The Institute for Energy Economics and Financial Analysis Lead Energy Finance Analyst for Bangladesh, Pakistan and the global steel sector as well as Asian seaborne thermal and coking coal markets Mr Simon Nicholas & energy finance analyst with IEEFA Australia Mr Soroush Basirat in a recent report have highlighted that decarbonizing the steel industry will require an increase in high grade iron ore production and improved beneficiation techniques. Mr Nicholas wrote “To reach net zero emissions by 2050, steelmakers must switch production methods from blast furnaces that consume coal to green hydrogen-based direct reduced iron processes. However, DRI technology requires a higher grade of iron ore than blast furnaces, typically at least 67%. Iron ore miners continue to be largely focused on producing lower quality blast furnace-grade iron ore as this coal-consuming technology still produces the great majority of the world’s steel.”Mr Basirat said that deposits of high-grade iron ore were scarce, but noted that mining options were available to alleviate the DR-grade iron ore supply issue. He wrote “Increased focus on magnetite mining is one option. Magnetite iron ore is often more suitable and preferable for further processing and producing iron ore concentrate and pellets of DR-grade quality. There may also be the possibility of beneficiation of some existing iron ore production towards DR-grade.” As Bloomberg New Energy Finance anticipates 59% of primary steel production coming from DRI-EAF processes by 2050 under a net-zero steel sector scenarios, Mr Basirat wrote “This would mean 889 million tonnes of steel production from DRI-electric arc furnace by 2050, requiring a tenfold rise in DR-grade iron ore supply unless technology innovations allow DRI processes to use lower-grade ore. Fortunately, such technology innovations are being developed providing a potential solution to the DR-grade iron ore supply issue.”Mr says Nicholas added “German steelmaker ThyssenKrupp is planning to begin replacing its blast furnaces with DRI plants that include an integrated melting unit, submerged arc furnace, from 2025. The resultant liquid iron will then be converted to steel in the company’s existing metallurgical plant. This technology configuration will allow ThyssenKrupp to use blast furnace-grade iron ore in their DRI processes. ArcelorMittal and BlueScope Steel are also examining similar DRI-melting unit combinations that would allow the use of blast furnace-grade iron ore in direct reduction processes.”Mr Nicholas said “The challenge imposed by limited DR-grade iron ore supply on plans for a large global scale-up of DRI production is significant. Given long mining lead times and technology development requirements, the focus on potential solutions must increase immediately.”The amount of additional DR-grade iron ore capacity to be operational by 2030 is far from certain. In its 2021 iron ore project review, Wood Mackenzie provides data on planned mine projects that are earmarked to start producing ore this decade with Fe content of 67% or higher. This list totals 213 million tonner per year of new capacity, all magnetite projects, but Wood Mackenzie considers only 41 million tonner per year of this potential new iron ore capacity to be probable or highly probable with the remaining four-fifths considered only possible.
The Institute for Energy Economics and Financial Analysis Lead Energy Finance Analyst for Bangladesh, Pakistan and the global steel sector as well as Asian seaborne thermal and coking coal markets Mr Simon Nicholas & energy finance analyst with IEEFA Australia Mr Soroush Basirat in a recent report have highlighted that decarbonizing the steel industry will require an increase in high grade iron ore production and improved beneficiation techniques. Mr Nicholas wrote “To reach net zero emissions by 2050, steelmakers must switch production methods from blast furnaces that consume coal to green hydrogen-based direct reduced iron processes. However, DRI technology requires a higher grade of iron ore than blast furnaces, typically at least 67%. Iron ore miners continue to be largely focused on producing lower quality blast furnace-grade iron ore as this coal-consuming technology still produces the great majority of the world’s steel.”Mr Basirat said that deposits of high-grade iron ore were scarce, but noted that mining options were available to alleviate the DR-grade iron ore supply issue. He wrote “Increased focus on magnetite mining is one option. Magnetite iron ore is often more suitable and preferable for further processing and producing iron ore concentrate and pellets of DR-grade quality. There may also be the possibility of beneficiation of some existing iron ore production towards DR-grade.” As Bloomberg New Energy Finance anticipates 59% of primary steel production coming from DRI-EAF processes by 2050 under a net-zero steel sector scenarios, Mr Basirat wrote “This would mean 889 million tonnes of steel production from DRI-electric arc furnace by 2050, requiring a tenfold rise in DR-grade iron ore supply unless technology innovations allow DRI processes to use lower-grade ore. Fortunately, such technology innovations are being developed providing a potential solution to the DR-grade iron ore supply issue.”Mr says Nicholas added “German steelmaker ThyssenKrupp is planning to begin replacing its blast furnaces with DRI plants that include an integrated melting unit, submerged arc furnace, from 2025. The resultant liquid iron will then be converted to steel in the company’s existing metallurgical plant. This technology configuration will allow ThyssenKrupp to use blast furnace-grade iron ore in their DRI processes. ArcelorMittal and BlueScope Steel are also examining similar DRI-melting unit combinations that would allow the use of blast furnace-grade iron ore in direct reduction processes.”Mr Nicholas said “The challenge imposed by limited DR-grade iron ore supply on plans for a large global scale-up of DRI production is significant. Given long mining lead times and technology development requirements, the focus on potential solutions must increase immediately.”The amount of additional DR-grade iron ore capacity to be operational by 2030 is far from certain. In its 2021 iron ore project review, Wood Mackenzie provides data on planned mine projects that are earmarked to start producing ore this decade with Fe content of 67% or higher. This list totals 213 million tonner per year of new capacity, all magnetite projects, but Wood Mackenzie considers only 41 million tonner per year of this potential new iron ore capacity to be probable or highly probable with the remaining four-fifths considered only possible.
