The Saga of New Zealand Steel
An External Advisor
In March 1961, the Battelle Memorial Institute of Columbus, Ohio, was chosen as adviser on process selection, giving the investigating company the services of an expert non-commercial organisation. The institute considered over a hundred iron-making processes, eliminating the blast-furnace method (which produced 95% of the worlds iron) because of its difficulties with titanium and its requirement for coking coal, of which New Zealand possessed only small quantities. Furthermore, on the small scale of production envisaged, the capital required for a blast furnace was too high.
Six Processes for Trial
Six processes were selected for trials using New Zealand ironsands, reductant (coal and char) and limestone. Three appeared technically and economically feasible using Waikato coal. The Norwegian Elektrokemisk process was the most favoured, although this view was omitted from the investigating companys report of December 1962.
In 1963, engineering consultants, W. S. Atkins & Partners and McLellan & Partners, were appointed to confirm cost estimates, conduct detailed market studies and provide more detailed information than Battelle could offer on iron-making, steel-making and rolling plant. They were also to formulate a development plan to meet New Zealands economic interests and provide a profitable investment for the operating company. Independent consultant Dr Gerry Hatch was also engaged because of his experience in running the first electric ilmenite smelting plant in Canada.
The Stelco-Lurgi Process
In November 1964 the consultants recommended that the SL/RN (Stelco-Lurgi/Republic Steel-National Lead) process, not previously considered, was likely to be the most economic method for ore reduction.
In 1964, 200 tons of ironsands, 135 tons of Waikato coal and four tons of limestone were shipped to the Lurgi pilot plant at Frankfurt. Under controlled temperature, a high degree of reduction was achieved but at the expense of some 11% pellet degradation due to abrasion in the kiln. Some of the product went to the British Iron and Steel Research Association (BISRA) at Sheffield for steel-making in its electric-arc furnace. Reduced pellets were also shipped to Stelco in Edmonton, where they were melted in a full-scale, high-powered electric steel furnace, to produce high-quality steel at a power consumption of about 1200 kilowatt-hours per ton of steel.
To assist final process selection, detailed cost comparisons were made of possible process routes (combinations of pelletising, direct-reduction, steel-making and rolling) and products appropriate to the small New Zealand market. Despite doubts about green-pellet abrasion and the higher power consumption of cold-charge electric steel melting, Atkins, Hatch and associates preferred the Stelco-Lurgi process.
Although Tom Marshall still favoured Elektrokemisk, investigating company chairman Woolf Fisher was persuaded to recommend the Stelco-Lurgi option because it involved fewer processing steps. Although considerable scaling up of the kiln would be required (about eight times on a linear basis, or about 600 times on a volumetric basis), which raised additional concerns over pellet abrasion, the way seemed clear for the adoption of the process in New Zealand.
Teething troubles for New Zealand Steel
New Zealand Steel Limited was incorporated in 1965 and plans were developed for an integrated steelworks. To provide cash flow, in 1969 a galvanising facility was erected, using cold-rolled feedstock from Japan, and ironsands were exported to Japan from Lake Taharoa. An ironsand concentration plant was built at Waikato North Head, and a pelletising plant, rotary kiln, two arc furnaces and a continuous billet caster were assembled at Glenbrook. In keeping with the newness of the process and the size of the New Zealand market, the Glenbrook plant was designed initially to produce only 135,000 tonnes of iron and steel a year. To reduce costs, arrangements were made for billets to be rolled in the nearby Pacific Steel rod and bar mill.
In the Stelco-Lurgi design, the first step at Glenbrook involved ball milling of primary iron sand concentrates from about 125 down to about 40 micrometres, to allow pelletisation and liberate feldspars impurities. Further magnetic separation then yielded purer secondary concentrates containing about 60% iron, which were dried, mixed with bentonite clay and rolled into one-centimetre green balls for direct feed into the top of the rotary kiln. Coal injected at the bottom of the kiln produced gaseous combustion products and volatile components which passed up the kiln, counter to the flow of the ore charge, achieving ore reduction in the process. The high volume of exhaust gases leaving the top of the kiln was passed to gas bag filters to remove particulates before discharge into the air.
Operations began in 1969 and sponge-iron production commenced in early 1970. Unfortunately, serious troubles were experienced from the beginning. The green balls degraded in the kiln to form a fine dust, which caused accretions on the kiln walls and rapid filling of the exhaust-gas bag filters. Once again the commercial production of steel from New Zealand raw materials seemed doomed to failure. Two and a half years of frustration followed.
During this period, the galvanising facility and steel- making using predominantly scrap feed gave the company a cash flow but, by the 197172 financial year, accumulated book losses stood at $13.7 million.
Eventually the Stelco-Lurgi process was modified to become viable. Prior to the commissioning of the Glenbrook plant, New Zealand graduates C. Peter Bates, Nigel T. Evans, Christopher J. Pendleton and Richard H. Cooper, had been sent overseas for two years training in general steelworks operation as well as specific areas related to the New Zealand operation. Their analytical ability and persistence were vital to the eventual development of a successful process.
The accretion problem was traced to the fine 40-micrometre particles of milled concentrate, which melted at the operating temperature of the kiln, stuck to its sides and combined with coal ash. To minimise this difficulty it was essential to achieve close control of the kiln temperature. Initial attempts involved reducing the coal feed then replacing it with char. Eventually all carbon (char and coal) was fed with the ore into the top end of the kiln. Although this helped to solve the accretion problem, it enhanced the degradation of the green balls into dust. Despite considerable efforts by the DSIR and the New Zealand Steel Company, degradation of the green pellets could not he prevented and it was realised that the ore feed would have to take some other form.
The engineering consultants favoured thermal hardening of the pellets but the Glenbrook team was unenthusiastic, believing a viable process would need to be as simple and cheap as possible. There were pointers that unpelletised primary concentrate could be used Western Titanium at Capel in Western Australia were producing rutile (titanium dioxide: TiO2) by reduction of unagglomerated ilmenite (Fe TiO3) sand in a rotary kiln. The technical manager of this plant was New Zealander Bill Hockin who, in 1971, showed a group from New Zealand Steel around the operation.
A Process Change
Following this visit, metallurgists Nigel Evans and Peter Bates gathered support within New Zealand Steel for a trial using unpelletised primary concentrate, despite the difficulties encountered in the Elektrokemisk tests and continued opposition from Stelco and Lurgi. Three factors underpinned their enthusiasm. One was the absence from the primary concentrate of the 40-micrometre fines, which formed the cement for accretions. This was backed by laboratory observations that, unlike secondary concentrates, unground primary concentrate did not grow iron whiskers during reduction and hence was far less susceptible to accretion. There was also the appeal of removing the grinding and pelletising steps, which would make the process simpler and less expensive. However the steel-furnace operators did not receive the idea of a trial with unpelletised material cheerfully.
Electric-furnace practice at New Zealand Steel involved semi-continuous feeding of cold, pre-reduced pellets into a bath of molten scrap and slag through chutes in the furnace roof. Worldwide there was no experience of roof-feeding fine, 125-micrometre metallic particles. The operators believed the fines would simply blow out through the gas-extraction system and that the dust problem would be in the furnaces rather than the kilns.
Success at Last
Nevertheless, the New Zealand Steel board was persuaded by its technologists to proceed with a three-day trial in May 1972. Following this trial, a two-week campaign was conducted with high-grade primary concentrate obtained by magnetic and gravity separation. Consistent, high conversion to sponge iron was achieved in the kilns. The absence of fines reduced iron loss in the waste gas and changed the nature of any accretions that formed so that they became self-clearing. The sponge iron was fed to the electric-arc furnaces using overhead continuous-charging equipment and the results were very encouraging. Furthermore, steel- making proved easily controllable.
From August 1972, a complete changeover was made to the new method and another milestone in New Zealand steel production had been achieved. After nearly 130 years, a method finally existed for the commercial conversion of indigenous ironsands to steel.
The successful operation of the plant did not signal the end to innovation. The kiln and furnaces were used for full-scale experimentation over several years to optimise the process and its control. For example, the high reactivity and volatility of Waikato coal caused partial fluidisation of fine materials in the kiln with consequent improvement in heat transfer. However, the semi-fluidised state caused problems with the faster flow of materials and shorter retention time. These were overcome by installing dams within the kiln and decreasing the kiln slope, modifications that also brought kiln ringing under control.
Thermal efficiency of the system was improved in 1976 by drying and preheating the ironsand/coal feed mixture in a multi-hearth furnace, using the coal volatiles as fuel. Hot gases given off during reduction were also used to produce electricity, as in Culls patent. Thermal control of the whole system, performance of equipment components and the gas-cleaning system were also improved.
An Integrated Steelworks
With its plant fully in operation, New Zealand Steel focused on its original goal, the establishment of an integrated New Zealand steelworks. The required expansions were conducted by dedicated research and operating staff and included many significant elements of other processes, such as kiln operation (Yawata, Stelco-Lurgi and Western Titanium), hot transfer (Elektrokemisk), and vanadium recovery (Highveldt). In 1979, the first stage of expansion saw the adoption of a flow sheet for steel-making, similar to the Elektrokemisk process successfully trialled in 1961. It realised a 30% reduction in unit electricity consumption and the production of a valuable by-product, vanadium slag, from the vanadium content of the ore.
The process involves hot transfer of reduced primary concentrate and unused char from the rotary kiln to an electric melter designed to operate with fine materials. The molten pig iron then goes to an oxygen steel-making vessel. Four new rotary kilns fed by multi-hearth furnaces were also included in the expansion. The second stage saw the introduction of hot and cold rolling mills in the late 1980s, thus finally establishing an integrated steel works.
A Political Win
Prior to gaining government support for the full-scale steelworks, the New Zealand iron and steel industry faced a further obstacle. The proposed aluminium smelter at Aramoana on the Otago Peninsula and the synthetic gasoline plant at Motunui were competing for financial resources. Unfortunately, New Zealand Steel had based its case on market and price projections that Treasury officials found hard to accept. The size of the project was such that substantial government funding would be required.
According to official analyses, the Motunui (synthetic petrol) and Aramoana (aluinium smelting) projects were more in the national interest. However, a dramatic change came with the withdrawal of the Aramoana smelter promoters and the decision of the Mobil Oil Company, the private participant in the synthetic gasoline plant, to delay proceeding until after the 1981 parliamentary elections, since the Labour opposition had promised to review the proposal if elected.
Steel, the one major project using technology developed in New Zealand, was left the front-runner. Faced with the need to give credibility to its Think Big programme, the National government approved the first stage of the expansion in November 1981, before the election, with approval in principle to the second stage.
The saga was not yet over. By October 1983, tenders had been awarded for the stage-two plant and construction was proceeding on stage one, but extensive delays had been incurred by union action. Poor site productivity contributed to the projects financial losses and forced the incoming 1984 Labour Government to introduce radical reforms to state support for industry.
Two major capital reconstructions gave the government an initial 90% interest in New Zealand Steel, together with a release from all economic, financial and other obligations. Later, acting on its philosophy that the state should not own commercial enterprises, the Government found a buyer for its equity share of New Zealand Steel.
Sale to Equiticorp
The day before the October 1987 share-market crash, Minister of Finance Roger Douglas held a press conference at which he announced the sale of New Zealand Steel shares to Equiticorp, a conglomerate headed by Alan Hawkins. Part of the perceived value of Equiticorps investment was access to substantial tax depreciation allowances on the capital investment in plant and equipment.
Equiticorp administered New Zealand Steel for a year, but in January 1989 was placed under statutory management. Subsequently, Alan Hawkins was jailed on fraud charges and the government (and other parties) were sued by the statutory managers for substantial losses arising from the sale.
In June 1989, the statutory managers were completing a sale of New Zealand Steel to Minmetals, a company owned by the Communist Chinese Government, when the Tiananmen Square uprising took place and the deal foundered.
BHP Takes Over
Ownership was eventually transferred to the Australian giant, Broken Hill Proprietary (BHP). For BHP, the New Zealand operations, although novel, represented less than 10% of its steel-making capacity. They have received only minor mentions in that companys annual reports. At the end of the century, BHP New Zealand Steel remains New Zealands only fully integrated flat-products steel maker. Its products include established brands such as Colorsteel and ZincAlume. Dispatches in the 1997/98 financial year were 0.54 million tonnes, of which nearly two thirds were exported.