Final Thoughts: Venezuela in a different era

The steel landscape at the time

During this period, the integrated steelmakers still were dominant in the production of flat-rolled steels. Foreign competition and environmental problems were eroding their positions. The domestic steel industry had operated sinter plants since the early 1900s. These plants supplemented the blast furnace burden by agglomerating, hardening, and drying various ferrous waste streams into usable blast furnace feed, which supplemented iron ore pellets. This process was extremely polluting and was eventually restricted by the US Environmental Protection Agency (EPA). Several steelmakers installed scrubbers to limit the emissions and by 1983 they were back in business. 

However, they were in need of materials to sinter since their former feed streams were now limited. The dominant sinter feed was millscale, which is produced during the reheating and rolling of steel slabs, or ingots (yes, ingots were still used back then!). Think of it as a form of rust (iron oxide).

Millscale is 66-73% Fe with the balance being dirt, oil, and the usual “gangue” also contained in iron ore. Without the ability to sinter, millscale piled up at numerous rolling plants across the country. My job now included sourcing millscale for shipment to the reopened sinter plants operated by Bethlehem Steel in Sparrows Point, Md., and Bethlehem, Pa.  

The millscale has to be screened to 2” and under. It also had to contain low oil and be free from excessive residual alloys. After the acceptable quantities were sourced and shipped after the first two years, it became harder to supply the quantities needed for the ongoing sinter plant operations.

Journey to South America

Our trading company was informed a mill in Venezuela had a sizable stockpile estimated at 300,000 metric tons (mt) of low-alloy millscale, which they wanted to sell and ship. Bethlehem expressed an interest and a visit was arranged. I was to accompany Bethlehem’s blast furnace superintendent to inspect the material. I met George H. in Miami, and we flew to Venezuela together.

As we drove into the mountainous city of Caracas, I noticed beautiful modern areas in the city. However, there were enormous hillsides covered entirely with haphazardly constructed buildings and houses. What city doesn’t have their poorer sections, I thought? It was, however, eye-popping and very obvious this country was a version of rich man, poor man.

Our hosts were a trading group who worked to export Venezuelan iron and steel products. They had connections with the domestic steel mills. They were extremely knowledgeable about their products and the demand for them.

We went out for dinner at an upscale restaurant that evening to discuss our visit. I had never really been to a country where the US dollar went a long way. But now I was. Steak dinner for four with all the fixings and numerous cocktails (Johnnie Walker Black) came to just over $20, after the conversion. I jokingly asked my guides to drop me off at a mall on the way back to our hotel.

The next day we took a two-hour flight to Puerto Ordaz, located at the confluence of the Caroni and the navigable Orinoco Rivers. I have never seen a river the size of the Caroni with such large waterfalls and rapids. Needless to say, they had plenty of hydroelectric power for the industry in this area.

There was an active ferrous industry in Puerto Ordaz, which has grown since then. The large EAF steelmaker, Sidor, was located there as was the forerunner of modern direct-reduced iron/hot-briquetted iron (DRI/HBI) production, Fior. There was also plentiful iron ore mining in this area and natural gas was abundant. Of course, since then we have seen the rise and fall of the Venezuelan DRI sector.

We met with Sidor, who had produced most of the millscale. They were very hospitable and expressed a genuine interest in disposing of this material. After inspecting it, I could see why. The immense pile covered several acres inside the mill area. It was starting to impinge on their work area. It did not seem very oily and Sidor’s steel production was not high-alloy. We took samples to analyze.

Then, we showed the mill contractors what we expected in screening and handling to prevent contamination. Finally, we went to the ship loading facility on the Orinoco River to observe the loading procedures. All good. All that we needed was to establish quality and draft an agreement on price and shipment. That was done back in the States. Bethlehem agreed to transport the material using their own fleet which made the trade less risky from our side.      

We flew back to Caraccas for another steak dinner and a trip to a local mall. The deal on a trial shipment of 30,000 MT was approved with the balance to be shipped on a scheduled basis over the next several years. Sometime after I returned home, George H. at Sparrow’s Point called to say the first vessel of material was arriving and invited me to attend the discharge. As the millscale was drained out of the vessel, everyone agreed it was perfect. The shipments continued on a regular basis and the deal even outlasted those who were made it. 

Keeping in touch

I have maintained contact with this Venezuelan trading company throughout the trials and tribulations involving the political upheavals in Venezuela over the years. They have prospered nonetheless.

In my interaction with Venezuela during my brief trip there, I could feel the disparity between rich and poor in that country. I was not very surprised when it hit the boiling point. I was disheartened to see how the world’s leading exporter of DRI/HBI could collapse to the point they had to import Canadian iron ore to produce that product. And this all at a small fraction of the former production.   

I don’t know where the recent developments in Venezuela will lead. But it’s my hope their ferrous raw material industry will revive become a much-needed producer of the materials the world’s steel industry needs in the transitioning to decarbonization.