both have high value in use. We believe that the iron grade of the input to the blast furnace will be King in the future, providing it is cost competitive.

Magnetite has been the steel making resource of choice in the USA, Russia and China for many decades and was used before WWII. It has only been from around 2000, where Chinese supplies of domestic magnetite were insufficient to meet total iron units in demand, where imported haematite ores were necessary to meet hugely increased needs. There is, however, still over 300 million tonnes of magnetite used in Chinese blast furnaces every year. There are no significant operational or technical issues with the mining, concentration and use of magnetite.

Social and governmental pressures for a cleaner environment in China are now compelling Chinese steel makers to reassess their sources of iron ore. They are looking for sources of high grade ores and concentrates, to replace the more polluting lower grade haematite and goethite ores which go into sinter. The use of high grade ores and concentrates can significantly reduce all categories of pollution in the steel making process. Use of magnetite concentrates and high grade ores reduces the quantity of high cost coking coal used in the steel-making process. Read this news release in March 2014 by Wood Mackenzie for further details.

In traditional blast furnace iron making, the iron ore is fed to the blast furnace in one of three common forms: Lump, pellets or sinter. All of which are designed (in conjunction with coke) to maintain a porous feed bed in the blast furnace and thus facilitate rapid and uniform reduction of the iron ore (iron oxide) to iron metal.

Lump is the natural - 30mm x +6mm fraction of iron ore that is produced predominantly from Direct Shipping Ore (DSO = ore that is mined and crushed and screened, only, before being sold).

Pellets are made by taking very fine iron ore and/or concentrates (e.g. magnetite) and agglomerating them with moisture and a binder in balling discs or drums to form balls approximately 16mm in diameter. These are then indurated (baked and fused) at temperatures of 1,275 degrees centigrade to form very strong agglomerates for charging to the blast furnace. Pellets are essentially artificial lump.

Sinter is made from the size fraction -6mm produced from DSO and / or beneficiated -6mm fines and concentrates. The fines and concentrates are preconditioned and mixed with fluxes and coke breeze, before charging to a travelling grate (the sinter strand) on which they are ignited. Combustion air is drawn through the sinter bed to fuse the fines into a fused mass that is crushed and screened with the correct sizes going to the blast furnace. Any undersize is returned for more sintering.

Firstly, we need to describe what constitutes DSO these days. Originally, DSO described ore that was simply mined, crushed, and then screened into either lump or fines, which was then immediately sold as such. With many of the good ore bodies in the world already exhausted, producers of DSO are mining “fruit-cake like” orebodies, where the sultanas and raisins represent the ore and the predominating, intervening cake-dough is waste rock (gangue). Mining and blending to produce a saleable product from such orebodies requires multiple cycles of expensive loading and truck hauling, and intermediate stockpiling. A large proportion of what is currently called “DSO”, is actually beneficiated (beneficiation = to concentrate or make better) because even expensive selective mining cannot deliver the grade required by the steel makers without some beneficiation.

Studies1 have shown that uniformity and favourable geometries of the Braemar Iron Formation orebodies should allow very simple and cheap mining with the gangue separated in the concentrator, thus yielding a consistent and very high grade, high quality product at a very low cost.

1  Based on Lodestone Equity Group Conceptual Feasibility Studies

Yes, the proportion of ultra fine ores and magnetite concentrates used in conventional iron ore sintering can be over 50% in many steel mills around the world, including those in Brazil, China and Japan. This is achieved by the addition of lime and the relatively inexpensive processes of micro-agglomeration (pre-agglomeration) before the material is added to the sinter plant feed stream. We believe the steel industry has reached a cross over point where the benefits of high grade concentrates, far more than off-sets any perceived benefit of using lower priced but increasingly inferior Pilbara and Minas Gerais (Brazil) ores. Incidentally, these often contain a very significant proportion of ultra fine material. Additionally, many steel mills, particularly in China, will continue to run pellet plants to take advantage of the raised capacity that pellets provide in the the blast furnace, versus other iron unit feeds. Magnetite concentrates are ideal feed to pellet plants. Pellets are also needed to replace dwindling supplies of lump ore.

 

Concentrates can be pelletised (essentially manufactured lump ore) or sintered (usually in a blend with low quality DSO sinter fines where the concentrates enhance the quality of the final sinter product). These are charged into the blast furnace as either pellets or sinter. High grade concentrate can also be used in several "Direct Reduction" iron making processes.

Good quality lump ore is in very short supply and the quality of DSO sinter fines from all sources is steadily decreasing. Levels of Phosphorous (P), Alumina (Al2O3), Silica (SiO2), and Sulphur (S) are all getting higher. The results are increasing undesirable emissions, increasing slag rates and increasing costs in the blast furnace, as well as the consumption of more expensive metallurgical coal.

High levels of phosphorous affects costs in the basic oxygen furnaces down stream of the blast furnaces. High grade, high quality concentrates can not only obviate these problems completely, but also significantly lower emissions. In addition, the overall costs of producing hot metal in the blast furnace and steel in the basic oxygen furnace can be reduced.

The Middle East has the potential to emerge as a significant steel making and steel consuming region. The industry there will be based on direct reduction (DR) of iron ore using the abundant natural gas available in the region. Efficient DR steel making requires high grade, high quality iron ore concentrates. Magnetite, with its inbuilt energy bonus, is the ideal feed. The Braemar Iron Formation can be “tailored” to be the feed for direct reduction steel making.

 

Silica and Alumina are slag forming minerals. The blast furnace operators do not wish to make any more slag than is necessary to “slag-off” impurities from the hot metal in the furnace. Excess slag forming mineral content in the iron ore necessitates the use of excessive energy to melt and form the slag, and hence more emissions as well. Additionally, a balance has to be maintained between the silica and the alumina in the slag - too much alumina and the slag becomes very viscous and will not run out of the furnace when the time comes to remove it; too much silica and slag becomes too “runny” and cannot be controlled as it flows from the furnace.

Sulphur and phosphorous are difficult to remove (slag-off) in the blast furnace and all are dissolved into the hot metal in the furnace. If not subsequently removed the steel made from the high sulphur and phosphorous hot metal will be very poor quality, with serious strength defects and imperfections. This means no application for high end uses, if at all. To remove these impurities from hot metal requires a double slagging step in the basic oxygen steel plant (BOF). This is very expensive as attested by the fact that no steel maker in the world is doing it. Hence the iron ore input to the blast furnace must be such that the hot metal going to the BOF is low in phosphorous and sulphur. Our ore contains virtually no sulphur and is also very low in phosphorous.

 

All Chinese domestic iron ore is produced as concentrate and grade is KING. The supply is volume and cost constrained, and there is no significant replacement for domestic orebodies.

Virtually all the iron ore from Minas Gerais in Brazil is haematite concentrate and quality is declining. Vale is chronically short of product in the region, which is not helped by the urban sprawl that has permanently sterilised many of the remaining orebodies in the area.

Africa will not live up to any reasonable expectations as a source of quality iron ore - the direct shipping ore (DSO) from most new and proposed operations is poor quality and concentrates will be very high cost. The Simandou Project, Guinea, which is the only possible new source of significant quantities of DSO high grade ore in Africa, is associated with a capex estimate of 25 Billion USD. This high capex project is put at risk by an unstable political system and disease, such as Ebola.

We are talking of producing and selling an initial 50 million tpy in a current seaborne market already approaching 1,200 million tpy. As mentioned earlier, expansion of current cities, development of new cities and all the associated infrastructure and demand from a growing middle class in rapidly developing countries in Asia and Africa, will increase tonnage demand at a time when very few new mines are coming on stream or being planned. In current discussions with steel mills, all say they would have interest in buying significant amounts if a high grade magnetite concentrate was available in quantity right now.