Tenova HYL holds approximately 50% of the direct induced iron (DRI) reduction market, a technology which it has pioneered.
Could you give an overview of Tenova HYL’s history in Mexico?
Mexican companies are generally very good manufacturers but they use foreign technologies. There are very few Mexican companies that develop innovative technologies with commercial value abroad, and Tenova HYL is one of them. We are very proud to export Mexican intellectual property around the world. HYL is a pioneer of direct induced iron (DRI) reduction. In the 1950s, when there was a shortage of scrap metal in North America, HYL invented a way to produce pure iron from iron ore and natural gas. Before its acquisition by the Techint Group in 2005, HYL was the research and development arm of HYLSA. HYL was then placed under the Tenova umbrella, maintaining a strong relationship with Ternium and sharing the same facilities in Monterrey.
Since 2005, we have retained approximately 50% of the DRI market. In addition to our plants in Mexico, we also have three plants in the UAE, two in Egypt, one in South East Asia, and one in Louisiana, United States, among others. Tenova HYL and Danieli now develop the technology under the Energiron strategic alliance. We benefit also from the synergies within Tenova, a Techint Group company. Tenova is a worldwide partner for innovative, reliable and sustainable solutions in metals and mining. Leveraging a workforce of over three thousand forward-thinking professionals located in 22 countries across five continents, Tenova designs technologies and develops services that help companies reduce costs, save energy, limit environmental impact and improve working conditions.
What is Tenova HYL’s strategy to maintain a consistent growth rate moving forward?
Tenova HYL has a four-pillar business strategy, including innovation, reliability, sustainability, and safety. In terms of innovation, we are currently in the engineering phase for new plants where we will leverage our technology to produce novel products. For example, we have a very specific process to produce high-carbon DRI, and we are now moving toward high-carbon briquette production. In terms of reliability, our plants are in great condition. For example, our plant in Abu Dhabi that serves Emirates Steel was originally intended to have a capacity of 1.6million mt/y, but nowadays its actual production is over 2 mt/y. To enhance our reliability further, we are investing in the Industry 4.0 model and integrating technology such as advanced sensors and Big Data analytics through Microsoft’s Azure cloud.
In terms of sustainability, Tenova HYL provides the only DRI technology with a CO2 absorption system. For most companies, excess CO2 is an issue. For us, it is a source of revenue. For example, we sell our CO2 byproduct to oil companies in the UAE who use it for enhanced oil recovery, as well as beverage companies in Mexico who use it for soda.
Do you foresee an increase in DRI demand from the Mexican market?
Mexico alone would be too small as a market for us, and it has always been Tenova HYL’s intention to sell its technology abroad. That said, we have noticed a recent uptick in demand in Mexico driven by an influx in downstream investment, including rolling mills and finishing lines, for example. However, these lines must be fed, and importing slabs of metal is not always the most convenient way. Perhaps not in the short-term, but eventually we expect an increase in DRI installed capacity in Mexico. We are currently considering revamping our larger plants in Mexico that serve Ternium and ArcelorMittal. We are also discussing with these clients their plans to boost production so that we can plan to increase our capacity accordingly.
How competitive is the DRI market?
DRI is a growing trend in the steelmaking business. It is not as widespread as blast furnaces, but it is growing at a much faster rate. There are far more drivers for the increased capacity of DRI, while blast furnaces will eventually become obsolete. The DRI process is much better than converting scrap in terms of quality because scrap always involves impurities in the metal. For industries requiring high-quality metal, like the aerospace industry, for example, DRI is the best method because the results are purer. DRI also produces less CO2 than blast furnaces, so it is inherently better for the environment. With our CO2 absorption system, we produce 50% less CO2 than blast furnaces. When there will be direct access to hydrogen, that figure will increase to around 75%, and the process will be more cost-effective.
As a company based on innovation, from which government incentives have you benefitted in Mexico?
In many cases, we have developed new technologies through funding by the Mexican government’s Consejo Nacional de Ciencia y Tecnologia (CONACYT). We have also benefitted from partnerships with major universities in Monterrey, including Tecnológico de Monterrey, Universidad de Nuevo León, and Universidad de Monterrey. In these partnerships, we provide scholarships and training, which is very helpful for recruiting skilled engineers once they graduate.