Direct reduction processes were developed to overcome the difficulties of conventional blast furnaces. DRI plants need not be part of an integrated steel plant, as is characteristic of blast furnaces. The initial capital investment and operating costs of direct reduction plants are lower than integrated steel plants and are more suitable for developing countries where supplies of high grade coking coal are limited, but where steel scrap is generally available for recycling. Many other countries use variants of the process.
Factors that help make DRI economical:
* Direct-reduced iron has about the same iron content as pig iron, typically 90–94% total iron (depending on the quality of the raw ore) so it is an excellent feedstock for the electric furnaces used by mini mills, allowing them to use lower grades of scrap for the rest of the charge or to produce higher grades of steel.
* Hot-briquetted iron (HBI) is a compacted form of DRI designed for ease of shipping, handling, and storage.
* Hot direct reduced iron (HDRI) is DRI that is transported hot, directly from the reduction furnace, into an electric arc furnace, thereby saving energy.
* The direct reduction process uses pelletized iron ore or natural "lump" ore. One exception is the fluidized bed process which requires sized iron ore particles.
* The direct reduction process can use natural gas contaminated with inert gases, avoiding the need to remove these gases for other use. However, any inert gas contamination of the reducing gas lowers the effect (quality) of that gas stream and the thermal efficiency of the process. The use of natural gas also produces greenhouse gases.
* Supplies of powdered ore and raw natural gas are both available in areas such as Northern Australia, avoiding transport costs for the gas. In most cases the DRI plant is located near a natural gas source as it is more cost effective to ship the ore rather than the gas.
* To eliminate fossil fuel use in iron and steel making, renewable hydrogen gas can be used in place of syngas to produce DRI and eliminate production of greenhouse gases.