DR pellet has a typical Fe content above 66%, higher than the typical Fe content of blast furnace (BF) pellets.

This year, DR pellet production is expected to reach the 100Mt level annually for the third consecutive year. In 2020, DR pellet production reached 127Mt, despite the impact of the Covid-19 pandemic. AME forecasts that DR pellet will reach 159Mt in 2025 at a CAGR of 4.6%.

The new DR pellet production comes mainly from Brazil, Russia, India and Bahrain, and is intended for merchant trade or for companies’ own DRI plants.

Brazil

Vale is largest DR pellet export company in the world, exporting ~8.2Mt of DR pellet in 2020. In recent years, Vale has been subject to a series of disasters due to a dam failure, resulting in the shutdown of pellet plants. In November 2015, the failure of Fundão tailings dam led to the shutdown of the Samarco pellet plant, which has historically been the Brazilian iron ore producer most closely identified with DR pellets. Fundão tailings dam ruptured in January 2019. Vale has since idled the Fabrica, Vargem Grande and Tubarão I and II pellet plants.

Samarco started shipping DR iron ore pellet products again in March 2021. The market, in terms of both pricing and demand for DR grade pellets, is favourable for the restart, and the restart has been eagerly awaited by end users, who have been forced to substitute lower-quality pellets and lumps in order to maintain DRI output. Samarco will initially ramp up to 7Mtpa of pellets, which will include around 4Mtpa of DR grade pellets, before ramping up to 14Mtpa in the second half of the decade. Tailings disposal is the limiting factor preventing the plant from ramping up production at a faster rate.

Russia

Mikhailovsky started pilot scale shipments of DR grade pellets (~68% Fe, 1.4% SiO2), made from Lebedinsky concentrate, to OEMK and Lebedinsky in mid‐2020. Ore beneficiation is being upgraded to enable production of 16.4Mtpa of high grade concentrate from 2022, including 8.8Mt of flotation concentrate grading 70% Fe.

Metalloinvest plans to produce ~0.5Mt DR grade pellets (68% Fe) at Mikhailovsky for trial shipments to the market in 2021 and could supply ~2Mtpa to the market from 2022. The decision as to whether to produce DR or BF pellets will be market‐ and margin‐driven.

United Metallurgical Company (OMK) signed a contract with Tenova in 2020 to build a 2.5Mtpa DR pellet plant at its Vyksa Steel Works. The plant is expected to be commissioned in the second half of 2024, and will comprise a 2.5Mtpa plant producing metallised pellets using DRI technology and an EAF with up to 1.8Mtpa of steel capacity. Investment in the project is expected to total RUB150bn (US$2bn).

Ukraine

Metinvest has updated its production line since 2019 to install new vacuum filters at Central GOK. The new filters allow the company to produce 5.5Mtpa of premium concentrate with Fe content of 70.5%. Metinvest plans to produce ~2.2Mtpa of DR grade pellets with Fe content of 67.6%. 1Mt of DR pellet was produced in 2020 and delivered to DRI plants, which are in the MENA region.

Ferrexpo produced 0.34Mt of DR grade pellets (67% Fe) in 2020 and plans to increase its production of DR grade pellets in the medium term.

India

ArcelorMittal Nippon Steel India (AM/NS) has commissioned a second pellet plant with capacity of 6Mtpa at Paradip, Odisha. Together with the existing first pellet plant (6Mtpa, BF pellet), this will bring the total production capacity at the site to 12Mtpa. Paradip’s pellet plant II will produce superior quality DR pellets for domestic steel production. AM/NS has also started that iron ore mining operations at the Ghoraburhani–Sagasahi mine will provide feed to the new pellet plant.

Sweden

LKAB plans to build a 1.5Mtpa HYBRIT pellet plant at Malmberget. The first DR pellet is expected to be produced in 2025 for use in the company’s own DRI plant.

Canada

ArcelorMittal will invest C$205m (US$166m) in its Port-Cartier pellet plant in Quebec, Canada. The construction phase of the project in Port-Cartier is scheduled to begin in mid-2023, and construction is expected to be completed before the end of 2025. After the project is completed, the plant will convert its entire 10Mtpa pellet production to DR pellets and become one of the world’s largest DR-grade pellet plants. The project includes the implementation of a flotation system that will enable a significant reduction of silica in the iron ore pellets, facilitating the production of a very high-quality pellet.

Rio Tinto’s Iron Ore Company (IOC) produces ~4Mtpa DR pellet from its Carol Lake pellet plant, and this could potentially increase to 5Mtpa by 2025. The company’s major customers are from Middle Eastern countries, Trinidad and the US.

US

In the September quarter of 2017, Cleveland-Cliffs announced a US$75m investment into an expansion at the Northshore pellet plant to allow the production of up to 3.56Mtpa of DR grade pellet. AME estimates that ~2.7Mtpa of this DR pellet is provided to Cliffs’ 1.9Mtpa Toledo HBI plant, and the balance is sold to third parties (Nucor).

Algeria

The Tosyali Algeria pellet plant is located in Oran, Algeria. In 2016, Tosyali Iron & Steel Industry Algerie and China Sinosteel Equipment signed an engineering, procurement and construction (EPC) contract to set up a 4Mtpa pellet plant in Algeria. The total investment was CNY1.734b (US$263.5m), and the first DR pellet was produced in 2018. However, the plant’s output only reached ~1.8Mt in 2020 as the supply of suitable pellet feed has been a major constraint, initially due to lack of grinding capacity and port constraints. Port improvements and the addition of a 4.5Mtpa of ore beneficiation plant will be setup by 2021. AME expects that the plant’s DR pellet production will reach 4Mtpa by 2022, when the beneficiation plant is fully operational. 

Bahrain

Bahrain Steel has two pellet lines with a total production capacity of 11Mtpa. Production at the 12Mtpa level has been achieved on sustainable basis. The company imported ~8Mtpa of iron ore in 2020, mainly from Brazil, Canada, and Sweden, to produce ~8.3Mtpa DR pellet, of which ~6Mtpa was supplied to seaborne DR markets. The balance of ~2Mtpa was fed to the company’s own DR plant, SULB, which produces 1.5Mtpa DRI.

In 2019, Bahrain Steel signed a 20-year iron ore pellet feed contract with Anglo American, which supplies up to 8Mtpa of pellet feed. The pellet plant is able to produce high grade DR pellets with over 67% Fe and with combined silica and alumina levels of less than 2.5%.