Scientists and experts agree that in the future steel will remain the principle construction material. The main method of its production is iron melting from iron ore. At the same time, "Iron Direct Reduction" technology becomes more and more popular.

Ukraine inherited a good ore base - 20% of the world reserves (more than 30 billion tons). There are more than 80 known fields. 70% of reserves and more than 80% of crop accrue to Kryvorizh iron-ore basin. Together with ore deposits of Zaporizhya, Kyrovograd and Poltava regions, it makes the so-called iron-ore province "Greater Kryvoi Rig".

What we can

Enterprises of the industry produce all variety of iron-ore raw materials (IORM), which is four principle types of processed production:  merchantable ore, iron-ore concentrate, pellet, sintered iron ore. In 2012, domestic miners increased output of concentrate by 0.7% (to 66.379 million tons), while production of sintered ore reduced by 1.1% (to 13.435 million tons) and of pellet - by 0.2% (to 22.313 million tons). The biggest producers of IORM are "Metinvest" company, "Ferrexpo" and "ArselorMittal Kryvyi Rig".

Experts note that such decrease of figures is caused by both internal and external factors. Thus, domestic demand has dropped due to last year reduction of steelmaking by 7% (to 32.4 million tons). Moreover, in 2012 import strengthened its positions on the Ukrainian ore market. In 2011 import made 1.841 mln tons ($175 mln), but in 2012 it reached the level of 2.9 mln tons ($250 mln). Operators explain it by aggressive policy of Russian suppliers. Especially it concerns imported raw materials for metallurgical complexes of Industrial Union of Donbas, controlled by the "Vnesheconombank" holding (RF). Indeed, Russians provide almost all import of ore. In the first quarter of 2013, the import of iron ore in Ukraine increased again, by 45% at once (to 761 thousand tons).

Nevertheless, our iron-ore industry is able to cover all needs of the national metallurgy, as well as export its production. In 2012, export grew by 2.8% (to 35.1million tons, which is 50.6% of domestic production) in the amount of $3.1 billion. IORM is an important source of budget revenues and currency earnings. Moreover, suppliers managed to increased export sales even under weakening of performance indicators.

China remains the major consumer of Ukrainian iron-ore. Last year china purchased 16.325 million tons or 46.5% of all our export (in the amount of $1.4 billion). Among other important sales directions, there are Czech Republic, Poland, Slovakia, Austria. Economist Vitaly Kulik explains that these European countries are traditional consumers of Ukrainian IORM, as for the Chinese marker, Ukraine has to compete with such leading global suppliers as Australia and India. At the same time, according to the analyst, in 2013 Ukraine has a chance to strengthen its positions on the Chinese land. The matter is that India, one of the long-term export leaders, rapidly reduces its iron-ore export. In 2009, India exported 120 million tons of ore to foreign markets, but last year, due to rapid development of national metallurgy, the export made only 33 million tons, and in 2013 it is expected only nine million tons of export. This factor will enable Ukraine to strengthen its positions replacing Indian raw materials not only on Chinese market but also on other Asian markets, including Vietnam, Thailand, Malaysia, Indonesia.  

As a result, Ukrainian export of ore may grow by additional 9-10% and reach 38-39 million tons. In turn, domestic market will also rally due to recovery of metallurgy.

New horizons

Apart from quantitative perspectives, the iron-ore industry promises qualitative development. Subject matter specialist Volodymyr Pikovski reminds about rapidly developing production of direct reduced iron (DRI). This iron is produced from direct reduction of iron ore (in the form of lumps, pellets or fines) by a reducing gas produced from natural gas or coal. Direct reduction, an alternative route of iron making, has been developed to overcome some of difficulties of conventional blast furnaces and became popular and widespread in 1980s.

Content of Fe in DRI is more than 85%, considerably bigger than in traditional IORM. Use of DRI for steelmaking provides better quality and increases productive efficiency owing to waste minimization. There is no surprise that in 2012 the global output of various DRI exceeded 55 million tons. Among the world’s largest producer of direct-reduced iron, there are India (19.8 million tons in 2012), Iran, Mexico, Saudi Arabia, Venezuela. 

Within current CIS, the first facilities on DRI were put in operation in 1983 in Russia (Oskolsky electrometallurgical works). Up to now, Russia remains a regional leader. But in 2003-2004, due to rise of metallurgy, subject-oriented projects appeared also in Ukraine. Thus, in 2005 a business-plan was developed to build a DRI plant with annual capacity of three million tons on the basis of Poltava mining and processing works, and in 2007 a project on installation of DRI-lines on North and Central mining and processing works was initiated. Despite the economic crisis, domestic ore mining enterprises are still interested in such projects. Several years ago, Hares Engineering Company purchased the license for implementation of ITmk3 technology in our country. Volodymyr Pikovski believes that with the recovery of global metal markets the investments into DRI technologies on Ukrainian soil will pay off pretty fast.  

Don't forget about the possibility of production of DRI from oxide ore. The construction of Kryvorizh oxide ore mining and processing works, for example, started back in soviet times by the program of economic mutual aid, but remains unfinished until now due to disagreements among countries-successors (Ukraine, Romania, Slovakia). In 2005, there were plans and initiatives to finish the construction of the complex to start producing DRI.

Experts assume that the world metal markets will fully recover by 2014-2015. It means the demand for Ukrainian metal will increase, and Ukrainian metallurgists will be more motivated to produce high-quality products, including DRI. In turn, it will enable domestic mining works to implement investment projects on DRI production, as well as to develop supplies of traditional iron-ore, bringing more revenues to the budget and economy.

Andriy Boyarunets


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