Raw materials

The key raw materials needed in steelmaking include iron ore, coal, limestone and recycled steel.

The two main steel production routes and their related inputs are:

Route 1: The integrated steelmaking route, based on the blast furnace (BF) and basic oxygen furnace (BOF), uses raw materials, including iron ore, coal, limestone and recycled steel. On average, this route uses 1,370 kg of iron ore, 780 kg of metallurgical coal, 270 kg of limestone, and 125 kg of recycled steel to produce 1,000 kg of crude steel.

Route 2: The electric arc furnace (EAF) route uses primarily recycled steels and direct reduced iron (DRI) or hot metal, and electricity. On average, the recycled steel-EAF route uses 710 kg of recycled steel, 586 kg of iron ore, 150 kg of coal, 88 kg of limestone and 2.3 GJ of electricity, to produce 1,000 kg of crude steel.

Around 70% of total global steel production comes from the BF/BOF route. Global EAF output accounts for about 30% of global steel production.

Iron ore and metallurgical coal are used mainly in the blast furnace process of ironmaking. For this process, coking coal is turned into coke, an almost pure form of carbon, which is used as the main fuel and reductant in a blast furnace.

Typically, it takes 1.6 tonnes of iron ore and around 450kg of coke to produce a tonne of pig iron, the raw iron that comes out of a blast furnace. Some of the coke can be replaced by injecting pulverised coal into the blast furnace.

Iron ore

Iron is a common mineral on the earth’s surface. Most iron ore is extracted in opencast mines in Australia and Brazil, carried to dedicated ports by rail, and shipped to steel plants in Asia and Europe.

Steel is an alloy consisting primarily of iron and less than 2% carbon. Iron ore is, therefore, essential for steel production and maintaining a strong industrial base. 98% of mined iron ore is used to make steel.

Iron is one of the most abundant metallic elements. Its oxides, or ores, make up about 5% of the earth’s crust. The average iron content for high-grade ores is 60% to 65% after taking into account other naturally occurring impurities.

Iron ore is mined in about 50 countries. Most iron ore is mined in Australia, Brazil, China, India, the US and Russia. Australia and Brazil dominate the world’s iron ore exports, each having about one-third of total exports.

Worldwide, iron ore resources are estimated to exceed 800 billion tonnes of crude ore, containing more than 230 billion tonnes of iron.

In thousand tonnes

In thousand tonnes

Source of iron ore production and export data:  Steel Statistical Yearbook, worldsteel, subscription

Coal and coke

Coking coal is a key raw material in steel production. As iron occurs only as iron oxides in the earth’s crust, the ores must be converted, or ‘reduced’, using carbon. The primary source of this carbon is coking coal. Coke, made by carburising coking coal (i.e. heating in the absence of oxygen at high temperatures), is the primary reducing agent of iron ore. Coke reduces iron ore to molten iron saturated with carbon, which is called hot metal.

It is estimated that around 1 billion tonnes of metallurgical coal are used in global steel production, accounting for around 15% of total coal consumption worldwide.

Coal reserves are available in almost every country worldwide, with recoverable reserves in around 80 countries. Although the biggest reserves are in the US, China, Russia, Australia and India, coal is actively mined in more than 70 countries^.

China is by far the biggest producer of coking coal in the world.

Australia dominates metallurgical coal exports, accounting for about 200 million tonnes of a total of 310 million tonnes of metallurgical coal exports globally.

It is estimated that about 30% of coal can be saved by injecting fine coal particles into the blast furnace, a technology called Pulverised Coal Injection (PCI). One tonne of PCI coal used for steel production displaces about 1.4 tonnes of coking coal. Coals used for pulverised coal injection into blast furnaces have more narrowly defined qualities than steam coal used in electricity generation.

Recycled steel (or scrap)

Scrap is a term used to describe steel that has reached the end of its useful life, known as ‘post-consumer scrap’ or has been generated during the manufacture of steel products, known as ‘pre-consumer scrap’.

While the term ‘scrap’ may lead one to believe this is a waste product, it is actually a valuable raw material used in every steelmaking process. Due to its inherent magnetism, steel is very easy to separate and recycle, making steel the most recycled material in the world.

At the end of a product’s life, steel’s 100% recyclability ensures that the resources invested in its production are not lost and can be infinitely reused. Melting steel scrap at the end of its useful life allows us to create new steels, making adjustments to the chemistry and shape of the new product. Almost every steel plant uses scrap as part of its raw materials mix, and therefore, almost every steel plant is also a recycling plant.

Maximising scrap use helps reduce CO2 emissions

Around 650 Mt per year of scrap is consumed each year for steel production (compared with a total crude steel production volume of around 1.9 Gt per year), with comparable amounts of scrap used in the primary and secondary routes. This avoids the emission of approximately 975 Mt of CO₂ annually and significantly reduces the use of other natural resources use, such as iron ore, coal and limestone.

In theory, all new steel could be made from recycled steel. However, currently, this is not feasible due to the scarcity of scrap. This is because of the long service life of steel products, given steel’s strength and durability.

Steel demand is growing faster than scrap is being released from the pool of ‘steel in use’. All scrap currently collected is recycled. As such, there is only limited scope for increasing scrap availability. Any future increase in availability will be drawn from the expected increase of post-consumer scrap availability.

Steel is one of the few magnetic metals. It is easy to separate from waste streams.

By sector, global steel recovery rates are estimated at at least 85% for construction, 90% for automotive (reaching close to 100% in the US), 90% for machinery, and 50% for electrical and domestic appliances.

Recycled steel (scrap) can be collected from excess material in steel facilities and foundries (home scrap) or downstream production processes (industrial scrap) and from discarded products (obsolete scrap).

The availability of home and industrial scrap is closely related to current domestic steel production levels, while the availability of obsolete scrap is closely related to levels of past steel production, average product lives and efficient recycling programmes.

Recycled steel is a key input needed for all steelmaking process routes. Scrap acts as a cooling agent, absorbing excess heat from the exothermic decarbonisation process. In some cases, scrap is added directly to the BF as a source of iron units, reducing greenhouse gas emissions.

EAFs can be charged with up to 100% recycled steel and BOFs with up to 30%.

Recycling this steel accounts for significant energy and raw material savings: over 1,400 kg of iron ore, 740 kg of coal, and 120 kg of limestone are saved for every 1,000 kg of steel scrap made into new steel.

The steelmaking process is able to remove most impurities that may be present in scrap steel. Hence ‘downcycling’ of steel scrap into lower quality products is not an issue for the steel industry in the same way it can be for glass and aluminium.

However, some elements, especially copper, cannot be removed during the steelmaking process. Elevated copper levels in steel can lead to a loss of ductility and resulting surface defects. Copper content is currently carefully managed through a combination of sorting and dilution. Improved scrap sorting and better separation techniques to reduce contamination will be important to ensure all steel grades can be produced via the EAF route.

Steelmaking materials markets

Steelmaking materials are some of the world’s most significant commodities in terms of volume of production, consumption, and transportation. For example, iron ore, with a production volume of around 2.3 billion tonnes and an export volume of about 1.6 billion tonnes, is the third largest commodity in terms of production volume – after crude oil and coal – and the second most traded commodity – after crude oil.

Globally, ferrous scrap, with a recycling volume of more than 800 Mt, is the world’s most extensive commodity recycling activity.

Notes:

• Scrap consumption: This global scrap consumption figure is an estimate based on assumed crude steel production, the share of different routes for steelmaking in total crude steel production, and raw materials charge rates. Hence, it is subject to a higher level of uncertainty and margin of error than some other statistics that we report, such as crude steel production and iron ore consumption, as these statistics are based on reports collected from national steel producers’ associations and customs offices.
• Scrap availability (end-of-life scrap availability, also known as obsolete scrap availability):  These estimates come from our scrap availability estimation work, which models the lifecycles of steel containing goods and structures such as buildings and automobiles. Modelling product lifecycles is quite a data and assumption-intensive work that requires information such as the average steel content of the goods, average useful lifetimes and recovery rates. Our approach does not consider the potential impact of certain policies, such as auto scrappage schemes and scrap prices, the discarding of steel-containing goods or collection and recycling activities. Hence, there can be wide discrepancies between the scrap availability estimate for a certain year and the actual amount of scrap that is recycled in that year. Nevertheless, we believe that our scrap availability estimates should give a reasonable view of how scrap supply might be expected to change in time, especially over the medium term.