Insight Conversations with mining and steel industry leaders

How has the creation of the China Mineral Resources Group changed iron ore trade negotiations?

It has definitely changed the dynamic. You're having your customer base represented in a single buying group. I was there when the CMRG was launched to the market in 2022 in Beijing and the message, very clear from day one, was that it would be worth exploring how CMRG could create a more balanced participation across the supply chain. CMRG can contribute trucks, capital and renminbi-based trade, so it would welcome a larger role.

We shifted our strategy and secured the largest and first financing arrangement in a RMB 14.2 billion ($2.01 billion) syndicated loan in August 2025. We're actually financing our debt in Chinese currency rather than US dollars. We've already been trading in RMB for a long period of time. We're now also getting all of our equipment for our decarbonization process from China.

How has Fortescue shifted its strategy in this environment?

We have shifted our strategy by pivoting a lot more of the value share to China versus the traditional US-based suppliers of trucks and currencies in terms of lending. We now have Chinese banks represented on our book. It doesn't make us immune to the same type of pressures that everyone else is, but if I'm going to the negotiating table and it's about price, I can also suggest that, according to the ‘shared prosperity’ -- the term that colloquially is being used in the Chinese industry -- we're sharing the supply chain of iron ore and steel across a much more diversified supply chain.

How has the startup of Simandou impacted the market?

Rio Tinto itself has talked about Simandou as a replacement tons for their own portfolio. That's an upside in terms of the supply concern that people had about Simandou coming online. Simandou hasn't ramped up yet to its full potential, but we look at all bookends of the supply scenario. One bookend is a couple of dollar [per metric ton] impact on the cost curve. The other bookend is its replacement tons hitting the market, and the market absorbing them.

What we have noticed in the last few years, though, is that at about $90-$95/mt, you do actually get some movement in terms of entrance and exit to the market, particularly out of India, which sets a pretty good indication of what that actual floor price is; whereas in years gone by, there was a large overhang to the market as people continue to produce while pricing may not warrant the profitability that we'd expect. That's also a good indication that the market is responding normally to supply and demand.

All of that, for us, is a bit out of our control. But we are the lowest-cost iron ore producer in the world and concluded a really cheap acquisition in the Blacksmith mine in Western Australia to our portfolio, which gives us a bit more confidence.

What other ways have you been adapting to the evolving iron ore market?

We have been working on and seeing now the results of implementing more sophisticated models into our supply chain, which has yielded a lot more capacity than what we thought. So even though your fixed costs may be similar, your dilution in terms of the amount of tons you make for that fixed cost goes up.

Our system was formerly designed for 155 million mt, but is now producing about 193 million mt. We did that through conventional efficiency improvements over the years and small capital debottlenecking exercises. Then we unleashed this [AI] agent team, so to speak, into our supply chain, and it's yielding pretty impressive results.

While sensing and ‘internet of things’ is a more typical and traditional technology use, it's through multi-language modeling now where you can import all those billions of data points. We're seeing an extra 2 million to 3 million mt in the last six months on the rail and in the stockyard as a result of AI and other productivity improvements.

This year, we also launched our own proprietary operating system, which is basically algorithms we've built based on how we run our portfolio. If you look at the apples-with-apples comparison, our peers would be running maybe 20% to 30% more expensive than we are. So we've created a gap between our unit cost versus our peers.

That is also autonomy-driven, with a fleet management system and an energy management system, which link into decarbonization. So, along with an enviable unit cost position and the drive for decarbonization -- which we don't see as a cost but as an investment to actually create more value -- we're anticipating a further $2 to $4/mt off that cost base over the next two years as we rid ourselves of 800 million liters of diesel.

How do you see the balance of supply and demand evolving in global coking coal markets?

I've been in greenfield development for 30 years, and the risk on supply is still far greater than the risk on demand because there's just no new investment. Anglo American’s Dhilmar deal brings the tally to about $24 billion in M&A in met coal over the last 24 months. The reason for that is the only way anyone can grow is to buy, consolidate and aggregate projects. There's no greenfield development, so the supply is very limited.

Producers are declining, pits are getting deeper, reserves are getting depleted and there's just a lack of new supply. That's where I really see an opportunity for us and other new projects.

Even with a pessimistic view of demand growth by 2035, there's still a significant demand-supply gap and questions about how it will be filled. It might be filled with lower-quality coal in different markets, but there really is a mismatch between supply and demand because the majors haven't built any new projects and have been retreating, along with a lack of capital and some approval challenges.

Has Donald Trump’s US presidency changed things for Canada’s met coal?

There's been a real change in outlook in the last 18 months since Trump arrived. Both provincially and federally in Canada, there has been a real recognition of the importance of resource projects.

The British Columbia government has become a lot more focused on resources since 2024. Minerals tax is a huge part of the revenue side in the province, and coal effectively pays half the mineral tax there, and all of that really comes out of the Elk Valley. The Environment Minister Tamara Davidson said the government needs new projects and is keen to support. They have a very rigorous process, but they are keen to work with us to try to expedite the approval process from here.

Canada’s Mark Carney government has also been very different from the Trudeau government in terms of their environmental process and willingness to support resource projects.

The trade and tariff barrier issue really rose and fed Canadian nationalism, the need for economic independence, and the recognition that they needed to rely less on the US. Steelmaking coal exports from Western Canada all go to the Pacific. None of it goes to the US, so there are no tariff issues there. So, it is really recognized as a key industry where Canada has a product advantage and a competitive advantage. Hence, there has been a real focus on what can be done to maximize that.

We've been lobbying the federal government for steelmaking coal to be a critical mineral. We haven't been successful yet, but it's happened in the US, the EU and New Zealand, so we are still continuing to lobby that. Glencore and Nippon Steel paid over $9 billion for assets in the Elk Valley, which is the second-largest primary basin in the world for key steelmakers, alongside the Bowen Basin. This shows the critical importance of continued supply from Western Canada.

Part of that drive is the effort to continue diversifying supply from the Australian industry, which has faced issues due to royalties, labor costs and additional carbon costs.

So, Canada is increasingly cost-competitive, with labor costs probably 20% lower. Fuel costs are certainly cheaper amid the overriding issue that Canada is an oil exporter. Oil prices have increased, but not to the same extent as they have in Australia. The coal mining royalty in Queensland is incredibly punitive and has a huge impact on Australian producers.

How significantly has China's coking coal import mix shifted away from Australian origins, and might there be a permanent structural change?

It is probably a permanent change. That really started during the COVID-19 restrictions, then they just haven't come back in the same volume they had previously. It's been interesting seeing waves of investment and marketing for Australian coal. There were investments from Japan, South Korea and China, and then Indian investments in production. Now we're seeing Indonesian investment as well, with Dhilmar acquiring Anglo’s Australian steelmaking coal mines. While this does not necessarily represent coal flows going to Indonesia, it is interesting to see investment flows.

With freight rates on the Australia-China Panamax route rising, how are freight costs reshaping arbitrage economics and trade flow decisions between Atlantic and Pacific basin coking coal suppliers?

I've seen some limitations, particularly from the East Coast US, where the doubling of freight rates has reduced competitiveness in Asia and is keeping pressure on US pricing. Chinese buyers have been willing to maintain and develop those import channels. But higher freight costs due to the Middle East situation and other disruptions put a lid on the ability for those markets to expand, certainly for the next six months.

Vale produced 335 million metric tons of iron ore in 2025. How confident are you in reaching the upper end of the 340 million-360 million mt guidance for 2026?

It is still early to provide additional detail beyond the guidance we have already disclosed. As part of our annual planning cycle, we update our seasonality plan using the prior year’s performance and the latest weather outlook.

The plan integrates key risk drivers across the operating system -- hydrology, mine and plant infrastructure, geotechnical controls and electrical reliability -- so we can proactively manage constraints and protect production through the wet season. This discipline has supported year-over-year operational improvements and remains a core element of our execution against our 2026 plan.

How quickly can Vale scale AI and digital twin technology after the 38% increase in DR feed at Conceição II?

We are already scaling this approach beyond the pilot: the next deployment is underway at our Brucutu processing plant, with implementation expected to be completed in the second half of 2027.

After Brucutu, we plan to extend the rollout to the Vargem Grande complex, leveraging the learnings and standardized models developed in the earlier phases.

The following section contains official responses provided by Vale to Platts.

Vale has explicitly identified India as a critical growth engine to offset plateauing Chinese steel production. In a previous statement given to Platts, Vale identified India as a key growth market and stated that the company is better placed than its competitors to grow business here. What underpins Vale's confidence in its ability to grow in India?

Vale plays a strategic role in supplying minerals to support India’s industrialization and energy transition. Over the next decade, India is expected to double its steel production, and we can help meet the resulting demand for iron ore.

In addition, we have some competitive advantages. Our iron ore has complementary characteristics to the ore produced in India, and Vale’s logistics capabilities -- with distribution centers in Oman and Malaysia -- are well positioned to serve both the east and west coasts of India.

In February, the signing of a memorandum of understanding with Adani and NMDC [National Mineral Development Corp.] was announced to study the potential development of an iron ore blending facility and a dedicated Special Economic Zone at Gangavaram Port.

How is Vale positioning DR-grade pellets and briquettes for India versus other markets?

Steel production in India is still predominantly based on blast furnace/basic oxygen furnace routes, and this trend is expected to continue over the next decade.

Demand for direct reduction production is currently stronger in Europe, where steelmakers face stricter carbon emissions constraints, but there is also significant potential in other parts of Asia, such as Japan, South Korea and Taiwan.

Regardless of the scenario, the flexibility of our integrated supply chain allows us to allocate products to where they generate the greatest value at any given moment.

How can Vale make Brazil-India iron ore flows more competitive?

Flexibility across the extended supply chain is one of Vale’s competitive advantages. We are able to serve both the east and west coasts of India through our distribution centers in Oman and Malaysia. Large-capacity vessels such as Valemax provide unmatched economies of scale.

In addition, we are innovating through the Ecoshipping program to reduce carbon emissions while also enhancing competitiveness. Solutions such as rotor sails and the use of low-carbon fuels, including ethanol, are strong examples of this strategy.

If iron ore prices fall below $100/mt, would Vale prioritize volume discipline or cost competitiveness?

There are many factors in our business that we do not control, such as product prices, freight rates or exchange rates. We need to focus on what is within our control to remain competitive under any business environment.

We continuously pursue operational excellence to deliver planned volumes while keeping costs under control. In iron ore, we have a robust strategy that includes operational flexibility and an extended supply chain capable of delivering what the market demands at any given time. This strategy helps us navigate effectively across different pricing environments.

How is Simandou affecting Vale’s blending strategy for Carajás Medium Grade ore?

Simandou will enter the market gradually. The general market expectation is that Simandou will supply around 15 million-20 million mt in 2026, and that it will take until the end of the decade to reach 120 million mt.

At the same time, we expect depletion at other mines to offset a significant portion of these additional volumes entering the market.

Regarding Medium Grade Carajás ore, this is a product we developed with the goal of delivering what the market demands at each moment, as part of the flexibility of our portfolio. Our strategy is always to operate with the customer’s needs in mind, assessing what we can offer in order to maximize results.

What does India’s strengthening steel market and declining imports mean for ferroalloy producers?

It is important to distinguish between carbon steel and stainless steel. Safeguard measures have been applied to carbon steel, while ferrochrome is supplied to stainless steel producers.

At present, IMFA has an installed production capacity of about 384,000 metric tons of ferrochrome per year. We are predominantly export-oriented, with more than 90% of output exported and about 10% supplied domestically.

Over the next three years, our aim is to move toward a 60:40 export-domestic mix. Exports would still be account for the larger share, but a much more significant tonnage would go into the domestic market. India’s stainless steel consumption is still low, at around 3.5 kg per capita, perhaps a little higher, and I see room for growth.

How is IMFA’s capacity base changing?

We are executing a 100,000 mt/year greenfield project at Kalinganagar. We have also completed an acquisition of Tata Steel’s Kalinganagar ferrochrome asset nearby. That unit has 100,000 mt/year of operating capacity and a partially built furnace that can add another 50,000 mt/year once completed.

The acquired unit has four operating furnaces and production has started in all four. Once the greenfield project and acquired capacity are fully in place and the partially built furnace is completed, our total installed capacity would move beyond 500,000 mt/year.

What does the Kalinganagar expansion mean for raw material security and costs?

The key point is our integrated business model. Even as ferrochrome output increases, we are not looking to buy any ore from outside. We will raise captive ore output to meet our in-house requirements.

We were raising about 500,000-600,000 mt/year of ore. In phases, we plan to take that to about 1.2 million mt/year over the next three to four years, which supports the doubling of smelting capacity.

Kalinganagar is logistically advantageous with its proximity to chrome ore mines, ports and stainless steel customers. Taking the greenfield project and acquired unit together, Kalinganagar will become a 250,000 mt/year ferrochrome location.

We are also indicating expected output of about 400,000 mt in fiscal year 2026-27 (April-March) and 475,000-500,000 mt in FY 2027-28. The base price for the acquisition was Rupees 6.10 billion (about $64 million) plus GST and net working capital, and as I recall, the final consideration was a little over Rupees 7 billion.

How are you planning for energy security given that it is a major cost for ferrochrome?

Energy accounts for about 35% of ferrochrome production cost, so reliable and competitively priced power is critical.

We have about 205 MW of captive power generation, including around 200 MW coal-based and about 4.55 MWp solar.

We have also executed a 29-year power purchase agreement with EG Urja Strot under the captive consumer structure, securing a contracted demand of 65 MW of hybrid renewable power for our ferrochrome operations. The underlying hybrid renewable energy project has a total installed capacity comprising solar capacity of 81.4 MW, wind capacity of 102.6 MW and battery energy storage system capacity of 25 MWh, of which IMFA will draw 65 MW as a captive consumer. The indicative timeline for completion of the project is June 2027.

With the signing of this agreement, IMFA’s contracted renewable energy supply portfolio stands at 135 MW. We had previously announced 70 MWp hybrid renewable energy sourcing arrangement with JSW Energy, expected to commence in Q2 FY 2026-27. Together, it marks a significant step in IMFA’s transition to cleaner and more sustainable energy sources.

Has the Middle East situation affected operations or costs?

We have not been significantly impacted. Freight rates have risen and that adds somewhat to export costs. But our major raw materials are either captive, such as chrome ore, or sourced in ways that do not depend on affected routes such as the Strait of Hormuz.

Industrial LPG is a very small part of our production process. During this temporary phase, we have switched back to alternate fuels, which we had used earlier, so there has been no material operational impact.

What is the most practical decarbonization path for ferrochrome?

For me, the low-hanging fruit is renewable energy. It is practical, easily implementable and available at grid parity or better, so it does not require viability gap funding.

Beyond that, carbon remains a significant input because ferrochrome smelting uses metallurgical coke. Research is taking place globally and some producers are talking about green ferrochrome. We will need to look at ways to reduce the carbon footprint further.

In our greenfield project, we are installing closed furnaces and will use furnace off-gas to generate electricity. Over time, technologies such as carbon capture and storage may also become relevant.

Where does IMFA stand on critical minerals?

Ferrochrome remains our core business. But critical minerals and rare earths are adjacent to our skill set because we mine and process minerals at an industrial scale.

We are still crafting our strategy. We are working with experts and consultants to identify which minerals or rare earth elements fit our capabilities, capital allocation and return expectations. It is early days, but the intent is there. IMFA has a strong balance sheet and that gives us flexibility as we evaluate opportunities.

What role will ferrochrome play in India’s manufacturing growth by 2030?

You cannot produce stainless steel without chrome. Stainless steel is much smaller than carbon steel in volume terms, but it has critical applications.

As India’s economy matures, life cycle costing will become more important. Stainless steel may have a higher initial acquisition cost, but when maintenance and recyclability are considered, it scores well. Greater stainless steel adoption in India should support ferrochrome demand.

Regarding global risks, I think it is difficult to identify a single factor that is underpriced. The world has seen COVID, supply chain shocks, multiple conflicts, geopolitical uncertainty and concerns about China slowing. The better approach is to expect the unexpected and build a resilient business model that can withstand shocks.

How is JSW assessing the impact of CBAM on its exports to Europe?

Europe remains an important market for us and we continue to be one of the largest exporters of Indian steel to the region, although export volumes have declined year on year. At present, we are not seeing a significant reduction in demand from our European customers. Existing trade flows continue although some near-term softness may emerge due to import quotas and the implementation of CBAM.

At the same time, our business is increasingly supported by the domestic market, which accounts for more than 90% of our sales. Demand fundamentals in India remain strong and provide an attractive alternative as export markets become more complex.

CBAM will undoubtedly affect competitiveness over time. Historically, steel pricing was primarily determined by raw material and production costs. Carbon costs are now becoming an additional component of the final price, creating a new dimension in how steel is traded and valued internationally.

How prepared is JSW for CBAM compliance and how do your emissions compare with EU benchmarks?

Our emissions intensity is significantly below the default values assigned to Indian steel under the CBAM framework. While the default value for Indian hot-rolled coil is around 4.7 metric tons of CO2 per metric ton of steel, our emissions are about 2 mtCO2/mt, with HRC emissions typically ranging between 1.8 and 2 mtCO2/mt, depending on the production facility.

Emissions vary across plants, but all of our facilities are capable of exporting and are included within our reporting framework. Throughout the CBAM transition period, we have been submitting emissions data on a quarterly basis.

Going forward, reporting will move to an annual cycle. Emissions data for 2026 will need to be verified and submitted between January and April 2027, with final compliance obligations completed by August 2027. The EU has recently begun identifying authorized verification agencies, and we expect our accreditation process to be completed by June. Until then, third-party verification remains voluntary.

How are carbon costs influencing steel trade and purchasing decisions in Europe?

CBAM costs are calculated using actual emissions, adjusted for the applicable free allowance benchmark, and multiplied by the EU Emissions Trading System price.

To illustrate, if emissions are assessed at the default level of 4.7 mtCO2/mt, with a free allowance of 1.37 mtCO2/mt and an ETS price of about Eur80/mt, the resulting carbon cost could reach around Eur270/mt but if you use verified emissions for HRC from JSW Steel operation, the CBAM cost would be substantially lower at around Eur30-Eur45/mt when compared with use of default values. While the tax is formally paid by importers, the impact is increasingly being felt across the entire value chain.

European buyers are becoming much more focused on emissions data. Purchasing decisions are no longer based solely on the steel price itself but on the total landed cost, including carbon costs. In cases where verified emissions data is unavailable, importers may be forced to rely on default values, which can significantly increase compliance costs.

Customers are increasingly requesting third-party verified emissions reports rather than relying solely on Environmental Product Declarations or internal company data. As the market gains greater clarity around CBAM implementation, both buyers and sellers are becoming more focused on understanding the final carbon-adjusted price of steel.

What is your outlook on CBAM’s effect on steel pricing and competitiveness over the next few years?

The impact is likely to be manageable during the initial years because free allowances remain relatively generous. However, those allowances will decline each year, while default emissions values are also expected to become more stringent.

Ultimately, customers will focus on the final net price after carbon costs are included. To remain competitive, steelmakers will need to improve operational efficiency and further reduce production costs. At the same time, stronger steel prices may be required to offset some of the additional burden created by carbon regulation.

Over time, this could contribute to firmer domestic steel prices, particularly in markets such as India, where demand remains robust.

How are shifting trade flows shaping JSW’s export strategy?

European import quotas naturally limit the volume that can enter the market, requiring producers to continuously evaluate alternative destinations.

We believe future export opportunities will increasingly lie in higher-value, niche product segments rather than in volume-driven exports. Given the strength of the Indian market, domestic sales currently provide attractive and stable returns.

Looking ahead, postwar reconstruction activity in the Middle East could create significant steel demand. Southeast Asia has historically been an important export market, but substantial capacity expansions across the region are likely to make many countries increasingly self-sufficient.

Are customers willing to pay a premium for green steel?

At this stage, we do not see strong evidence that customers are willing to consistently pay a premium for green steel. Ultimately, purchasing decisions remain driven by economics.

Europe has been at the forefront of decarbonization efforts because carbon costs are already embedded within the market. However, progress has been uneven. The investments required to significantly reduce emissions are substantial and, in many cases, are not fully offset by CBAM-related benefits or government support mechanisms.

Current decarbonization initiatives include greater use of renewable energy and increased scrap consumption. Lower emissions are generally easier to achieve in long steel production than in flat steel production, creating additional challenges for flat product producers.

The economics need to work for customers before widespread green steel premiums can emerge.

What role can policy play in accelerating the adoption of green steel?

Policy support will be critical. India is currently exploring mechanisms to encourage green steel consumption, and one potential model is similar to renewable purchase obligations that helped accelerate renewable energy deployment.

Mandated consumption of green steel could create the demand signals needed to support investment and wider adoption throughout the value chain.