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Charcoal production to pig iron industry in Brazil

 

Edited by : Md Muzammel Haque


1. Description of the product and technology.

Charcoal results from the carbonization on slow pyrolysis of wood. The wood is heated to temperatures between 200°C and 400°C, this process promotes modifications of the wood components, which the main objective is to concentrate the carbon content in the resulting mass.  For this conversion of wood into charcoal, the industries have been developing more and more efficient furnaces and investing in technology to reduce the costs of production and emissions.

                                                                         

Figure-1 & Figure-2: Minas Gerais Industrial region in Brazil

The state of Minas Gerais has the greater area of Eucalyptus in Brazil, with around 1.37 million hectares, great part of this is destined to the production of charcoal, mainly to be used as energy to the production of pig iron. Minas Gerais is also the main producer and consumer of charcoal, this product is very representative in the economy of the country, especially in the state above mentioned. Brazil is the world’s largest producer of charcoal, producing 6.2 Mt in 2015, which was 12 percent of global production (FAO, 2016d), great part of this production comes from Eucalyptus wood.

                                                                                             

Figure-3 : Compositin of the area of planted trees ,by owner type, 2016

As an alternative to coal coke in steel production, charcoal, a renewable coke, can be used to mitigate emissions of greenhouse gases. It should be noted that the use of charcoal as a reducing agent is a peculiarity of the Brazilian steel industry, accounting today for about 20% of the total production of pig iron, raw material used for the production of crude steel (SINDIFER, 2015).

The production of charcoal can capture CO2 from atmosphere and not emit SO2 into the atmosphere, "green steel" is the name given when the steel industry uses charcoal in its production system, this product exists only in Brazil, where there is an industrial use of charcoal. Charcoal blast furnaces were developed in Brazil and are a genuinely national technology whose engineering is fully mastered.

 

2. Description of the market.

The participation of planted wood in the production of charcoal has been increasing in the last years, because in 2009 a new law was introduced in Minas Gerais stimulating the substitution of consumption of products from native forests for the consumption of products from planted forests, as the state is the major producer and consumer of charcoal, it reflected directly in the national scenario.  

                       

Figure-4 : Brazilian charcoal consumtion 2008-2016 : Blue(planted) and Blue-green(native).

Figure-5 : Main centers of Charcoal consumption in Brazil

Figure-6 : Destinations of the pig iron exported by Minas Gerais from 2011 to 2016, sources : SINDIFER ( yearbook 2016 )

 

Producing pig iron based on charcoal from planted forests is a way to add value to iron ore available in Brazil. The competitor of charcoal in the steel process is the coke, raw material imported by the country. This market of charcoal means great advantages, environmental, social and economic ones, it is also a competitive advantage for Brazil that dominates the technology of its production.

The price of charcoal is regulated by 3 factors:

  • Price of steel: the higher its price, the higher the price of charcoal;
  • Price of mineral coal: the higher its price, the higher the price of charcoal;
  • Dollar value: the higher its price, the higher the price of charcoal;

The steel mills in Brazil has as the large consumer, the market abroad, because of this there is natural tendency to export their products. After the 2008 crisis, the largest worldwide affected were the construction and automobile industries, the main consumers of Brazilian iron ore, since then the sector has been experiencing difficulties and expects a recovery in the coming years.

3. Description of the policy measures:

Currently, there is no specific policy related to the production of charcoal from planted forests, only some environmental regulations that discourages the utilization of natural forests and stimulates the utilization of planted forests to the production of charcoal.

There is the National Forests Program that does not present specific guidelines for the growth and strengthening of industries in any sector, nor even government commitments so that such measures can be implemented.

Some policy measures that must be taken and that the executives of the national steel sector expect from the new government are measures related to the main factors affecting the price of mineral coal, investments in infrastructure, reduction of tax burden and political reforms.

4. Evaluation of the effect of these measures

There are some troubles to face in the following years to the steel industry, which is passing through a difficult period, difficulties with taxation in the sector, the cost of producing renewable wood is still higher than native wood extraction, and the extremely bureaucratic legislation in Brazil are great problems to be over passed in near future.

According to the diary of commerce, industry and services, and if the expectations become reality, the sector has a great tendency to grow. The international scenery is showing signals of recovery, specially in the construction and automobiles industries. With the measures being implanted and the international recovery, the executives from the steel industry have expectations of 10% increasing in the iron exports.

 

5. References: