In the US, where the Midrex process was first developed, direct reduction was seen in the 1960s as a way of breathing new life into electric steelmaking. The techno-economic model of the mini-mill, based on flexibility and reduced plant size, was threatened by a shortage of scrap metal, and a consequent rise in its price. With the same shortage affecting metallurgical coke, a return to the blast furnace route did not seem an attractive solution.
Direct reduction is theoretically well-suited to the use of ores that are less compatible with blast furnaces (such as fine ores that clog furnaces), which are less expensive. It also requires less capital, making it a viable alternative to the two tried-and-tested methods of electric furnaces and blast furnaces.
The comparative table shows that the diversity of processes is also justified by the need for quality materials. The coking plant that feeds a battery of blast furnaces is just as expensive as the blast furnace and requires a specific quality of coal. Conversely, many direct-reduction processes are disadvantaged by the costly transformation of ore into pellets: these cost on average 70% more than raw ore. Finally, gas requirements can significantly increase investment costs: gas produced by a COREX is remarkably well-suited to feeding a Midrex unit, but the attraction of the low investment then fades.