DRI for a sustainable future of the steel industry

1. Steel and the green challenge

During my previous professional life, my image of the steel industry was of one of blast furnaces fuelled by carbon coke within an integral cycle that is said by many to be obsolete and harmful to the environment and human health.

I approached the steel sector a few years ago, first as a board member of Acciaierie d’Italia and then as managing director of DRI D’Italia S.p.A. I realised that, regardless of whether or not the integral cycle has been superseded, the sector is heavily invested in the need to cope with the ecological transition and show the sustainability of production for a number of reasons, the main ones being a) the reduction of emissions in general and, in particular, decarbonisation, i.e., the reduction of CO2 emissions; b) the improvement of the quality of the end product through the use of feed-stocks other than scrap to make higher-performance steels and the energy and digital evolution of production plants.

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2. How to meet the challenge

Compared to the rest of Europe, Italy is a virtuous steelmaking system; indeed, only the Acciaierie d’Italia plant in Taranto (formerly ILVA) still uses the integral cycle only, despite the commitments made to replace, even partially, the current blast furnaces with electric furnaces.

The remaining 80% of domestic steel production is made with electric furnaces, mainly using domestic scrap and a small portion of DRI and cast iron, both imported. Italy is also a net importer of scrap. The direct reduction production process is an alternative to the integral cycle process and is characterised by significantly lower emissions of CO2 and other pollutants than the traditional one. In this process, the reactor is fed with pellets of a quality usually higher than those used in blast furnaces, which are characterised by a higher iron oxide content and thus less gangue. The reducing gas used is a mixture of CO and H2 derived from methane gas and injected into the reactor, which operates at high temperature. The resulting product is Direct Reduced Iron (DRI), with an iron content of 90% to 94% and a metallisation of 92% to 97%. This material can be fed directly and hot into an electric furnace to produce steel, reducing energy requirements compared to typical values for scrap-fired furnaces; alternatively, it can be briquetted to obtain a dense, stable material suitable for transport and sale to third parties. DRI is the only solution to accompany the ecological transition of the steel sector and to start green steel production. DRI is also the only alternative to the use of increasingly poor-quality scrap.

?An overview of the world steel sector shows a massive use of DRI to the extent that numerous projects for the construction of DRI plants have been launched in Europe (see table).

?Some of these plants have already received EU incentives (Saltzgitter in Germany) or national incentives (Dunkirk by ArceloMittal) in France.

In early 2023, a 2.5 million tonnes/year Midrex technology DRI plant started operation in Algeria (Tosyali.Algeria).

In the meantime, MIT in Boston, one of the world’s most highly-rated research centres, is going ahead and has developed the Moe technology, tested by Boston Metal, which aims at smelting iron ore by electrolysis: the project has been financed with USD 600 million – donated by Bill Gates and the French-Indian giant Arcelor Mittal. The building of a nuclear reactor is planned to operate the plant, which is quite energy-intensive.

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3. Environment and health as levers of economic competition

Far from being an economic burden, the environmental impact of the steelmaking process through prereduction is significantly lower than that of full-cycle steelmaking in terms of CO2 emissions (about 50%), thus representing a significant economic saving in terms of CO2 quotas for the portion exceeding the level covered by ETS scheme, the incidence of which threatens to put full-cycle plants out of business in a few years from now.

The prereduction system also makes it possible to significantly reduce, almost to the point of total elimination, other polluting emissions (dust, nitrogen and sulphur oxides, dioxin and polycyclic aromatic hydrocarbons) resulting from steel production using the integral cycle, and thus substantially reduce the so-called socio-environmental burden.

The balance of reducing climate-changing emissions can be further improved through the use of green hydrogen in the DRI production cycle, i.e. hydrogen derived from the electrolysis of water using electricity produced from renewable sources, partially replacing natural gas.

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4. The Italian choice

As regards Italy, DRI D’Italia S.p.A. was established in February 2022, a company wholly owned by the Italian Agency for Inward Investment and Economic Development (Invitalia), with a very challenging mission: to promote the energy transition and green evolution of the Italian steel industry by contributing to the process of reducing climate-changing emissions and the carbon footprint of the country in general, and of the Taranto industrial site in particular, with the aim of building a plant for the production of Direct Reduced Iron (DRI), the first in Italy. The company was endowed with financial resources, from NRRP funds earmarked for the decarbonisation of hard-to-abate sectors amounting to EUR 1 billion, pursuant to Article 24 of Italian Law No. 175 of 17 November 2022.

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5. Final considerations

The numerous projects for Direct Reduced Iron production plants show the tendency of national systems to equip themselves with autonomous production processes for this semi-finished product, almost as if it were a ‘raw material’ – a tendency that Italy cannot and must not escape.

Apparently, the current political, institutional and media debate focuses much on the role that DRI can play in the modernisation and environmentalisation of the former Ilva steel site in Taranto, forgetting the much greater importance of the second objective entrusted by the Italian government to the public entity DRI D’Italia S.p.A., that is, that of creating a Direct Reduced Iron production infrastructure to support the (further) decarbonisation policies of the entire Italian steel sector.

Therefore, in the absence of a careful reflection on global scenarios, Italy risks finding itself displaced by the Direct Reduced Iron and hydrogen investments made in the West, in general, and in other EU countries, in particular, and, as a result, to see the national steel sector and the Italian industry dramatically lose ground.