MINI-MILLS: The new look of Steel Mills
Electric mini-mills are fast raplacing the more traditional blast furnace steel mills
of the past. In a mini-mills, electricity is used to melt (primarily) scrap steel.
The diagrams below show the steps that traditional steel mills must take, to make
steel from ore, coke, and limestone. It also shows how mini-mills streamline this
Minimills make steel from scrap steel or scrap substitutes in an electric
arc furnace (EAF). Electric furnace steel, like integrated steel, is then
cast into the semi-finished forms. Because an integrated process takes
more steps (i.e., coke batteries, blast furnaces), is more capital intensive,
and traditionally requires more man-hours per ton, the minimills have
used their cost advantage to take share away from the integrate steel
mill+blast furnace operations. However, as the price of the raw materials
that go into an electric furnace, i.e. scrap, has increased, the cost
advantage of the minimills has diminished. The integrate mills, too, have
brought their costs down at the same time. Generally, if scrap is above
$160-170 per ton, the minimill cost advantage disappears.
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