[ferro-alloys.com]Brazilian miner Vale said July 13 it has reached a non-binding agreement with Japanese steelmaker Kobe Steel and Japanese trading company Mitsui & Co. to collaborate on providing low-CO2 iron metallics and steelmaking solutions for the global steel industry.

According to Vale, agreement establishes preliminary terms and conditions for the creation of a new venture with the objective of delivering low-CO2 metallics. "An evaluation period has already begun to deepen the cooperation and to gauge market demand for several existing and new steelmaking solutions prior to a final agreement for the creation of the new venture," it said.

Vale has committed to contribute with its steelmaking customers in this challenge of reducing carbon footprint. "The new venture will use existing and new low-CO2 iron making technology such as Tecnored Technology and Midrex Process," it added.

Tecnored is a 100% Vale subsidiary in Brazil's Minas Gerais state focused on developing a low-CO2 pig iron process through the use of alternate energy sources, such as biomass, syn-gas and hydrogen, that emit less CO2 than the coal and coke the tradition iron-making process uses. "Using biomass, the path to economic carbon neutrality may be achieved in the medium term," Vale said.

The Midrex process - Kobe Steel's wholly owned US subsidiary - is the world's leading direct reduction ironmaking technology, with Midrex plants producing more than 60% of the world's direct reduced iron (DRI).

"Because the Midrex process uses natural gas [or gas derived from coal] to reduce iron ore for use in steelmaking, its CO2 emission level is lower than the blast furnace route," the Japanese steelmaker said.

Together with these processes, the new joint venture would utilize Mitsui's marketing and business development know-how to offer the low-CO2 metallics and iron making solutions to the global steel industry.

Steelmakers are suffering growing pressure to reduce emissions and having a range of iron ore-based products may help them.

"In five years the seaborne market will start to contract and in ten years it will be very contested," Vale CFO Luciano Siani said at the Vale Day London event late last year. "We are beefing up our technological market and resources to be ready for what will happen next."

In Europe and the US a faster rate of change is seen from use of blast-furnaces (using coal and iron ore) towards use of EAFs, which typically use steel scrap as their main raw material, but are also increasingly using HBI and pig iron.

HBI - an easily-transportable form of DRI - and pig iron can also be used as alternatives to iron ore in the blast-furnace steelmaking process. They are high-iron-content products that allow integrated steelmakers to reduce their use of metallurgical coal to make coke, thus reducing their carbon emissions.

Midrex CEO Stephen Montague said of the accord that the company is "excited to provide Midrex technology using both natural gas and hydrogen to help steelmakers mitigate CO2 emissions and transition from aging blast furnace technology."

(S&P Global Platts)

• [Editor:王可]