Japan's Kobe Steel Develops New Low-Cost Production Technique

Kobe Steel said April 12 it has co-developed a way of producing high-grade steel from low-cost materials, a technique that it hopes to sell to other companies. Kobe Steel has built an experimental plant in Minnesota with two of its U.S. partners, electric furnace steelmaker Steel Dynamics Inc and iron ore producer Cleveland-Cliffs Inc.

"The new plant with the completely new technique can produce high-grade steel quickly and with low-cost materials," said Kobe Steel spokeswoman Miki Kasuga. Unlike a blast furnace or an electric furnace, the new technique makes steel from iron ore pellets placed on a rotating furnace, she said.

Blast furnaces are generally suited for making such high-grade products as automotive steel from iron ore and coal on a large scale, while electric furnaces are used to produce mainly construction steel from scrap iron. The new technique produces high-grade steel although analysts said it was unlikely to be such high quality as product from a blast furnace.

"Compared with electric furnace product, a rotating furnace is expected to provide better quality. But it still wouldn't be as high-grade as blast furnace steel," said Tomomichi Nagaoka, a steel analyst at Moody's Japan. "Rotating furnace steel would overlap the market of electric furnace, likely to be used for machinery, not for automotive or home appliances," he said.

The Nihon Keizai reported that the Minnesota plant, which is expected to reduce materials costs to about one-third of those for a blast furnace, will start up at an initial rate of about 500,000 tons a year as early as 2008. However, Kobe denied it intended to construct the plant itself. "We are trying to sell the technique and plant to other companies as an engineering firm, not produce more steel as a steelmaker," Kasuga said.

Copyright Agence France-Presse, 2006