Insight Conversation: Luciano Siani Pires, Vale

Vale has been pursuing partnerships with steelmakers, looking to address the challenges of finding cleaner ways to process minerals. The company also plans to create solution hubs to make high-quality iron ore and green products in regions with low energy costs, including the Middle East and the US.

As executive vice president for strategy and business transformation, Luciano Siani Pires plays a crucial role in bringing Vale's vision into fruition. He joined the company in 2008 and has held positions such as global strategy director as well as global human resources and governance director. He is also currently the chairman of VLI, the second largest logistics provider in Brazil.

Pires talks to S&P Global Commodity Insights Managing Editor Adriana Carvalho about Vale's initiatives as the company positions itself for the future.

What makes Vale different today from decades ago? And what is Vale's vision for the metals industry for next decades?

Ten years ago, the world of mining and metals was ruled by the growth of China. The mission and vision of Vale and all mining companies was to grow by serving this opportunity, taking as many projects off the ground as possible to meet this demand in China, driven by urbanization.

In the next 20 years, we will have a different dynamic. The big driver and challenge for the industry are energy transition and decarbonization.

Vale sees itself in a privileged position to support and lead the supply of the materials necessary for this transition. The iron ore business will increasingly be a quality business, because all technologies that have been developed for the steel decarbonization route have quality as a common denominator.

Vale has signed several memorandums of understanding with customers to jointly research the best combinations of technology and raw materials for the production of green steel.

As of base metals, Vale has a leading role in the West, with the highest volume and highest quality in the production of nickel, which is also a fundamental metal in transport electrification.

How are Vale's projects going on the iron ore side of the business?

Nowadays, we have the challenge of resuming our total pellet production because it still has to do with the consequences of the Brumadinho tragedy. But in a long-term view, 12-18 months, we should have the [Minas Gerais-based] Brucutu and Itabira mines producing again, taking our production to 50 million mt/year.

To produce more pellets or briquettes for direct-reduction iron as part of the decarbonization route, we need more concentrated products. And Vale has been investing a lot in concentration technology. We are currently building the New Steel 1.5 million mt/year concentration plant at the Vargem Grande complex. It's a dry concentration process which means no water – and therefore no dam.

We have another 8 million mt concentration technology called Cleaner, in Oman, that cleans the blast-furnace pellet feed and transforms it into DR-pellet – a nobler and more important product for decarbonization. Succeeding on both projects at this first scale, we plan to expand them.

Moreover, we are building the first 7 million mt/year green briquette iron plant, an agglomerated product that allows steelmakers to reduce the need for sintering. And we have a roadmap to increase this production to 25 million mt/year by 2030 and with a long view to reach up to 50 million mt/year.

Vale is also betting on the Tecnored technology, which allows us to produce green pig iron on a large scale, using biomass as reusing waste from the blast furnace process itself. There are already conversations with customers to co-locate Tecnored plants at their steelmaking sites. So, we can serve the product or serve the technology.

The first large-scale plant is under construction in Marabá, Pará. Initially, it will have a production capacity of 250,000 mt/year in 2023, potentially expanding to 500,000 mt/year.

Which markets will be pioneers in the production and consumption of these green solutions?

Europe is a pioneer. Most European steel companies have decarbonization targets and they are desperate over the upcoming regulation.

The US is also starting to migrate production, and some Chinese customers are already thinking and anticipating their decarbonization needs.

There is an opportunity to create big technology hubs. For example, send iron ore to the Middle East, concentrate there, clean the pellet through the Cleaner process and make DR-pellets, then use gas to produce HBI [hot-briquetted iron], and also set up there a Tecnored plant. We see the US and the Middle East as great candidates to host these solution hubs. Vale's goal is to develop these hubs within this decade.

How about on the base metals side?

We are directing part of our product portfolio to the battery market. There is a feasibility study to build the first nickel sulfate plant in Canada to feed precursors and gigafactories for electric vehicles. We are currently looking for partners to produce 25,000 mt/year of nickel sulfate for the manufacture of nickel-based batteries. There is a lot of nickel in the world that cannot reach this market, which does not have the proper specification for the battery market.

How do you see Brazil's future as a green steel producer?

Before hydrogen-based green steel, an intermediate step would be natural gas-based production, which reduces CO2 emissions by half. But on that, Brazil is already at a disadvantage. There is no competitive natural gas. There is a lot of talk about pre-salt gas, but there is no infrastructure. Now it is more economical to reinject gas into the wells that transport that to the market.

But when we talk about hydrogen, there are some regions in the world pointed out by experts as the best-positioned for production and one of them is mainly the Brazilian northeast, due to the abundance of sun and wind. Certainly, the Port of Pecém can become a hub to produce green hydrogen, then green steel.

This article was first published in the October 2022 edition of Commodity Insights magazine(opens in a new tab)