en.Wedoany.com Reported - Brazil Iron plans to transform an iron ore deposit in south-central Bahia into a decarbonized iron production platform for the international market, using natural gas as a transitional emission reduction route. The project is expected to commence production in 2030 or 2031, with a total investment of approximately US$5.7 billion. The main product will be Hot Briquetted Iron (HBI), an intermediate raw material between iron ore and steel.
According to Emerson Souza, Vice President of Institutional Relations at the London-based Brazil Iron, mining accounts for only a small portion of the project investment, about 10% to 20%, with the remaining funds allocated to steel production facilities and logistics construction. The company has certified 1.7 billion tonnes of high-purity iron ore reserves in the Bahia municipalities of Piatã, Abaíra, and Jussiape, with potential for expansion. Souza stated that the ore possesses advantages such as low contaminants and high plasticity, considered crucial for HBI production.
The first phase of the project plans to use natural gas, which can reduce emissions by over 70% compared to traditional coal-based smelting routes. Remaining emissions will be offset through Carbon Capture and Storage (CCS) or the purchase of carbon credits. The company is also monitoring the application prospects of biomethane and green hydrogen, though green hydrogen is viewed as a long-term option, dependent on technological and market evolution. Souza stated: "If hydrogen takes off economically, we will build a green hydrogen production plant in the same region."
The product market focus is on Europe and Asia, where regulatory pressure for steel decarbonization continues to intensify. According to Souza, the current market price for green HBI is around US$350 per tonne. Research by consulting firm McKinsey & Company indicates a potential global supply gap of 109 million tonnes of green iron annually starting from 2030. Brazil Iron has already secured ten-year pre-contracts covering 100% of the initial planned production volume (5 million tonnes of HBI per year), involving one European buyer and one Asian buyer.
Project advancement depends on the railway and port infrastructure in southern Bahia. The preferred option is to use the FIOL (West-East Integration Railway) section connecting to the Porto Sul, though both lines are still in the planning phase, under concession to Bahia Mineração (Bamin). The company has obtained a license to build a railway spur connecting the plant to the FIOL line. If a one-year assessment deems the plan viable, it will proceed; otherwise, alternative facilities such as the FCA (Central Atlantic Railway) and the Port of Aratu will be considered. Souza pointed out that this logistics corridor will not only serve mining but also benefit agribusiness in western Bahia and the transport of critical minerals like lithium, nickel, niobium, and rare earths.
Brazil Iron is monitoring discussions in Brasília regarding the national policy on critical and strategic minerals. Souza believes high-purity iron ore should be included in this category and advocates for distinguishing it from traditional iron ore. The company hopes for policy support in accelerating regulatory procedures, facilitating financing, and opening the natural gas market to reduce production costs.
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