Mining Technology

Daily Newsletter

10 August 2023

Daily Newsletter

Rio Tinto and Vale sign iron ore supply deals with H2 Green Steel

The iron ore pellets will be used as feedstock at H2 Green Steel’s fully integrated, digitalised and circular plant in Sweden.

Swedish metal and hydrogen company H2 Green Steel (H2GS) has signed multi-year agreements to offtake iron ore pellets from Brazilian mining company Vale and global metals and mining company Rio Tinto.

The iron ore pellets will be used by H2GS as feedstock at its hydrogen-based steel mill in Sweden.

The company is planning to build a low-carbon steel plant in Boden, Sweden, with commissioning scheduled in 2025.

Under the agreement, Rio Tinto will supply high-grade direct reduction iron ore pellets from its Iron Ore Company of Canada (IOC) operations.

In a press statement, Rio Tinto said: “IOC’s direct reduction pellets will account for a significant part of the iron ore supply to H2 Green Steel’s flagship plant in Boden, Sweden, which will be one of the world’s first large-scale producers of low-carbon iron and steel.”

Rio Tinto has also signed an agreement with H2GS to purchase and on-sell a part of the surplus low-carbon hot-briquetted iron (HBI) produced by the latter during the steelmaking capacity.

Rio Tinto steel decarbonisation head Simon Farry said: “Our supply of high-grade iron ore pellets will support the acceleration of H2 Green Steel’s project, and on-selling their low-carbon HBI will enable us to gain a deeper understanding of the future needs of our customers and end users in the emerging green iron and steel market.”

Furthermore, Vale will supply iron ore pellets to H2GS as input material for its steel mill in Boden.

Together with green hydrogen from H2GS’s own electrolyser facility, the pelletised iron ore will be a critical input material for the green direct reduced iron production, which will be used to make near-zero emissions steel in the Boden steel plant.

Vale will deliver the pellets from Tubarão in Brazil to Boden via the Port of Luleå in Sweden.

ESG 2.0 marks a shift towards stricter environmental rules

ESG is moving into a different era, which we call ESG 2.0. While ESG 1.0 was driven by voluntary corporate action, spurred by pressure from activist consumers and investors, ESG 2.0 is being driven by a new wave of government policies. The EU has taken the regulatory lead, with rules introduced or in the pipeline that will price emissions, regulate the use of the terms ‘ESG’ and ‘sustainability’ in marketing materials, and make ESG reporting mandatory. The US has taken a different approach, favoring less regulation and more financial support in the form of tax breaks for clean industry (renewables plus nuclear and hydrogen). China is planning to expand its emissions trading system to more sectors, decarbonize its heavy industry, and ramp up its use of renewables. The new policy direction is mainly motivated by the ambition to hit net zero emissions targets. But on top of this, governments are now competing for clean industry and trying to challenge China’s leadership on the production of the world’s green technologies such as solar panels and batteries, as well as the production and refinement of materials needed for energy transition such as lithium. These driving forces are leading to policy that will impact every sector, not just heavy industry, and will keep ESG near the top of the regulatory agenda over the longer term.