As the steel industry seeks to lower its carbon footprint, the use of transitional fuels with green hydrogen as an end-goal in the direct-reduction iron process has emerged as one of the preferred routes, putting the limelight on high-grade iron ore and its scarcity.
This has given rise to capital expenditures in various new projects in Latin America, Africa and the Middle East touting high-grade products and facilities to pelletize and reduce them – even as mandatory use of low-carbon steel has all yet to be secured through regulatory regimes in most parts of the world.
But as China carves out its own path toward steel decarbonization, its iron ore buying habits over the past two years – a time when its steel industry has come under strain from a slowdown in its property sector and weakened steel demand – raise important questions as to whether high-grade iron ore will get to live out its vaunted purpose of turning the industry greener – or whether the flight by steelmakers to lower-grade material as a cost-saving measure would leave it in a constant search for a longer-term home.
Expansion of high-grade iron ore projects
With the notable drive towards decarbonization, the market saw significant investments in multiple projects across the globe, with fresh high-grade iron ore supply expected to come online during 2025, mostly originating from Brazil, Canada and West Africa. Considering the nameplate capacities of these projects, the market may see a new supply of high-grade iron ore fines and pellet feed totaling around 120 million mt injected into the market by 2027-28, with most projects to commence production in 2025.
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