Vale has signed a memorandum of understanding (MoU) with the Port of Açu Operações, a deep-sea port complex, to assess the potential development of a mega-hub in Brazil for the decarbonisation of steel industry.

Due to be built in São João da Barra in the state of Rio de Janeiro, the hub will be equipped to produce hot briquetted iron (HBI) using the direct reduction route.

Initially, the hub will receive pellets from Vale.

The two parties could also add an iron ore briquette plant at the site to supply to an HBI plant.

As per the agreement, the two companies intend to attract investors and clients for the construction and operation of the direct reduction plant, which would use natural gas available at the port.

This plant is later expected to use green hydrogen to produce HBI with near zero carbon emissions.

The complex is expected to be commissioned at the port by 2028. It is expected to have an annual HBI output capacity of around 2.5 million tonnes, reported Reuters, citing Prumo Logistica, the company that operates Port do Acu.

HBI is said to be a key intermediate steel product to reduce emissions as it removes the need for coal usage during the production of steel.

Vale iron ore solutions vice-president Marcello Spinelli said: “We believe that Brazil has a lot of potential to be a low-carbon steel-making hub. We have high-quality iron ore, abundant natural gas reserves and the potential to develop green hydrogen.

“As a Brazilian company, Vale is seeking to partner with other entities that can add value to this process. We want to foster 'neo-industrialisation' in Brazil, a green-based industrialisation.”