VALUE-IN-USE MODEL FROM IRON ORE THROUGH DIRECTREDUCED IRON AND ELECTRIC ARC FURNACE Howard Pielet and

George Tsvik, Ispat International R&D Valery Addes, Ispat Inland Bar Products ast !"icago, I#, $%A ABSTRACT A DRI Production and cono&ic 'odel was developed and used to esti&ate t"e process and econo&ic e((ects o( c"anges in &aterials and operating practices at !ari))ean Ispat, *td+ (or e,a&ple, to guide t"e invest&ent se-uence in i&proving &aterials "andling. An A/ 'ass and nergy Balance cono&ic &odel was developed to esti&ate t"e process and econo&ic e((ects o( c"anges in &aterials and A/ operating practices at Ispat Inland Bar Products 0IIBP1. /or e,a&ple, it was esti&ated t"at su)stitution o( Pig Iron (or Pig2su) would reduce pro(ita)ility )y 345,555 per year i( t"e lectric /urnace s"op is not operating at capacity, )ut would increase pro(ita)ility )y 3655,555 per year i( t"e s"op is operating at capacity 0values &ay not apply at current prices1. Plant data on su)stitution o( Pig Iron (or Pig2su) t"en indicated t"at t"e &easured reductions in power2on ti&e and power consu&ption were even greater t"an predicted. T"e &odel was t"en used to co&pare t"e Value2in2$se o( di((erent types o( scrap to t"eir selling prices. !onnecting t"ese &odels allows t"e& to )e used toget"er to esti&ate t"e e((ects o( c"anges in &aterials and operating practices at t"e DR plant on processing and econo&ics in t"e A/, including t"e Value2in2$se o( di((erent DRI raw &aterials. T"e paper e,plains t"e i&portance o( considering w"et"er a (acility is Production2 *i&ited or %ales2*i&ited. It su&&ari7es t"e concepts and varia)les included in t"e DRI and A/ &odels, presents Production2*i&ited and %ales2*i&ited calculations (or several plant studies, and illustrates t"e value o( co&)ining t"e two &odels. INTRODUCTION In t"e last ten years, t"roug" ac-uisition and e,pansion, t"e *#' Group "as grown (ro& a single steel plant to nu&erous steel plants wit" A/s, B8/s, 'idre, &odules, and Hy* &odules. *#' is now t"e world9s largest producer and consu&er o( DRI. To guide pro(ita)le operation o( eac" (acility, we "ave developed tec"nical2econo&ic &odels o( )ot" DRI production and A/ steel&aking. In t"is paper, we descri)e eac" &odel and illustrate "ow it "as )een used to i&prove pro(ita)ility. :e t"en s"ow "ow co&)ining t"e two &odels can guide opti&i7ation o( overall pro(ita)ility, e.g., w"en increasing t"e pro(ita)ility o( t"e DRI (acility reduces t"e pro(ita)ility o( t"e A/ (acility. Please note that operating and economic values in this paper are for illustration only.

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CONCEPTS OF PROFITABILITY AND PRODUCTION Contribution vs. Profit /i,ed costs co&)ine wit" varia)le costs, production, and selling price to deter&ine pro(ita)ility. However, since (i,ed costs are generally not t"e do&ain o( eit"er tec"nical or operating personnel, we (ocus on t"e e((ect o( c"anges in varia)le costs. T"e di((erence )etween varia)le production cost and sales revenue is t"e =!ontri)ution9. %ince production rate is (le,i)le, )ut ti&e is not, we (ocus on !ontri)ution per unit ti&e. >?@ Production-Limited Sales vs. Sales-Limited Production It is i&portant to identi(y and distinguis" w"et"er a (acility is operating in a &arket t"at would allow additional sales 0Production2*i&ited %ales1, or a &arket t"at will not allow additional sales, 0%ales2*i&ited Production1. To account (or c"anges in econo&ic conditions, we generally calculate and present t"e e,pected c"ange in pro(ita)ility (or )ot" &odes o( operation. Value-In-Use Value2in2$se 0VI$1 is t"e &a,i&u& price we can a((ord to pay (or a replace&ent &aterial wit"out worsening econo&ic results+ it is also ter&ed t"e Indi((erence Price. ? As an e-uation, VI$i A !ost o( 'aterial Replaced B !"ange in 8t"er Varia)le !osts B !"ange in Value o( Production 0?a1 T"us, (or %ales2*i&ited Production, VI$ depends only on varia)le costs+ (or Production2li&ited %ales, VI$ depends on varia)le costs, production, and sales price. By its nature, VI$ is always speci(ic to a particular plant and operating practice. DRI MODEL T"e &odel was developed (or a 'idre, s"a(t (urnace at !ari))ean Ispat, *td. 0!I*1 )ut is applica)le to any direct reduction s"a(t (urnace process. It co&)ines a c"e&ical &ass )alance on t"e conversion o( iron ore to DRI wit" e&pirical relations (or t"e e((ects o( (eed &i, co&position, (ines generation, reducing gas te&perature, o,ygen inCection, etc., on productivity and energy consu&ption. /ines generation, screening, and sales are &aCor (actors in t"e &odel. T"e &ass )alance includes screening o( (ines (ro& )ot" t"e pellets and t"e DRI, and su)se-uent )ri-uetting o( t"e DRI (ines. &pirical results are used to calculate t"e (ines generation (ro& eac" ore and t"e e((ect o( (ines on production and energy consu&ption (ro& a re(erence condition o( ?55D pellets, ;.ED (ines, no o,ygen inCection, and a 655 F! )ustle2gas te&perature.
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Gatrak, et al. de(ined Value2in2$se di((erently, asH It"e pre&iu&, or discount, t"at an alternative iron can co&&and co&pared to t"e prevailing price o( t"e scrap it displaces.J :e re(er to t"is si&ply as t"e di((erence )etween t"e VI$ and t"e price o( t"e scrap. >;@

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:e assu&e t"at eac" raw &aterial generates (ines according to its decrepitation tendency and its proportion in t"e (eed &i,, i.e., independently o( t"e presence o( ot"er raw &aterials in t"e (eed &i,. T"e e,tent to w"ic" t"e (ines generated are re&oved )y screening (ro& t"e product strea& deter&ines t"e c"e&istry and (ines content o( t"e DRI product. T"e &ain inputs to t"e &odel are o,ide &aterials c"e&istry+ t"e proportions o( pellets and lu&p ore in t"e (eed &i,+ o,ide and DRI (ines generation and screening e((iciency+ o,ygen inCection+ )ustle gas te&perature+ i&pact o( (ines on productivity, and on consu&ption o( natural gas, and electricity+ DRI (ines )ri-uetting+ DRI losses+ along wit" prices o( ore, natural gas and electricity, ot"er varia)le costs, and t"e selling price o( DRI. T"e &odel t"us includes t"e &aCor varia)les a((ecting s"a(t (urnace operation and contri)ution to pro(ita)ility. T"e &odel includes &ultiple DRI units wit" di((ering operating c"aracteristics. It is i&ple&ented as an ,cel %preads"eet wit" an iterative calculation. Ta)le ? s"ows an e,a&ple o( input data and calculation results (or a &i, containing ?5D lu&p ore. Table 1. Example Inputs and Results from DRI Model
Input Materials Pellet 1 Pellet 2 Pellet 3 Lump Ore Pellet 4 Pellet 5 Processing Constraints and Opportunities DRI Fines from Furna e at Referen e !on"itions# % DRI Pro"u tion Rate at Referen e !on"itions# $% DRI&Operatin% ' (ala)le DRI Pro"u tion Rate# $% DRI&!alen"ar ' *+aila)ilit,# Operatin% -ime&!alen"ar -ime /ustle 0as -emperature at Referen e !on"itions# o! O1,%en In2e tion# 3m3&$% DRI from Furna e O1i"e ( reenin% 4ffi ien , DRI ( reenin% 4ffi ien , $a1imum /ri5uettin% Rate# $%&!alen"ar ' 6 DRI !# % DRI $etalli8ation# % 2.50% 200 220 .2% .00 0.00 75% 50% 7.00 2% .5% 83.0% 7.0% 0.0% 10.0% 0.0% 0.0%

Material Flow Input $i1 O1i"e Fines ( reene" )efore $o"ule O1i"e Fines Remainin% *n" 0enerate" ), 9an"lin% !'an%e in Pro"u tion +s. Referen e !on"itions !'an%e in 0as !onsumption +s. Referen e !on"itions !'an%e in 4le tri it, +s. Referen e !on"itions !ontaine" Fines after $o"ule (lu"%e after $o"ule Dust after $o"ule DRI Pro"u tion from Furna e ;in lu"in% Fines# 41 lu"in% Dust an" (lu"%e< Fines ( reene" after $o"ule DRI Pellet to 4*F or (ales Fines Remainin% in DRI after ( reenin% /ri5uettin% Deli+ere" Pro"u t ;DRI=In2.Fines=/ri5uettes< >iel"# Pro"u t&?et !'ar%e

Mg/Operat ing h 270.1 8.. 2.. :4.57% 4.52% 3.18% 7.8 1.5 1.5

1.0.. 3.4 187.5 1.8% 4.. 1.2.4 7...%

Applications :e "ave used t"e 'odel to calculate t"e econo&ic e((ects o( di((erent scenarios o( invest&ents and R8I at several Ispat plants. At !I*, guided )y t"e &odel results, &anage&ent (irst invested in i&proving &aterial "andling, particularly a new o,ide screening station. /urt"er invest&ents were t"en &ade (or o,ygen inCection and increasing t"e )ustle gas te&perature. :e present "ere a study to to (ind t"e opti&al proportion o( lu&p ore in t"e (eed &i,.

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Opti al p!opo!tion of lump ore Bra7ilian DRI2grade lu&p ore can )e a valua)le raw &aterial )ecause it "as "ig" total iron, low gangue, "ig" reduci)ility, and "ig" sticking resistance at a price signi(icantly lower t"an t"e price o( pellets. However 22 due to "ig" (ines generation 22 use o( lu&p decreases productivity, and t"e negative e((ect see&s to increase as t"e proportion o( lu&p increases. /igure ? s"ows "ow t"e !ontri)ution and production rate c"ange as t"e proportion o( lu&p ore increases. /or Production2*i&ited %ales, at low proportions o( lu&p in t"e &i,, t"e )ene(it o( t"e lower price &aterial predo&inates and !ontri)ution increases wit" increasing lu&p. At "ig"er proportions, t"e negative e((ect on production predo&inates and !ontri)ution decreases wit" increasing lu&p. T"e opti&u& is )etween ?5 and ?ED.
$"00 $0 -$"00 -$!00 -$ 00 -$400 -$500 -$600 -$700 0# "0# !0# 0# 117 $%&' 40# 50# 60# 184 $%&' 170 $%&' 150 $%&'

Change in Contri(ution' )*$/Calendar h

$u%p Ore in Mi&' #

Production $i%ited *ales *ales $i%ited Production+ "50 Mg/Calendar h Pol,- .Production $i%ited *ales/

Figure 1. Effect of Lump Ore on Contribution and Production Rate /or %ales2*i&ited Production, t"e !ontri)ution at (irst increases s"arply )ecause t"e operation can co&pensate (or t"e negative e((ect o( lu&p on production )y increasing t"e operating ti&e o( t"e unit until the unit reaches its maximum utilization. A(ter t"at point, t"e negative e((ect o( lu&p reduces t"e !ontri)ution on t"e sa&e curve as (or Production2*i&ited %ales. EAF MODEL T"e &ass )alance calculates eit"er t"e a&ount o( scrap needed to &ake t"e desired tap &ass, or t"e tap &ass (ro& t"e speci(ied &aterial inputs. Inputs include t"e a&ounts and c"e&istries o( &etallics, water, gases, (lu,es, electrodes, and re(ractories. As t"ere was no data on &oisture in scrap, we &easured t"e &oisture o( as2received and deli)erately soaked sa&ples o( scrap. Process 'odel !onstraints including slag 0/e81, 0'g81, 0%1L>%@, and 0'n1L>'n@ were i&posed. 8utputs include t"e a&ounts and c"e&istries o( t"e steel, slag, and o((2gas.

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T"e energy )alance accounts (or t"e energy needed to "eat t"e input &aterials to ?<55 F!, t"e energy o( reactions at ?<55 F!, and t"e energy to "eat t"e steel, slag, and o((2 gas to t"eir e,it te&peratures. Inputs include t"e energy (ro& electricity, o,ygen inCection, )urners, and pre"eated &aterials. 8utputs include t"e energy in t"e steel, slag, and o((2gas, and energy lost to t"e wall and roo( cooling water, and "eat loss t"roug" t"e (urnace )otto&. nergy is generated in t"e (urnace )y o,idation and slag (or&ation, and a)sor)ed )y reduction. T"e co&position and te&perature o( t"e o((2gas is esti&ated )y se-uential calculation o( t"e co&position and energy o( t"e o((2gas as !8 and !8; rise t"roug" li-uid steel and slag, t"e lance adds o,ygen and )urns car)on, )urners add o,ygen and natural gas, air in(iltrates into t"e (urnace, and t"e gas passes t"roug" t"e scrap and t"e "ood. T"e &odel calculates t"e !ontri)ution (ro& t"e costs o( steel&aking and casting and t"e revenue (ro& sales o( cast product. Inputs include t"e costs o( &etallics, utilities, gases, (lu,es, electrodes, re(ractories, electricity, la)or, and slag disposal+ and t"e sales price o( cast product. T"e &odel is i&ple&ented as an ,cel %preads"eet wit" an iterative calculation. Applications :e "ave used t"e A/ &odel to esti&ate t"e econo&ics o( &aterials and (urnace operation in a variety o( applications, including esti&ating t"e operating results and costs (or di((erent Hot 'etalLDRIL%crap ratios (or a proposed A/ at Ispat Inland /lat Products+ t"e )id price penalty (or increased &oisture and as" in c"arge coke, t"e value o( reducing li&e, and t"e econo&ics o( &odi(ied scrap &i,es at Ispat Inland Bar Products 0IIBP1+ and t"e value o( "ig"er2car)on DRI at I&e,sa. :e present "ere a study to esti&ate t"e value o( replacing Pig2su) 0a general ter& (or reclai&ed Pig Iron1 and DRI wit" Pig Iron at IIBP. S"#stit"tion o$ pi%-s"# #& pi% i!on :"ile Pig2su) is a low2cost scrap, Pig Iron is a "ig"er ! and lower gangue &aterial t"at, despite its "ig"er price, can &ake it co&petitive wit" Pig2su). :e t"ere(ore evaluated su)stitution o( Pig2su) )y Pig Iron under two operating conditions 22 %ales2 *i&ited Production, and Production2*i&ited %ales. T"e %ales2*i&ited Production condition assu&ed t"at t"e s"op operated wit" a reduced crew on a t"ree2s"i(t sc"edule, using overti&e as re-uired to &ake t"e (i,ed production, and t"at )illet sales could not )e increased. $nder t"is condition, t"ere was no need (or increased production+ "owever, an increased production rate reduced overti&e "ours. T"e Production2*i&ited %ales condition assu&ed t"at t"e s"op operated wit" a reduced crew on a t"ree2s"i(t sc"edule wit" overti&e to (ill t"e entire t"ree2s"i(t sc"edule, and allowed t"e sale o( additional product. In t"is case, t"e s"op (illed t"e t"ree2s"i(t sc"edule wit" &a,i&u& overti&e, and sales (ro& increased production increased t"e contri)ution to s"op econo&ics.

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Calc"lat'( op'!atin% !'s"lts Ta)le ; lists scrap prices, co&positions, and &i,es (or t"e Base and su)stituted scrap &i,. Table 2. Scrap Prices, Compositions, and Mixes
*crap Price and 5nal,sis 0ase Co%posite *crap @.5.08 .7.0.% .8.28% 0-70# 0.17% 0.3.% 0.08% 0.03% 0-60# 0-64# 0- 4# 0- !# "- 4#
*crap Mi&es

Price' $/ton Metallic Content .Fe1Mn12esiduals/ Metalli3ation C *i Mn * P *iO! CaO MgO 5l!O 7!O

Pig-*u( @73.00 87.38% ...30% !- 0# 0.35% 0.21% 0.41% 0.02% !-5 # 4-"4# "-7 # "- 6# - 0#

Pig Iron @103.55 .4.81% 100.00% 4-50# 0.70% 0.35% 0.02% 0.07% 0-00# 0-00# 0-00# 0-00# !-00#

0ase Case *crap Mi& Pig Iron *u(stitute Pig Iron 82I/70I Plate 9 *tructural Mill 7ea:, Melt *hredded 0usheling 0aling 9 Clips "!; Mi&ed 15.00% 0.00% 15.00% 15.00% 17.00% 10.00% 11.00% 8.00% 10.00%

2eplace Pig*u( 0.00% 15.00% 15.00% 15.00% 17.00% 10.00% 11.00% 8.00% 10.00%

Ta)le M lists selected /urnace inputs and outputs, calculated results (or electric power, power2on ti&e, and production rate, and calculated econo&ic results (or )ot" constant and increased production. !olu&n ? lists t"e ?ED Pig2su)L?ED DRI Base !ase to w"ic" t"e ot"er options colu&ns are co&pared. !olu&n ; lists t"e results o( si&ple su)stitution o( ?ED Pig Iron (or t"e sa&e a&ount o( Pig2su) wit"out any c"anges to t"e (urnace practice. Because Pig Iron contains &ore car)on t"an Pig2su), t"e &elt2in car)on content o( t"e steel )at" would )e too "ig" 05.M5D1 to &ake &ost o( t"e re-uired grades. In !olu&n M, t"e *ance 8; was increased to get t"e sa&e tap ! as t"e Base !ase. /inally, !olu&n N, t"e li&e addition was reduced to take advantage o( t"e lower gangue content o( t"e Pig Iron. According to t"e calculated results, su)stitution o( Pig2Iron (or Pig2su) s"ould i&prove (urnace per(or&ance+ reducing power2on ti&e )y M.E &in and power consu&ption )y ;; k:"Lton. Calc"lat'( 'cono ic !'s"lts As listed in Ta)le M, !olu&n ; in t"e %ales2*i&ited Production section, alt"oug" su)stitution o( Pig Iron (or Pig2su) reduces power2on ti&e and power consu&ption, i( t"e s"op is operating )elow capacity t"is i&prove&ent does not co&pensate (or t"e increased cost o( Pig Iron and pro(ita)ility su((ers )y a)out 345,555Ly. In contrast, as listed in t"e Production2*i&ited %ales section, i( t"e s"op is operating at capacity, t"e 'odel indicates a gain o( 3655,555 per year.

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Table 3. Calculated Results for Scrap Substitutions

1 2 3 4

*u(stitute "5# Pig Iron =or Pig *u(' 5dAust *u(stitute "5# $ance O! to get 0ase Case' Pig Iron =or Pig 0ase Case >ap "5# Pig *u( *u( C Input *crap @eight' ton/7eat Charge Co?e' l(/7eat InA- Car(on' l(/7eat $i%e' l(/7eat 8olo' l(/7eat 5:g- Power-On M@ $ance O!' sc=/7eat 0urners C74' sc=/7eat Calculated Output $iBuid *teel' ton/7eat >ap Car(on' # Furnace Cield' # *lag 0acisit, *lag MgO' # *lag FeO' # *lag' ton/7eat Calculated 2esults Dlectrical Dnerg,' ?@h/t Power On >i%e' %in Ma&- Production 2ate' h/d Dcono%ics Change in *crap Price' $/ton *crap Change in Material Cost' $/ton $iB Change in Dnerg,' $/ton $iB Change in 8ust and *lag 8isposal' $/t $iB Change in Misc and D5F9$MF $a(or' $/t $iB Contri(ution For *ales-$i%ited Production+ Operation' turn/w? Production 2ate' tp, Cast Product Eain .$oss/' $/, Contri(ution For Production-$i%ited *ales Operation' turn/w? Production 2ate' tp, Cast Product Eain .$oss/' $/, 17.45 457000 17.45 474180 @104#.73 17.45 470720 @412#18. 17.45 457000 17.17 457000 ;@41.#183< 15..3 457000 ;@527#572<

*u(stitute "5# Pig Iron =or Pig *u(' 5dAust $ance O! and $i%e to get 0ase Case >ap C and 0asicit,

137.. 4000 2300 5000 5500 47 .5017 14..8

134.2 4000 2300 5000 5500 47 45 6 14..8

135.0 4000 2300 5000 5500 47 10702. 14..8

134.5 4000 2300 "74 5500 47 103502 14..8

125.7 0.075 .1.2 !-6 11.2 35 14.4

125.7 0-"60 .3.7 3.38 12.0 0 10.4

125.7 0-075 .3.1 3.37 11.1 35 11.2

125.7 0-075 .3.4 !-6 12.3 35 ..8

438 7... 13.3

427 78.0 13.7

417 77.5 13.8

417 77.4 13.8

@4.58 @2.11 ;@0.51< ;@0.42< ;@0.1.<

@4.58 @2.87 ;@0..0< ;@0.33< ;@0.33<

@4.58 @2.14 ;@0..5< ;@0.48< ;@0.35<

15..1 457000 .$6 '66!/

17.45 4714.0 $4!0'"57

Plant t'st To test t"e calculations, Pig Iron was used to replace Pig2su) in several &i,es designed (or special low2# grades 045 pp& &a,.1. Ta)le N co&pares (urnace per(or&ance (or t"ese &i,es to plant results (or standard low # scrap &i,es wit" Pig2 su). T"e &easured reductions in power2on ti&e and power consu&ption were reasona)ly close to 22 and not lower t"an 22 t"ose predicted )y t"e 'odel. Table 4. Results of Plant Trial
Power Power Melt-in <o- o= On >i%e' Consu%pt Car(on' O(ser:%in ion' ?@h/t # 24 2. 80.8 77.7 -4-! - -5 488 454 - 4 -!! 0.12 0.1. >ap Power InAected Car(on' O== >i%e' O&,gen' # %in sc=/t 0.07. 0.087 42 43.7 7.0 740 InAected Car(on' l(/t 20.8 1...

*crap Mi& "4# Pig-su(/!5# 82I/0# Pig Iron 0# Pig-su(/!5# 82I/"5# Pig Iron 5ctual 8i==erence Calculated 8i==erence

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Value-In-Use of Scrap Types Scrap types differ greatly in quality and price and the trade-off is often not clear. :e t"ere(ore used t"e A/ 'odel to esti&ate t"e VI$ o( t"e scrap types availa)le and co&pared t"e& to t"eir selling price. Column 1 in Table 5 lists the Business Plan price, i.e. the expected purchase price, for selected scrap types. Pig-sub and Pit Scrap are priced lower than other scrap types )ecause t"ey contain &ore oxide and gangue. 12 Mill Mixed return scrap is lowpriced because of its varying residual content, and Turnings is low-priced because of its low bulk density. Table 5. Calculated VIU of Scrap Types
1 2 3 4 5 Production-2estricted *ales 7 *ales-2estricted Production

0usiness Plan Price' $/ton 0ase *crap Mi& "!; Mi&ed 0aling 9 Clips Mill 7ea:, Melt 0usheling Plate 9 *tructural *hredded >urnings Pig Iron Pig-*u( Pit *crap @.5.08 $80.71 $95.12 $99.22 $101.12 $96.19 $97.72 $77.00 $103.55 $73.00 $55.00

FI)' $/ton @.5.08 @101.08 @100.8. @100... @100.18 @100... @...37 @.8..7 @110.24 @7..2. @58.10

Eain =ro% D&changing " ton/heat =or Production 0ase *crap Mi&' 2ate o= Cast $/, Product' tp, @0 @75#.88 @21#537 @7#707 ;@3#4.0< @17#8.0 @7#140 @81#.55 @24#.71 @23#455 @11#574 457#000 457#170 457#244 457#242 457#230 457#228 457#217 457#223 455#801 455#373 455#003

FI)' $/ton @.5.08 @104.04 @105.14 @105.20 @104.20 @104..5 @103.14 @102.85 @107.78 @78.17 @40.7.

Eain =ro% D&changing " ton/heat =or 0ase *crap Mi&' $/, @0 @87#075 @37#407 @22#318 @11#488 @32#707 @20#212 @.7#477 @12#03. ;@18#003< ;@53#251<

Calculation of Value-in-Use T"e calculations considered only c"anges in t"e cost and rate o( steel production due to di((erences in c"e&istry and yield )etween t"e scrap types. 8( course, issues suc" as scrap )ulk density, oily scrap, steel nitrogen content, residuals, and c"anges in (urnace cooling losses &ust also )e addressed in practice. Our reference Base Case used the amount of Base Scrap Mix needed to make 125.7 ton of liquid steel. For subsequent calculations, one ton of each specified scrap replaced the amount of the Base Scrap Mix that would result in the same mass of steel tapped from the furnace as for the Base Case. The mass of steel was kept constant because some values, e.g. refractory wear, are known only per heat. The furnace practice was adjusted for each scrap mix. We adjusted the charge coke manually to keep the calculated lance O 2 constant. The Model calculated the calcined lime and dolomitic lime additions to maintain the slag Basicity and MgO concentration. The VIU of the added ton of each type of scrap is the price for that one ton of scrap that results in the same Contribution per day as the Base Case. Thus, any offered

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price below the VIU should be economically attractive. As an equation, VIUi = Decrease in the amount of Base Mix Scrap Used*Cost of Base Scrap Mix + Change in Other-than-Scrap Costs + Change in Production*Billet Sales Price (1b) From Equation (1b), the yield of the replacement scrap, the cost of the Base Scrap Mix, and the change in Other-than-Scrap Costs affects VIU for all operating conditions. The change in Production and Billet Sales Price affect the VIU only for Production-Limited Sales. Value-in-Use results and comparisons Table 5 lists the calculation results. Column 2 lists the VIUs for Sales-Limited Production. Column 4 lists the Annual Production Rate that can be achieved with each scrap mix, and Column 5 lists the resulting VIUs for Production-Limited Sales. As expected, the VIUs of the oxide- and gangue-containing scrap types: Pig-sub and Pit Scrap are lower than the VIU (cost) of the Base Scrap Mix and than the VIUs of the other scrap types. Comparing Columns 2 and 5, shows that, because they reduce production rate as well as increase costs, the VIUs of these scraps are even lower at Production-Limited Sales than at Sales-Limited Production. The annual gain (loss) from switching one ton per heat of each scrap for the equivalent amount of the Base Scrap Mix is the difference between the VIU and the Business Plan scrap price times the number of heats per year. As listed in Columns 3 and 6, even a change this small can save or cost $75,000/y.

"!; Mi&ed 0aling 9 Clips Mill 7ea:, Melt 0usheling Plate 9 *tructural *hredded >urnings Pig Iron Pig Iron *u(stitute Pit *crap .$!0-00/ .$"0-00/ $0-00 $"0-00
*ales-$i%ited Production Production-$i%ited *ales

$!0-00

$ 0-00

8i==erence (etween 0usiness Plan *crap Price and FI)

Figure 2. Differences between Business Plan Prices and VIUs

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Figure 2 shows the difference between the VIU and the Business Plan Price of the selected scrap types. Scraps with negative values are priced higher than their value for this shop, and scraps with positive values are priced lower than their value. As shown in Figure 2, the Business Plan Prices of 12 Mixed and Turnings were lower than their VIUs. Pig-sub and Pit Scrap were under priced for Sales-Limited Production, when only costs are important, but overpriced for ProductionLimited Sales, when production is also important. These results provide the needed guidance for investigating charge makeup. Since the initial calculations were done with a specific furnace practice and for only small changes to the Base Scrap Mix, the VIUs listed in Table 5 are only correct as long as the furnace practice and the Base Scrap Mix do not change much. If either changes significantly, the model must be rerun to calculate new values. COMBINED DRI-EAF MODEL Combining the two models allows evaluation of the overall value of material and process changes. For example, the DR plant would like to replace 20% of input pellets with a pellet that is $15/Mg cheaper but has 2% more SiO2. However, the EAF plant will have to use more lime and electricity to process the resulting DRI. Since there are two operating conditions for each plant, there are four possible operating combinations. Table 6A shows both individual and summed results. With the lower-cost ore, the Contribution at the DR plant increases by $404,000/y for Sales-Limited Production and by $391,000/y for Production-Limited Sales. At the same time, the Contribution at the EAF plant decreases by $339,000/y and $369,000/y because of the higher-SiO 2 DRI. The Contribution at the DR plant increases less when it is production-limited because the lower-cost ore decreases production slightly. The Contribution at the EAF plant decreases more when it is production-limited because the higher SiO 2 DRI decreases production. For all four operating combinations, the Contribution at the DR plant increases more than the Contribution at the EAF plant decreases. The combined Contribution increases by from $22,000/y to $65,000/y. Table 6B shows the resulting decrease in the VIU of DRI at the EAF plant and the remaining additional VIU of pellets at the DR plant. The VIU of the DRI to the EAF plant decreases by from $3.77/Mg to $4.10/Mg, while the DR plant can pay up to $0.70/Mg to 2.28/Mg more for pellets. Table 6. Changes in Contribution and VIU with Low-Cost, High-SiO2 Pellets
5- Change in Contri(ution' $/,
*ales-$i%ited Production at D5F Plant Production$i%ited *ales at D5F Plant

0- FI)s o= 82I and Pellets' $/Mg

*ales-$i%ited Production at D5F Plant Change to FI) o= 82I to D5F Plant Production$i%ited *ales at D5F Plant

;@33.#000<
*ales-$i%ited Production at 82 Plant Production-$i%ited *ales at 82 Plant

;@37.#000< G $ 5'000 G $!!'000

-$ -77

-$4-"0

@404#000 @3.1#000

G $65'000 G $5!'000

2e%aining 8i==erence (etween FI) and Price o= Pellets at 82 Plant

*ales-$i%ited Production at 82 Plant Production$i%ited *ales at 82 Plant

$!-!6 $"-60

$"-"6 $0-70

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ACKNOWLEDGEMENTS :e would t"ank our colleagues (or t"eir contri)utions to t"is workH 'ark Hu))ard, Pinakin !"au)al, Oi& Bul(er, and *uis GiguPre (or t"e A/ 'odel+ !li(( %&it" (or t"e econo&ic concepts, and *uisito *aus (or t"e &oisture &easure&ents. REFERENCES 1. Goldratt E, The Goal. Great Barrington, MA, North River Press, 1994. 2. Katrak F, Agarwal J, Brown F, Loreth M, Rainville G, and Morton J, Assessing the value of alternative irons. New Steel, 1995 (2) 22-24

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