TOKYO (October 24, 1996) -- Kobe Steel, Ltd. and its subsidiary Midrex Direct 
Reduction Corporation announce that they are jointly developing a circulating 
fluidized bed direct reduction process.  Called the SPIREX Process, the new 
technology uses iron ore fines as the raw material and natural gas as the reductant 
to produce direct reduced iron (DRI) fines.  DRI is a feed material that is typically 
used in electric arc furnace (EAF) steelmaking.  

Plans call for the two companies to build a demonstration plant at Operaciones al 
Sur del Orinoco C.A., a Kobe Steel subsidiary in Puerto Ordaz, Venezuela that 
produces hot briquetted iron (HBI), a compacted form of DRI highly suitable for 
merchant shipment.  The demonstration plant, to make DRI fines, is expected to 
have a nominal capacity of 30,000 metric tons per year.  Roughly US$14 million 
(about 1.5 billion yen) is anticipated to be invested in construction and operation of 
the trial facility.  

Kobe Steel and Midrex are currently working on the detailed design of the 
demonstration plant.  Construction is planned to start in the second half of 1997, 
with trial operations in the second quarter of 1998.  The SPIREX Process would 
be highly applicable in South America, the Middle East, Australia and other 
locations where natural gas is plentiful.

The SPIREX Process utilizes a circulating fluidized bed preheater and two stages 
of direct reduction reactors.  The first stage consists of a circulating fluidized bed 
reactor, while the second stage consists of a bubbling fluidized bed reactor.  

After being dried and screened, the iron ore fines are fed to the preheater for 
preheating and prereducing using the off-gas from the reactors.  Turbulent 
movement of the ore fines in the preheater and the first-stage reactor degrade the 
larger ore particles into smaller sizes, and thus make them more uniform in size.  
Reducing gas from the MIDREX Reformer at temperatures of 800 to 850 degrees 
Celcius reduces the iron ore fines in the two-stage direct reduction reactors in 
roughly 3 hours with metallization of a minimum 92%.  The product is discharged 
as DRI fines, which can be briquetted into HBI.

Plant operators would benefit from the SPIREX Process over other processes 
using natural gas and iron ore fines:

1.   Broad raw material flexibility
A wide variety of iron ore fines, including those suitable for standard pellet and 
sinter feed, can be used.  Other processes require ore fines of a more uniform size.  

Sticking of the iron ore fines is solved by the turbulent movement of the ore fines in 
the fluidized bed and by the optimum rate of reduction in each reactor.

2.   Energy efficient
Off-gas from the reactors is fed into a proven MIDREX Reformer and is reused in 
the reactors.  As a result, energy loss is minimized.  

3.   Low construction cost
The carbon-dioxide reformer eliminates the need for carbon-dioxide removal units, 
gas reheaters, boilers and other associated equipment for processes that use steam 
reformers. 

4.   Simple operation & easy maintenance
Sticking of the iron ore fines is greatly reduced, and the gas generation process is 
simple owing to the carbon-dixoide reformer.

Demand for DRI to grow
Electric arc furnace (EAF) steelmaking has been increasing sharply in recent years 
and is anticipated to continue growing in the near to midterm future.  This trend is 
most noticeable in North America and Southeast Asia.  As EAF steelmaking 
continues to rise, with technological advances enabling the production of higher 
grades of steel products, mini-mills face a continuous shortage of high quality scrap 
and virgin metal.  

By the first decade of the 21st Century, DRI/HBI demand is anticipated to nearly 
triple.  In 1995, 30.7 million metric tons of DRI was produced worldwide, of which 
over 92% was produced in gas-based plants. In 2005, it is estimated that production 
will rise to 65.9 million metric tons and to 86.8 million metric tons in 2010. 

Kobe Steel and Midrex are taking a leading role in promoting the iron unit business 
to meet the demand for virgin metal. The development of the SPIREX Process 
will not only help meet the demand for a gas-based process for iron ore fines, but it will 
add to the array of direct reduction processes available to plant operators to fit their 
requirements.  

The most widely used process in the world is the MIDREX Direct Reduction 
Process, which uses natural gas to reduce iron ore lumps or pellets.  Since 1969 
when the first plant using this process began operation, Midrex has supplied 50 
modules worldwide.  

In the FASTMET Process, developed by Kobe Steel and Midrex, pulverized coal is 
used to reduce pellets made of iron ore fines.  Construction of a commercial-scale 
plant is to begin in the first quarter of 1997 in Louisiana, USA.  In yet another 
joint development, the two companies are conducting research on a new process that 
makes molten iron using pulverized coal and iron ore fines.  

Midrex Direct Reduction Corporation is a wholly owned subsidiary of Kobe Steel, 
Ltd.  Based in Charlotte, North Carolina, USA, the company is involved in the 
development and engineering of direct reduction processes.  The president is 
Winston L. Tennies.

OPCO is a wholly owned subsidiary of Kobe Steel in Puerto Ordaz, Venezuela.  
Established in March 1987, OPCO operates a direct reduction facility that produces 
HBI.  The president of the company is Jose Santiago Nunez Gomez. The plant is 
owned by MINORCA, a CVG subsidiary, and the project operates under a "build-
operate-transfer" scheme.

                         BACKGROUND INFORMATION

MIDREX Direct Reduction Process
This process converts iron oxide in pellet or lump form to high-purity 
DRI using natural gas as the reductant.  Iron oxide is fed to the top of a 
vertical shaft furnace.  Reducing gas consisting of a mixture of natural gas 
and recycled gas is injected into the shaft furnace.  The iron oxide, heated 
for 6-8 hours at 800-900 degrees Celsius, is reduced to DRI, which is 
discharged from the bottom of the furnace.  

The DRI can be charged hot to an adjacent melting furnace or be briquetted 
for merchant shipment.  DR plants using this process are primarily located 
in countries rich in natural gas.  About 65% of world DRI production is 
made using the MIDREX* Direct Reduction Process.

FASTMET Process
In this process, a combination of pulverized coal and iron ore fines are made 
into pellets.  The pellets are fed into a doughnut-shaped rotary hearth 
furnace and heated. At 1,350 degrees Celsius, the pellets are reduced in 
8-10 minutes.  Under high heat, the pulverized coal serves as the reductant 
and burns off the oxygen in the iron ore.  DRI can be charged hot to an 
adjacent melting furnace or briquetted for merchant shipment.  

New molten ironmaking process 
Pellets made of iron ore fines and pulverized coal are heated to 1,300-1,500 degrees 
Celcius.  At these temperatures, iron ore is reduced in a short 6 to 10 minutes.  
The iron in the pellets separates from the gangue, or valueless rock in the ore, 
yielding high-purity molten iron.

Kobe Steel and Midrex are conducting research in three stages. Phase 1 consists of 
basic research,which is currently underway.  Phase 2, bench-scale testing, began 
in October 1996 and runs to mid-1998. are planned for the first two stages.  In 
phase 3, a pilot plant is planned to be built.  Should this process be proven viable, 
Kobe Steel and Midrex believe it will be regarded as revolutionary next-generation 
technology.  The characteristics of this process are as follows:

1.  Reduction is a short 6-10 minutes.  In comparison, reduction in a blast 
furnace takes 6-8 hours.

2.  As the end product is in molten form, downstream steelmaking 
operations would be shorter and energy savings would improve.

3.  Without being processed in an electric-arc furnace (EAF), the molten iron can go 
directly to the ladle furnace, where the chemical composition can be adjusted, and 
consequently to the continuous caster.

4.  Molten iron cooled into iron shot or ingots can easily be transported as 
there is no danger of re-oxidation.

5.   The high-purity molten iron, separated from the slag, is of similar 
quality to blast furnace pig iron.  Molten iron made by the new process 
contains less carbon than blast furnace pig iron, and the carbon content can 
be adjusted. 

6.  Iron ore fines is a plentiful resource and coal is used as the reductant 
instead of natural gas.  Consequently, process users will have a greater
range of locations to situate molten ironmaking plants.  In addition, they 
will be able to locate molten ironmaking plants near their steelmaking 
facilities, contributing to an overall reduction in production costs.

7.  After reduction occurs in the pellet, the metal and slag separate.  As 
the remaining amount of FeO is extremely low, it is believed that there will 
be no refractory erosion in the furnace.

World DRI/HBI Production by Region

                   1995    2005    2010 
Region
North America	    1.5     5.9    10.3
South America	   11.0    17.6    22.9
Asia/Oceania        7.3    28.3    35.3
Middle East         7.8     9.8    11.8
Europe/Russia       2.1     2.1     4.3
Africa              1.0     2.2     2.2  
Total              30.7    65.9    86.8

Figures are in millions of metric tons
Source of total figures:  Paine Webber
Source of regional breakdown:  Kobe Steel, Ltd.
                                    # # #

Note:  MIDREX Direct Reduction Process is a registered U.S. trademark.
       SPIREX Process is a trademark.

For additional information, please contact:
Gary Tsuchida
Kobe Steel, Ltd.
Tokyo, Japan
tel (03) 3218-6055
fax (03) 5252-7961
e-mail  www-admin@kobelco.co.jp
URL  http://www.kobelco.co.jp

David Wood
Midrex Direct Reduction Corporation
Charlotte, North Carolina  USA
tel  (704) 378-3382
fax  (704) 373-1611

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