Tenova in talks with US, Middle East steel companies to build plants

Reuters

* In talks to build DR plant for North star BlueScope

* Trying to make technology less polluting

* CO2 from the process can be sold as by-product

By Silvia Antonioli

LONDON, May 23 (Reuters) - Engineering firm Tenova HYL is in talks with steelmakers in the United States and the Middle East to build plants that produce a raw material using natural gas to make high-quality steel.

The Milan-headquartered firm specialises in building plants that make direct reduced (DR) iron, which is produced from iron ore and natural gas and used to make high-quality steel mostly in electric arc furnaces. The abundance of shale gas has made investment in DR plants more attractive to U.S. steelmakers.

Tenova, a unit of Argentina's Techint group, is in final talks to build a DR plant for North Star BlueScope and is negotiating with at least thee more companies in the United States and in the Middle East, Tenova HYL commercial vice president Pablo Duarte said.

"We are expecting growth in North America because of the shale gas (revolution)," he said on the sidelines of the Platts Global Metals Awards.

"We also see potential in Northern Africa, where some Middle Eastern companies want to invest to take advantage of the abundance of gas."

North Star BlueScope was not immediately available to comment.

At the end of last year Tenova HYL completed a plant for U.S. steelmaker Nucor Corp in Louisiana, with annual capacity of 2.5 million tonnes of direct reduced iron.

"We built the Nucor plant and now we are pursuing other projects. There are at least three or four under development," Duarte said, adding he could not disclose company names due to confidentiality agreements.

Tenova's main competitor Midrex Technologies Inc is building a plant in Texas in partnership with Siemens AG which will have annual capacity of 2 million tonnes of hot briquetted iron, a product similar to DRI, for Austrian steelmaker Voestalpine.

Duarte said he was confident an improving global economy would support a recovery in the steel sector and boost demand for DR plants this year.

To help attract customers, Tenova is improving its energy use efficiency and introducing systems to capture and clean increasing amounts of carbon.

"Carbon can be sold as a by-product. It is not only an environmental benefit but also economical because at the end you can sell it to many industries," Duarte said.

CO2 can be sold for example to the beverage industry that uses it to make drinks fizzy and to oil companies that use it increase the productivity of their oil wells, he added.

(Reporting by Silvia Antonioli; editing by Susan Thomas)

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