For iron ore miners, it could be considered an inconvenient truth that the carbon emissions of steel (which account for around 8% of the global total), and iron ore (the key ingredient in steelmaking), are so intrinsically linked.
Rio Tinto’s scope 3 emissions – the indirect greenhouse gases (GHG) produced outside of its direct operations but still a consequence of its activities – represent a whopping 95% of its overall emissions footprint. Of these, 69% come from energy-intensive steelmaking. In 2023, processing of the company’s iron ore accounted for an estimated 14% of total global steelmaking emissions.
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As such, steelmakers are under huge public, investor and regulatory pressure to reduce the industry’s impact. So far, 20 steel producers, including half of the major companies that account for more than 30% of global production, now have a net-zero by 2050 target. To reach this goal, many are making investments in lower-carbon technologies such as electric arc furnaces (EAF) and direct reduced iron (DRI).
Industry under pressure to decarbonise iron and steel production
On the face of it, this is good news for iron ore miners including Vale, BHP and Fortescue, and their scope 3 emissions – but it does not come for free. Rather, it forces miners to adapt the type of iron ore pellet feed they produce.
The fact is, says Jon Stewart, CEO at Binding Solutions, a company scaling up BHP-backed technology to lower steelmakers’ emissions, miners are ‘forced’ to get involved in their customers’ decarbonisation efforts “because steelmakers are asking for it”.
Producing steel via DRI and in EAFs requires high-grade iron ore feedstock with an iron content of more than 67% and minimal impurities.
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By GlobalDataThis, says Marty Knauth, CEO of Zanaga Iron Ore Company, will see additional premiums placed on high-grade iron ore as steelmakers look to reduce their carbon footprints.
“Especially considering government policy is increasingly based around net-zero targets,” he adds. His company is developing the Zanaga project in the Republic of Congo, which it says is Africa’s largest known iron ore reserve. Recent tests have demonstrated the reserve can produce high-grade pellet feed concentrates suitable for low-emission steelmaking, according to Knauth.
Miners have been eager to showcase the compatibility of their iron ore with commercial DRI production. BHP and China Baowu recently announced that the former’s Pilbara iron ores were successfully trialled for DRI production at commercial scale.
The Institute for Energy Economics and Financial Analysis also predicts that as the global steel industry shifts from blast furnaces towards DRI this will drive a significant change in the quality profile of traded iron ore. Vale, Rio Tinto and Fortescue are already focusing on higher-grade ores.
Developing technology pathways for decarbonisation of steel
However, given that lower/mid-grade ores are now far more common, miners know more work is needed to commercialise green pathways for Pilbara ore. Emerging technologies, supported by strategic mining industry investments, could provide that route.
Vale’s activities in Brazil
In 2023 Vale opened a plant in Brazil to test the briquettes for clients. A Vale spokesperson said in blast furnaces the company has conducted more than 10 successful pre-industrial tests, two fully industrial tests, including with 100% briquettes.
“The results were excellent,” the spokesperson said, “both in productivity and production rate – better than with pellets.”
For direct production it has conducted more than 10,000 tests with ‘hundreds’ of customers which it also says were ‘extremely successful.’
“These advances demonstrate that our briquette line is stabilizing. In July, we produced 40,000 tons, our best month yet,” they added.
The company added it plans to build mega hubs to manufacture low-carbon steel products, using the briquettes and iron ore pellets as inputs, such as agglomerates, which will then be exported to other countries to produce low-emission steel. One hub will be in Brazil, but it did not provide further information about timescales or other locations.
NeoSmet initiative in Australia
In Australia, the NeoSmelt consortium, which includes Rio Tinto, BHP and others, is jointly developing electric smelting furnace (ESF) technology. The tech promises to enable the use of Pilbara iron ore – a major Australian export – to produce iron within an ESF as opposed to a traditional blast furnace.
In June, the joint venture received Australian Renewable Energy Agency support (A$19.8m) for a front-end engineering design study for a planned Western Australian pilot plant. If approved, operations at the NeoSmelt pilot facility, which is expected to produce 30,000–40,000 tonnes (t) of molten iron a year, could begin in 2028.
Anglo’s efforts to decarbonise steelmaking
Meanwhile, Anglo American was an early investor in PeroCycle, a technology developed by the University of Birmingham in the UK.
PeroCycle uses double perovskite material which enables the in-process splitting of carbon dioxide (CO₂) into carbon monoxide (CO) at considerably lower temperatures than current methods. The CO can then be recycled in a closed loop as a substitute for coal or coke currently used in the steelmaking process, significantly reducing the volume of CO₂ emissions. Its developers say the technology can be retrofitted onto existing steel plants, including DRI.
UK-based Cambridge Future Tech is currently spinning out a company to commercialise the technology, which is now at lab scale but is targeting commercial deployment for 2028.
Maxim Vreeswijk, a venture researcher at Cambridge Future Tech, says the team hopes to have an operational 100kg pre-pilot unit by summer 2026.
He adds that it was Anglo American who felt strongly about the need to commercialise the technology.
“This is, I think, for several reasons: the company has a very large iron ore division, [high] scope 3 emissions, [and] therefore finding investments to support the decarbonisation of that is absolutely key to its road map in reducing scope 1, 2 and 3 emissions,” he explains.
MinRes and Mitsui support trials of indurated pellets in ironmaking
Elsewhere, Mineral Resources and Mitsui & Co. have invested in UK-based Binding Solutions’ Cold Agglomerated Pellets, which can be used to replace standard indurated or sintered materials in iron-making processes, according to the company. The process, it says, is 30–40% less energy intensive and reduces emissions of CO₂, nitrogen oxides and sulphur oxides by 70% compared to traditional methods because it doesn’t use high temperatures. The company has done a 250t trial for British Steel and is now looking to scale, starting with a plant that can process 350,000t.
Company CEO Jon Stewart says Binding Solutions is in discussions with several miners and steelmakers to secure funding.
“Miners need this interim technology and that is why they have an interest; how do they mine now in new locations, accessing new markets, and create that value to the steelmaker? Our technology is the conduit that allows them to do that,” he says.
The decarbonisation process, he adds, driven by various regulations and targets, is forcing miners to take a more downstream role.
“But it is an opportunity, especially for new miners to break, a bit, the dominance of the major miners such as Rio and Vale,” he says.
CSIRO explores dry magnetic separation technologies
Back in Australia, given the financial strategic importance of iron ore to its economy, national science agency the Commonwealth Scientific and Industrial Research Organisation (CSIRO) has been working on technological solutions to process magnetite, a naturally occurring iron oxide mineral abundant in Australia.
“As we move towards the net-zero transition there is renewed interest in better ore products that can be good candidates for the emerging DRI technologies. This has led to renewed interest in mining for magnetite, which is one of the major ores of iron including hematite and goethite,” says Humair Nadeem, a research fellow in the Green Metals Production team at CSIRO.
Nadeem and his team are developing dry magnetic separation technologies – as opposed to traditional magnetic separation methods that typically rely on “wet” processes. This technology, he says, can dramatically reduce both energy and water usage.
“Unlocking the right technologies is not the only challenge, however,” he says. “The development of a sustainable green iron and steel value chain in Australia will require coordinated planning across industrial and community development, including the development of enabling infrastructure, workforce upskilling… and investment into community services such as housing, schools, etc.”
Collaboration key to decarbonising
Arif Gasilov, partner for sustainability strategy at environmental, social and governance consultancy Gasilov Group, says the main barriers for both miners and steelmakers to adopting new technologies such as these are the high upfront capital costs, regulatory uncertainty and often as-yet unproven economics. An additional challenge is monitoring supply chain emissions to comply with regulations.
“If a miner can’t provide accurate, auditable numbers, they risk their shipments being hit with extra tariffs or losing contracts with European buyers who want verified ‘green materials’,” he says. “We believe, by 2028, and latest, by 2030, there will be more regulations in place that will directly penalise firms that haven’t decarbonised the majority of their operations.”
Although efforts could always move more quickly – the reality is that 23 of the top 50 steel producers still lack concrete intermediate net-zero milestones, making it challenging to achieve the goal of net zero by 2050. Most iron ore miners don’t yet have scope 3 emission reduction targets either.
Vreeswijk believes collaboration is needed to release more capital, which could lead to faster innovation.
“A challenge that [miners] might see is: where are the returns generated? Ultimately, if one iron ore provider makes [the] most of the investments, they are helping the entire industry,” he says.
“A way to de-risk that is to invest more collaboratively, creating something like an industry syndicate to help their customers decarbonise. The more collaboration, the stronger those innovations will be.”
