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LKAB joins steel industry shift toward hydrogen, DRI

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LKAB joins steel industry shift toward hydrogen, DRI

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DRI production linked to renewables, hydrogen investment

To invest up to $2.3 billion/year in transformation

Green hydrogen costs high currently vs natural gas

Swedish state-owned miner LKAB plans to develop direct-reduction iron production to reduce emissions in the steel industry, highlighting massive capacity additions in renewable power and hydrogen needed to enable operations to reach zero emissions within 15 years.

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LKAB plans to be emitting zero carbon dioxide from its iron ore and minerals mining and activities by 2045, and invest to secure the company's operations beyond 2060, the Lulea-based company said in Nov. 23 statement.

LKAB, the second-largest iron ore pellet producer globally, said it will invest SEK10 billion–20 billion/year ($1.15 billion-$2.3 billion/year) over 15–20 years in digitalization, automation, electrification, new operating methods and carbon dioxide-free production. LKAB emits 700,000 mt/year of carbon dioxide, or about 4% of Sweden's total industrial emissions, and is the fourth-largest emitter in Sweden.

Related podcast: Greening steel production and hydrogen's potential

"On top of that there will be investments in expansion of renewable energy and hydrogen in order to make the conversion possible," it said. "LKAB is facing the biggest transformation in the company's 130-year history, which could become the biggest industry investment ever in Sweden."

LKAB has begun using biofuel for firing some of its iron ore pellets, which are used in the HYBRIT green hydrogen-based DRI pilot plant, in which LKAB is a shareholder with SSAB and power utility Vattenfall.

LKAB, like other steel industry companies such as Vale, ArcelorMittal and ThyssenKrupp, is investing in DRI projects to help global steel production transition away from the blast furnace route, which typically emits 2.2 mt of carbon in total per ton of steel, according to the International Energy Agency.

DRI using natural gas and an electric arc furnace produces 1.4 mt of total emissions per ton of steel, while DRI using an EAF running off renewable power and green hydrogen can produce steel with minimal associated emissions.


The steel sector accounts for around 7% of global emissions based on energy use.

Just over two-thirds of steel globally is produced in blast furnaces, which use iron ore and met coal, and in some cases PCI coal injection. The remainder is largely from EAFs melting ferrous scrap, with a small portion from DRI.

The IEA expects the relatively young fleet of blast furnaces in China and India to retain a significant share in steel production globally through the next few decades, even with increases in scrap-fed EAFs and hydrogen-based DRI as costs fall, based on scenarios published in October.

Current costs for green hydrogen -- made by electrolysis using renewable power -- remain elevated compared with natural gas, which already has more of the infrastructure needed for supplying into new DRI plants, according to analysis by S&P Global Platts. New wind and renewables capacity in Europe and globally along with sharp reductions in electrolyzer costs, and the potential for carbon capture and storage, are expected to help reduce the difference in cost between hydrogen and natural gas.

DRI steel production based on the Platts Hydrogen Netherlands PEM Electrolysis price including capex in October was 64% -- or over Eur163/mt higher -- compared with natural gas-based DRI steel production, with no further adjustments for yields.

ThyssenKrupp and Dillinger have ongoing tests to replace PCI coal with hydrogen injection in blast furnaces in Germany. Met coke is harder to replace in the BF, due to its role in supporting the iron ore burden and maximizing iron reduction, compared with energy from high calorific value PCI coal, natural gas or hydrogen.

Several companies in Europe plan to adopt new DRI plants under proposals to use EAFs or integrate the iron into existing integrated steel plants. These plants will use hydrogen and in some cases natural gas initially, until commercial quantities of hydrogen become available and the necessary power and gas transmission and supplies are implemented.

Producing metallics such as DRI and making pig iron available for external sale can address quality constraints in scrap, allowing EAFs blending with merchant iron to offer similar ranges of steel as blast furnaces.

In the US, trade in imported pig iron has helped mini mills boost their product quality and range, with EAFs increasingly dominating steel production over blast furnaces in the past 20 years.

"Through the shift from iron ore pellets to carbon dioxide-free sponge iron we will take an important step forward in the value chain, [and] increase the value of our products while giving our customers direct access to carbon dioxide-free iron for steel production," LKAB said.

Voestalpine offers hot-briquetted iron from its DRI facility in Texas to North American and international markets, while Cleveland-Cliffs has just finished an HBI plant in Ohio, and blast furnace producer Stelco in Canada has installed a pig iron caster to enter into the merchant market from year-end.

LKAB also intends to extract minerals and phosphorous from mine waste, using fossil-free technology.