Appraising the value of compositional information and its implications to scrap-based production of steel

Reinol Josef Compañero (), Andreas Feldmann, Peter Samuelsson, Anders Tilliander, Pär Göran Jönsson and Rutger Gyllenram
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Reinol Josef Compañero: KTH Royal Institute of Technology
Andreas Feldmann: KTH Royal Institute of Technology
Peter Samuelsson: KTH Royal Institute of Technology
Anders Tilliander: KTH Royal Institute of Technology
Pär Göran Jönsson: KTH Royal Institute of Technology
Rutger Gyllenram: Kobolde & Partners AB

Mineral Economics, 2023, vol. 36, issue 3, No 7, 463-480

Abstract: Abstract The current nature of steel design and production is a response to meet increasingly demanding applications but without much consideration of end-of-life scenarios. The scrap handling infrastructure, particularly the characterization and sorting, is unable to match the complexity of scrapped products. This is manifested in problems of intermixing and contamination in the scrap flows, especially for obsolete scrap. Also, the segmentation of scrap classes in standards with respect to chemical compositions is based on tolerance ranges. Thus, variation in scrap composition exists even within the same scrap type. This study applies the concept of expected value of perfect information (EPVI) to the context of steel recycling. More specifically, it sets out to examine the difference between having partial and full information on scrap composition by using a raw material optimization software. Three different scenarios with different constraints were used to appraise this difference in terms of production and excess costs. With access to perfect information, production costs decreased by 8–10%, and excess costs became negligible. Overall, comparing the respective results gave meaningful insights on the value of reestablishing the compositional information of scrap at the end of its use phase. Furthermore, the results provided relevant findings and contribute to the ongoing discussions on the seemingly disparate prioritization of economic and environmental incentives with respect to the recycling of steel.

Keywords: Steel recycling; Steel scrap; Value of information; Excess cost; EVPI (search for similar items in EconPapers)
JEL-codes: C00 L20 L61 Q39 Q56 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s13563-022-00361-z

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