METI to start work on new steel project

The Yomiuri Shimbun

The Economy, Trade and Industry Ministry is to launch a project aimed at developing a new steel-manufacturing technology that can utilize iron ore containing lower levels of iron, in light of current high prices for raw materials, The Yomiuri Shimbun has learned.

Prices for high-quality iron ore and coal are controlled by major natural resources traders, and the growing demand from rapidly developing countries has boosted the cost of such raw materials.

The ministry hopes to achieve a technological breakthrough that will allow low-grade iron ore to be used instead of high-quality ore to reduce or limit production costs.

Steelmakers generally use iron ore containing about 65 percent iron, and coal with high viscosity as raw materials.

These resources are supplied by major providers such as Australian-British company BHP Billiton and Brazil-based Vale.

Besides supplying steelmakers in Japan, these companies have to satisfy rising demand from developing economies, including China and India, which has led to the surge in global prices.

The ministry concluded that developing a practical way to use low-quality raw materials for steel manufacturing is necessary, as prices for top-quality raw materials are expected to remain high.

The manufacturing process being eyed will mix steel ore containing about 50 percent iron with low-viscosity coal to form a solid matter.

After undergoing a special process, the material will be placed in a blast furnace and will become pig iron.

According to METI's initial calculation, besides reducing coal usage by 25 percent, the new technology could achieve energy savings of 10 percent on blast furnace operation costs.

Four major domestic steelmakers and the New Energy and Industrial Technology Development Organization, an independent administrative agency under the auspices of METI, will begin research and developments for the new technology in fiscal 2009, and the new raw material is expected to be used in steel production by fiscal 2015.

The budget for the new project is estimated at about 450 million yen for fiscal 2009.