- High-grade ore gains value as carbon costs rise
- Hydrogen ironmaking, DRI and scrap steadily gain traction
Mysteel Global: The global iron ore supply chain is set for structural changes over the next 25 years, as countries around the world step up efforts to decarbonize the steel industry — a major emitter — aiming for near-zero emissions by 2050, according to Dr. Liu Yinghao, technical director at the Low Carbon Metallurgy Innovation Center of China Baowu Steel Group Corp.
Iron ore’s core position in the ferrous industrial chain may gradually weaken as traditional, carbon-intensive ironmaking processes face increasing challenges, along with the rise of cleaner technologies such as hydrogen-based ironmaking and alternative iron feeds including DRI and steel scrap, Dr. Liu told delegates at the 2025 Ferrous Value-Chain Summit co-hosted by Mysteel and Xiamen ITG Group in Xiamen in Southeast China’s Fujian province on November 19.
“A large amount of carbon emissions in the traditional steel production route comes from pre-ironmaking procedures including coking, sintering, and iron melting in blast furnaces,” she explained.
For example, in the production of hot-rolled steel, these pre-ironmaking processes account for roughly 80% of total emissions.
While global steel demand has plateaued, demand for low-carbon and high-end steel materials continues to rise. This shift will also increase the need for steelmaking raw materials with lower carbon footprints, Liu predicted.
For iron ore, the main decarbonization pathway will be improving Fe grades: a 1% increase in iron ore’s Fe grade reduces the fuel ratio by 1.5% and carbon oxide emissions by 1.3-1.8%, making grade improvement the “lowest-cost, quantifiable pathway” for steelmakers, she pointed out.
“Low-carbon steel” produced from high-grade iron ore will command a market premium, which may pass upstream to iron ore prices and drive up demand for high-grade products.
Liu noted that Brazilian mining giant Vale has expanded its high-grade ores by re-concentrating 62-63% Fe high-silica sinter feed into a 65% Fe low-silica product. Sales of this material surged 85% to 24 million tonnes in 2024, and the miner is planning an additional 150 million tonnes of concentrate capacity by 2027.
On the other hand, low-grade ores will face growing headwinds because their higher impurity levels generate more slag and require more energy, raising carbon emissions. Although many steel mills with thin profit margins still prefer low-grade ores today, this could change as soon as their “carbon bills” outweigh the cost savings.
Beneficiation and grade improvement will be essential for low-grade ore producers; otherwise, they will need to offer steeper discounts to offset the additional carbon and smelting costs, Liu stressed.
Meanwhile, supplies of low-carbon alternatives including steel scrap and DRI are expected to rise steadily. With global crude steel production projected to reach 2.63 billion tonnes by 2050, DRI and steel scrap supplies may increase at annualized rates of 5% and 3.1% to 506 million tonnes and 1.42 billion tonnes, respectively.
Pig iron output, by contrast, may decline by 1.2% annually to around 960 million tonnes, Liu said, citing figures from the latest report Medium- to Long-term Outlook on Global Steel and Ferrous Raw Materials Demand by Baosteel chief analyst Jiang Li.
Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.
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