Vale SA is looking into making hot briquetted iron, or HBI, if the price of natural gas needed for production falls about 60% to US$4/MMBtu, Reuters reported Oct. 3, citing three anonymous company sources.
The product is a compacted brick of 93% iron with low contaminant levels, and removes the need to use coking coal when processing the briquette into steel, resulting in lower carbon emissions. Natural gas is the main input needed to make HBI, other than iron ore.
The move by the major miner comes as Brazil works to improve its natural gas sector by promoting competition to decrease dominance by state-owned Petróleo Brasileiro SA and reduce the price of the commodity.
Brazilian Economy Minister Paulo Guedes expects government reforms to the gas sector to aid growth in the country, according to the report, with the minister saying it could cause gas prices to drop by up to 50%.
HBI is sold at roughly three times the price of iron ore, at about US$250/t to US$300/t on the global market, due to increased demand related to a global push to cut greenhouse gas emissions to control climate change, Reuters noted.
One of the sources said the company is looking at building HBI plants, subject to the gas price, but is still contemplating an exact production model.
If Vale goes ahead with HBI production, it could produce about 20 million tonnes annually beginning in the middle of the next decade, the source added.
