As pressure mounts to meet net-zero targets, iron ore miners are confronting a new reality: steelmakers, their primary customers, are decarbonising – and are requiring miners to support their efforts.
or 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.
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 helping steelmakers reduce 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.
Heidi Vella 