High-grade iron ore, metallics in focus to enable DRI, low-emissions steel

Developing iron ore and metallic iron products which are optimized to enable lower-emissions steel to come to the market remains a persistent challenge for the steel and mining industry, supporting breakthroughs in hydrogen and direct reduction using renewable power.

Iron ore miners such as Rio Tinto, Vale, Fortescue and BHP are working with steel companies in Asia and Europe to adapt products such as pellets, high-grade concentrates, sinter and lump ore for use in direct reduction iron (DRI) and blast furnaces to enable emissions reductions. High regulated carbon emissions prices in Europe, and interest in lower-emissions steel for products has driven interest in new steel investments and markets to reinforce emissions benchmarking and taxation.

Adapting iron ore and metallics specifications and product properties for iron ore and steel processing using hydrogen and biomass, and less coal-based fuels, as well as electrolysis, are among projects and initiatives being pursued in a drive to slash steel industry emissions -- which make up around 8% of total global emissions. Hydrogen produced from a range of energy sources and the use of carbon capture utilization and storage are also considered widely in Europe and globally to help tackle emissions at coal and fossil-fuel dependent iron and steel plants.

Rio Tinto, a major producer of iron ore including pellets, concentrates and lump products, and steelmaker Salzgitter Group said June 7 that it will look at iron ore supplies and expanding processes and supply chains to support investments under Salzgitter's SALCOS project. The work will include technical, logistical and grade-specific issues for low-carbon supply chains and lower emissions steel production processes.

On June 3, iron ore pellet producer LKAB and Salzgitter signed a technical cooperation agreement.

"Very high-quality iron ore pellets are required for the new steelmaking process via SALCOS involving direct reduction plants and electric arc furnaces," LKAB said in a statement.

Rio Tinto and other steel and mining groups have highlighted the need to adapt processes for DRI plants which have traditionally run on reformed natural gas as new plants are developed for 100% hydrogen-based reduction. Many such projects expect to create hydrogen for DRI with electrolysis using renewable power from wind and solar projects.

Optimizing pellet quality and also the use of lump ore and other iron products when using hydrogen rather than other fuels, along with supply chain carbon certification, will be reviewed under Rio Tinto and Salzgitter's memorandum of understanding.

Miner Anglo American already regularly supplies high-grade South African lump to some DRI plants such as those in Egypt, which have used lump in a smaller proportion together with pellets. This may allow for a blended feedstock, saving procurement costs and enhancing risk management as premiums for lump and pellets may see disconnects on lump's major pricing reference in China's spot market while contract pellet premiums are currently negotiated quarterly.

As European integrated steel companies such as Salzgitter and Thyssenkrupp look to invest in DRI and electric arc furnaces to offer low-emissions steel, a shortage of low silica and alumina pellets with the optimal specification for DRI plants has already pushed pellet premiums to record highs in the past year.

New pellet plants are being developed in tandem with plans for DRI, which may increase the demand for suitable concentrate and resources. Some of the pellet plants announced will need seaborne imports.

Merchant DR-grade pellet demand may increase to 53 million mt in 2025 from about 38 million mt in 2020, and rise to 81 million mt in 2030, according to December 2021 estimates from the International Iron & Metallics Association.

Around 28.5 million mt of estimated market-based DR pellet demand in 2030 is expected to come from new DR plants, mainly in Europe and the Middle East and the North African region, at which time supply could undershoot demand, according to the IIMA's figures.

Miners such as Vale, LKAB and Rio Tinto's Iron Ore Company of Canada are looking into producing low-emissions iron products, which may compete with DRI and HBI producers and consume pellets. Cleveland-Cliffs, Metalloinvest and ArcelorMittal are already fully integrated, producing DRI/HBI and iron ore, while Metinvest, and Russian steel and mining groups were earlier investigating DRI projects.

Iron ore pellet alternatives

An alternative to DRI plants and a reliance on DR pellets is molten oxide electrolysis technology, which is set to be commercialized for steelmaking from 2025 onwards by Boston Metal and can use a range of iron ore products without a DRI plant. Other projects such as Voestalpine's HYFOR are designed for direct reduction of iron ores without pelletization, and using hydrogen only, which may ease difficulties in securing pellets.

Pelletizing iron ore uses energy at the pellet plant, and the more concentrated the ore feedstock the greater the need for beneficiation, grinding and sorting, with additional energy, equipment, water and in some cases chemicals used.

Under plans announced by several European companies including ArcelorMittal, hydrogen-based DRI or hot-briquetted iron is expected to be fed into electric arc furnaces, or melting modules, allowing further processing into steel. Renewable energy used down the chain, and low-emissions solutions upstream in mining and logistics may help minimize overall Scope 1-3 steel product emissions.

Currently, the HYBRIT pilot plant in Sweden is producing iron using hydrogen, which is being transformed into steel products by SSAB. The company said it is using EAF facilities owned by research institute Swerim in Lulea and a third party to melt the iron and combine necessary inputs prior to rolling the steel at SSAB's Oxelosund works for some of the trial grades supplied.

The newly developed steel has been offered to customers such as the Volvo Group, with SSAB expecting to move into full commercial production of low-emissions steel once it has developed its own EAF in 2026.

Germany's Thyssenkrupp has launched lower emissions steel products under the 'bluemint' range using its blast furnace-basic oxygen furnace works and is adapting feedstocks to use HBI and greater volumes of ferrous scrap. Thyssenkrupp said it used HBI directly in a blast furnace at Duisburg-Hamborn in 2021, which lowered the coal-based fuel needed for producing pig iron.

ArcelorMittal is producing a range of lower-emissions and certified flat and long steel products in Europe and is investing in emissions reductions and producing certificates for sale with its steel.