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I was at an iron works a while back where I learned that an industrial grade blast furnace was, ballpark, $100 billion. This was built 100 years ago. That day I

I was at an iron works a while back where I learned that an industrial grade blast furnace was, ballpark, $100 billion. This was built 100 years ago. That day I decided I just didn’t and wouldn’t ever understand capital markets.

markbnj 7y ago
> I learned that an industrial grade blast furnace was, ballpark, $100 billion. That seems like a very large number for the construction of any industrial installation. Just poking around the net the numbers I found were $220/ton of pig iron produced, and another source that claimed a $2.5b cost in 1980 and $5b today. If the $220/ton figure is accurate a $100b blast furnace would be producing 455m tons of pig iron a year. According to wikipedia a modern furnace can produce about 5-6m tons per year.
dekhn 7y ago
that doesn't make any sense. the capital to build, and operating expenses, aren't anywhere near $100B (direct costs). $100M makes more sense.
deleted 7y ago
[deleted]
trothamel 7y ago
The GDP of the US in 1929 was $105B nominal and $1,109B real. So this blast furnace would have been between 10% and 100% of total GDP. That doesn't seem right.
Robotbeat 7y ago
Off by a couple orders of magnitude. Capital cost of a blast furnace, rule of thumb, is ~$200 per ton of pig iron per year: https://www.quora.com/How-much-would-it-cost-to-set-up-a-blast-furnace-iron-producing-unit https://www.quora.com/How-much-would-it-cost-to-set-up-a-bla... The largest blast furnace in the world is about 5 million tons of iron per year (and was upgraded to that capacity in 2013): http://www.donga.com/en/List/article/all/20130610/406398/1/POSCO%C2%92s-Gwangyang-blast-furnace-emerges-as-world%C2%92s-largest http://www.donga.com/en/List/article/all/20130610/406398/1/P... ...so that means the biggest blast furnace in the world has a capital cost of approximately $1 billion. More than likely the cost (in today's dollars) of that blast furnace you're referring to is $100 million, not $100 billion. Side note: direct reduction furnaces furnaces are usually cheaper from a capital cost perspective and can use natural gas or even hydrogen for producing steel... We may use more of this tech in the future as we move away from coal for sustainability reasons.... The US now produces about 10% of its raw iron/steel using DRI and 90% by blast furnaces and the rate of DRI growth is fantastic (going from 2 million tons in 2017 to 3.4 million in 2018, pdf page 10): https://www.worldsteel.org/en/dam/jcr:96d7a585-e6b2-4d63-b943-4cd9ab621a91/World%2520Steel%2520in%2520Figures%25202019.pdf https://www.worldsteel.org/en/dam/jcr:96d7a585-e6b2-4d63-b94... A few years ago, virtually no steel was made via DRI in the US. The fracking boom has changed a lot.
rolltiide 7y ago
Why don't you learn how the world works so you can confidently write to the intern “pls fix” because that was easy to call bs on

markbnj 7y ago

> I learned that an industrial grade blast furnace was, ballpark, $100 billion. That seems like a very large number for the construction of any industrial installation. Just poking around the net the numbers I found were $220/ton of pig iron produced, and another source that claimed a $2.5b cost in 1980 and $5b today. If the $220/ton figure is accurate a $100b blast furnace would be producing 455m tons of pig iron a year. According to wikipedia a modern furnace can produce about 5-6m tons per year.

dekhn 7y ago

that doesn't make any sense. the capital to build, and operating expenses, aren't anywhere near $100B (direct costs). $100M makes more sense.

deleted 7y ago

[deleted]

trothamel 7y ago

The GDP of the US in 1929 was $105B nominal and $1,109B real. So this blast furnace would have been between 10% and 100% of total GDP. That doesn't seem right.

Robotbeat 7y ago

Off by a couple orders of magnitude. Capital cost of a blast furnace, rule of thumb, is ~$200 per ton of pig iron per year: https://www.quora.com/How-much-would-it-cost-to-set-up-a-blast-furnace-iron-producing-unit https://www.quora.com/How-much-would-it-cost-to-set-up-a-bla... The largest blast furnace in the world is about 5 million tons of iron per year (and was upgraded to that capacity in 2013): http://www.donga.com/en/List/article/all/20130610/406398/1/POSCO%C2%92s-Gwangyang-blast-furnace-emerges-as-world%C2%92s-largest http://www.donga.com/en/List/article/all/20130610/406398/1/P... ...so that means the biggest blast furnace in the world has a capital cost of approximately $1 billion. More than likely the cost (in today's dollars) of that blast furnace you're referring to is $100 million, not $100 billion. Side note: direct reduction furnaces furnaces are usually cheaper from a capital cost perspective and can use natural gas or even hydrogen for producing steel... We may use more of this tech in the future as we move away from coal for sustainability reasons.... The US now produces about 10% of its raw iron/steel using DRI and 90% by blast furnaces and the rate of DRI growth is fantastic (going from 2 million tons in 2017 to 3.4 million in 2018, pdf page 10): https://www.worldsteel.org/en/dam/jcr:96d7a585-e6b2-4d63-b943-4cd9ab621a91/World%2520Steel%2520in%2520Figures%25202019.pdf https://www.worldsteel.org/en/dam/jcr:96d7a585-e6b2-4d63-b94... A few years ago, virtually no steel was made via DRI in the US. The fracking boom has changed a lot.

rolltiide 7y ago

Why don't you learn how the world works so you can confidently write to the intern “pls fix” because that was easy to call bs on