Urgent need to cut steel mill emissions opens big global opportunities for Brazil

Brazilian iron ore firms see an opportunity to benefit from the global steel industry's urgent need to reduce greenhouse emissions, helping to offset the current challenging economic scenario, especially in China.

"Iron ore in Brazil is higher quality than in other regions of the world, and as the urgency to reduce emissions grows, it highlights the advantage of this Brazilian commodity compared with other countries," Pedro Galdi, a mining consultant, told BNamericas.

The demand for emission reductions is rapidly becoming one of the main drivers for Brazilian iron ore, as other factors, such as Chinese economic performance, have lost traction.

"We've seen increasing signs from different parts of the world that they're seeking high-quality iron ore," said Pedro Oliva, the CFO of Brazilian iron ore firm CSN Mineração during the company's Q3 results call.

The firm is advancing with the development of its Itabirito P15 project, also known as Casa de Pedra, in Minas Gerais state.

It plans to start production at the 15Mt/y project in the first quarter of 2027. Itabirito is considered a transformative project as it will improve iron ore quality by increasing the iron content from 58% to 65% by 2028. 

"We're committed to the P-15 project, as we understand that this plant will be our future. The works are progressing at a very good pace, and we're going to carry out this project in the best way possible. As part of the progress on this project, we also recently sold a minority stake in CSN Mineração, as we considered this a timely and positive moment for both parties," CSN Group chairman Benjamin Steinbruch told the call.

Recently, steelmaker CSN approved the sale of 11% of its CSN Mineração division to Japanese conglomerate Itochu Corporation. Itochu, which currently owns 9.26% of CSN Mineração through Japan Brasil Minério de Ferro Participações, will pay 4.42 billion reais for the additional stake.

Meanwhile, mining titan Vale is also advancing with similar initiatives.

Vale and Roheisengesellschaft Saar mbH, or ROGESA, a joint subsidiary of Dillinger and Saarstahl, announced a multi-year supply agreement for pellets that is a landmark in the quest to decarbonize steelmaking.

The agreement calls for the supply of blast furnace pellets from 2025 to 2027 and a flexible transition to direct reduction pellets starting in 2028, following the commissioning of ROGESA’s direct reduction plant at the Dillingen site. In the future, Saarland’s steel industry will use the direct reduction plant and its electric arc furnaces to produce environmentally friendly steel, using hydrogen to convert the iron ore into hot-briquetted iron (HBI) instead of using coking coal, as has been the case to date.

“For the upcoming transformation, it was important for ROGESA to secure high-quality input materials for the blast furnaces and the DRI plant with Vale, the world’s largest producer of iron ore pellets,” said Stefan Rauber, chairman of SHS - Stahl-Holding-Saar and chairman of Dillinger and Saarstahl in a statement.

Vale has established a commitment to reduce 15% of its net scope 3 emissions, related to its value chain, by 2035. The company also aims to reduce its absolute scope 1 and 2 emissions by 33% by 2030 and achieve net-zero by 2050, in line with the Paris Agreement, leading the way to sustainable mining.