Tracking Coal through the Process of Steel Making
Granite City, Illinois is the quintessential American small town. It has a population of about 26,000 and for more than 100 years, its economy has largely been dependent on the local U.S. Steel manufacturing plant. For most of that time the community lived with the assurance that comes with an economy centered on basic industry.
That assurance was shaken three years ago when the steel plant laid off most of the 2,000 workers, leaving only a small skeleton crew. The town was shaken at its core. Rosemarie Brown, executive director of the Chamber of Commerce of Southwestern Madison County, said the closure was “devastating.”
“The Granite City Works is vital to the community,” Brown said. “In fact, the town was founded around the plant in 1894.” Brown said that in the year after the plant effectively shut down, the Chamber lost 26 member companies.
All that changed when the new Trump administration shifted U.S. trade policy and began taking actions to support the domestic steel industry. Earlier this year, U.S. Steel announced it was restarting both furnaces at the Granite City plant and began recalling laid-off workers. Approximately 800 have returned to work in just the past few months with just one furnace online. More will be needed when the second furnace goes back into production later this year.
But this article is not the story of a small town in the middle of America. It is an article about the two industries that largely created the town and continue to carry it on their shoulders – steel manufacturing and coal.
The Role of Coal in Steelmaking
Steel is primarily produced using one of two methods: blast furnace or electric arc furnace. Both methods of steel production rely on coal, one directly and one indirectly.
Metallurgical coal (or coking coal) is the type of bituminous coal used to produce coke to make steel. Quality characteristics of met coal include low ash and sulfur content, and volatile matter within narrow parameters. The three main categories of metallurgical coal are: hard coking coal, semi-soft coking coal and pulverized coal injection (PCI) coal. Cokemakers often use blends of up to 20 different coals in order to offer a consistent product.
The blast furnace is the first step in producing steel from iron, and is used to make nearly 75 percent of steel worldwide. According to the American Iron and Steel Institute (AISI), the first blast furnaces appeared in the 14th century and produced one ton of steel per day. Although today’s equipment has improved and higher production rates can be achieved, the processes inside the blast furnace remain the same. The blast furnace uses coke, iron ore and limestone to produce pig iron, which is then converted to steel. After casting and rolling or coating, the steel is delivered as coil, plate, sections or bars. Steel made in an EAF uses electricity to melt recycled steel.
“Coal is a key part of the coke-making process,” said Lisa Harrison, senior vice president of communications of AISI. “The coal is crushed and ground into a powder and then charged into an oven where it is heated to approximately 1800°F in the absence of oxygen. As the oven is heated, the coal begins to melt so most of the volatile matter such as oil, tar, hydrogen, nitrogen and sulfur are removed.
“The cooked coal, called coke, is removed from the oven after 18 to 24 hours of reaction time. The coke is cooled and screened into pieces ranging from one inch to four inches. The coke is a porous, hard black rock of concentrated carbon (contains 90 to 93 percent carbon), which has some ash and sulfur but compared to raw coal is very strong. The strong pieces of coke with a high energy value provide permeability, heat and gases which are required to reduce and melt the iron ore, pellets and sinter.”
A second method of production utilizes electric arc furnaces. They date back about 100 years and have become the most common method of producing steel in the U.S., now accounting for nearly 2/3 of steel production. The electric arc furnace is different from the blast furnace as it produces steel by using an electrical current to melt scrap steel and then uses the scrap steel and electricity to produce molten steel. Coal is a key part of producing the energy required for the process. To produce energy, the heat from burning coal is used to create steam to drive a turbine. Casting, reheating and rolling processes are similar to those for blast furnace steel production.
According to the AISI, economic momentum has been building over the last several quarters, underpinned by robust labor market conditions, recoveries in both the industrial economy and in business investment expenditures, and a growth-oriented policy agenda by the Trump administration. These factors are reflected in, and reinforced by, high levels of business and consumer confidence.
“Improved economic conditions have led to improvement in United States steel demand. Apparent steel use was down 10 percent in 2015 and 4 percent in 2016 amid an energy market plunge and manufacturing sector weakness. Those headwinds have since shifted to tailwinds and apparent steel use increased 6 percent in 2017 and is up 4 percent in the first five months of 2018, thanks to a healthy construction industry, an energy sector rebound and strong growth in manufacturing output, even as light vehicle manufacturing plateaued,” said Harrison of AISI.
That optimism and increase in demand is what led U.S. Steel to reopen its Granite City Works. And according to Meghan Cox, spokesperson for the company, U.S. Steel has announced several other projects this year. These include plans to invest $275 million to $325 million in capital projects, announced in February; to construct a new steel-coating line to help PRO-TEC, a subsidiary, make cars in Leipsic, Ohio; and to restart the second of two blast furnaces at Granite City.
None of those are new plants, but they represent investment and job-creating activities. Additionally, other American steelmakers have announced new mills and re-openings this year.
Nucor, another steel manufacturer, announced in November it would open a steel rebar micro-mill in Sedalia, Mo., creating 250 full-time jobs. Nucor will build another mill in Frostproof, the company announced in March. Liberty Steel bought and is preparing to reopen a steel mill in Georgetown, S.C. The mill was shuttered by its previous owners in 2015. And Big River Steel is investing $1.2 billion to expand its Arkansas steel plant.
Steel demand is expected to grow in the near term as construction activity continues to increase, higher oil prices sustain a recovery in energy investment and the manufacturing sector benefits from robust business equipment investment and healthy global economic growth.