MB DRI & PELLET: Brazil pellet sector faces challenges, Samarco says

Environmental factors in Brazil are creating difficulties for the production and supply of high-quality direct reduction (DR) pellets, a Samarco executive said on Tuesday March 3.

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“There are many challenges in producing DR pellets,” Roberto Carvalho, chief operating officer at Samarco Mineraçao, told delegates at Metal Bulletin’s 3rd World DRI and Pellet Congress in Abu Dhabi.

“In Brazil, the challenges are greater,” he added, referring to the huge iron ore reserve needs, high energy consumption and water use, as well as waste and tailings disposal requirements.

High-quality requirements for DR pellets mean that selective mining and a larger pool of iron ore resources are needed to extract material with higher grades and lower trace elements, suitable for concentration and thereafter pelletizing.

At the same time, demands for more effective use of resources are growing in Brazilian society, Carvalho noted.

Limited rains in a country reliant on hydroelectric power have also increased risks of energy rationing in coming years, presenting operational challenges for the energy-intensive processing steps required to produce DR pellets.

In addition, costs of production are increasing with the costs of energy already up by 40% in 2015, according to Carvalho.

“Abnormal dry seasons have triggered social concern over the industrial usage of water,” he added. “[There is an] increasing debate over rights of water use and its taxation.”

To produce a high-quality pellet product, infrastructure needs for waste and tailings disposal are also growing, but licensing of new disposal areas has become a lengthier process, Carvalho said.

Despite the challenges, Samarco will “absolutely” continue as a DR pellet supplier and, following the commissioning of its fourth pelletizing plant last year, it has spare capacity for pipeline transportation and thus room to grow with its customers, Carvalho concluded.

Samarco is a 50:50 joint venture between iron ore majors Vale and BHP Billiton. It sold 24.1 million tpy of pellets in 2014, of which 48% were DR pellets.

The highest share of Samarco’s sales go to the Middle East-North Africa (Mena) region, where it aims to ship 7 million tpy of DR pellets in 2015, up from 5.8 million tpy in 2014.

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