The American steel industry is headed into a major reinvestment cycle. A new generation of technology—direct reduced iron—is the most attractive place to put that capital. It’s more flexible, more competitive, and cleaner than the alternatives.
Across the U.S., the steel industry’s aging ironmaking blast furnaces and the coke ovens that fuel them will soon reach the end of their lives and must be refurbished, replaced, or retired.
Decisions about how to make these multi-billion-dollar investments will define the structure of the U.S. steel system for decades.
This analysis, produced for Ceres by independent steel industry analysts with the guidance of 44 expert advisors, evaluates the feasibility of different iron and steel making technologies in four key U.S. regions.
Across all four regions in the U.S. we analyzed, direct reduced iron (DRI) technology outperforms traditional ironmaking in blast furnaces.
Key Findings:
Our analysis shows that DRI mills are the lowest -cost, new-build option.
DRI facilities can produce iron at costs competitive with the $2 to $3 billion the U.S. spends on pig iron imports each year. These results hold true even when modeled against lower steel prices and higher electricity costs than the current market, providing a major opportunity to onshore production and bolster supply chain security.
Flex-fuel DRI mills deliver other advantages that ironmaking in blast furnaces cannot: compared with the blast furnace, DRI mills are more flexible to operate and more efficient at making iron that is transportable. That makes it possible to decouple the iron and steelmaking processes geographically, enabling the industry to produce iron and steel where it is more cost effective for a customer and based on need.
These mills also emit 40% lower greenhouse gases, 80% lower local air pollution, and can switch between gas and hydrogen as fuels—providing a future hedge against energy and emissions costs.
More details are available in the full analysis of Smarter, Leaner, Cleaner: Direct Reduced Iron and the Future of American Steel commissioned by Ceres from Dr. Chris Bataille and Dr. Francis Li.