Iron ore mining and green steel

EMBRACING THE GREEN STEEL PHENOMENON

Steelmakers are becoming more discerning on their path towards a net-zero future, and low grade or less sustainable iron ore producers risk being left out in the cold.

There is an awkward conundrum facing today’s tenaciously growth-minded world – how do you balance a desire for expansion with the necessity to reduce one’s footprint?

The iron ore industry faces this concern, with record production levels marred by ballooning emissions and the reality that investors, regulators, customers and employees are siding with the green transition.

While the global production of iron ore decreased by three per cent to 2.2 billion tonnes in 2020, led by reduced outputs in Brazil and India, the industry is expected to bounce back.

According to Fitch Solutions, worldwide iron ore output is set to average 2.4 per cent from 2021 to 2025, with Australia’s iron ore production set to grow at an annual average of 1.7 per cent over the same timeframe.

Given the role iron ore plays in steelmaking and broader industrialism, there’s going to be a continued need for this resource; the mining industry just needs to be smarter with how it is extracted.

McKinsey & Company partner Christiaan Heyning believes iron ore miners need to be more fastidious with the quality of their product before putting it to market.

“Demand for your products will differentiate depending on what you sell and to make it very simple – the purer the better and the higher Fe (iron) grade the better,” Heyning, speaking at the 2021 AusIMM Iron Ore Conference, says.

Heyning suggests this will lead to tougher decisions regarding lump and fine iron ore products, with the former being a more sustainable option as it doesn’t need to be sintered, but a more expensive commercial product at that.

Then there’s direct-reduced (DR) pellets, an even more premium product, delivering an Fe grade of up to 67-68 per cent.

“There’s going to be huge growth in DR (direct-reduced) pellets. You already see some companies already moving into that space and starting to produce pellets even if they don’t produce the steel themselves,” Heyning says.

Brazilian major Vale is the world’s leading producer of iron ore pellets, producing 55.3 and 41.8 million tonnes (Mt) in 2018 and 2019

Pelletising is important to the green steel value chain.

respectively, before dropping to 29.7Mt in 2020 due to disrupted dam operations across some of its mines in Brazil.

In February 2021, Vale executive director Marcello Spinelli forecast the company would recover its iron ore pellets production to between 50-60Mt per annum in 2022.

Despite being a global iron ore fortress, pelletising isn’t a prominent practice in Western Australia, and Heyning believes the state has an opportunity to further embrace this sustainable method.

“That is one of the questions I would have for Western Australia. It seems quite obvious that if the world wants hydrogen-based pellets that they could be made in WA,” he says.

“It’s not immediately obvious who would do that – would that be done by the miners, would that be done by the steelmakers or would you get dedicated pellet makers.

“So how the value chain will play out there is still very much open for debate.”

Pelletising is already an important method in the sustainable steelmaking value chain and the continued decarbonisation of this will continue to benefit net-zero pursuits.

Global mining technology developer Metso Outotec is at the forefront of sustainable pelletising developments and continues to explore opportunities in this regard.

“Pellet plants are likely to play a prominent role in the future and what can be done to support a carbon-neutral future as far as this particular technology is concerned?” Metso Outotec Asia Pacific president Stuart Sneyd says.

“Things that we consider are alternative burner fuels such as biofuel and hydrogen in pellet plant powering, process modifications for energy efficiency and new hoods for electrification – all of these things under development are being considered.”

Metso Outotec recently added a digital solution to its iron ore pelletising process with the aim to improve production capacity and quality, while reducing energy and costs.

The company has iron ore pellet plants in Brazil, China and Africa but not in Western Australia, according to public contracts.

Pelletising is just one piece of the green steel puzzle and there are many other possible considerations to decarbonise this important value chain.

Many of the unanswered questions that encircle the future of green steel revolve around hydrogen – coal’s potential replacement in steelmaking.

At this point in time, hydrogen is expensive to produce, difficult to transport and store, and highly flammable and dangerous.

While green steel can also be produced through renewable energy or alternative reducing agents, hydrogen is going to play an important role in the future viability of this sustainable practice.

In November, the Western Australian Government awarded a contract to GHD Group to investigate the role the state’s iron ore can play in the global green steel movement, unpacking hydrogen capabilities as part of that.

In partnership with ACIL Allen, GHD Group will initially identify opportunities and current barriers for Western Australia to support this revolution.

The next step will be to examine infrastructure needs, market dynamics and policies to solidify the state’s understanding of the green steel value chain.

Minerals Research Institute of Western Australia (MRIWA) chief executive officer Nicole Roocke says the state’s examinations would be centred around its Pilbara and Mid West regions.

When understanding the market dynamics for green steel, it will be important to understand the costs involved – a particular barrier for the implementation of hydrogen.

“(By analysing future market dynamics) we’ll be looking at what the demand for low grade and high grade ores are going to be into the future, and look at the jurisdictional and mineral endowment differences,” Roocke says during the AusIMM conference.

“Also, to understand that if hydrogen is to be part of the solution, where does it have a role to play and what do production costs need to be to be able to make it economic.”

Roocke says the examinations will establish the clarity Western Australia needs to explore a green steel opportunity intelligently and efficiently.

“The whole intention of doing this work is to be able to ensure that both from a Western Australian Government and industry perspective, we have an understanding of what the opportunity is, and we have a better understanding of what the risk is to the state,” she says.

“But importantly, we understand what’s needed from industry, government and the research community to be able to embrace that (green steel) opportunity.”

Whether it’s evolutions in pelletising, the implementation of hydrogen across the value chain or any other green steel development, the future of the iron ore industry hinges on its embrace of steelmaking’s new frontier.

Those unable to adapt are likely to be left behind as steelmakers discern which mining companies will best assist them in meeting their net-zero obligations.

Western Australian iron ore miners have an opportunity to embrace green steel.