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Steelmakers drawn to Iberian promise of green hydrogen for DRI projects


H2GS, ArcelorMittal plan green hydrogen projects in region

Solar, renewable power supplies to drive electrolyzers

H2GS plans larger lower emissions steel plant

ArcelorMittal and Swedish steel developer H2 Green Steel have set up plans to tap new green hydrogen supplies in Spain and in the Iberian peninsula, to fuel direct reduction iron plants and meet demand for low-emissions steel.

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H2 Green Steel, or H2GS, said it had signed a Eur2.3 billion ($2.61 billion) green hydrogen venture with Spanish power group Iberdrola for a 1 GW green hydrogen plant, feeding a new 2 million mt/year DRI plant owned solely by H2GS. The electrolyzer will be jointly owned and operated by Iberdrola and H2GS, with the project financed with a combination of public funding, green project financing and equity, it said.

The companies will explore the opportunity to colocate a green steel production facility capable of producing 2.5 million-5 million mt/year of low-emissions flat steel, in conjunction with the plant, it said. Iberdrola will deliver renewable energy to the electrolyzers.

The plan follows ArcelorMittal's announcement for a DRI plant at its huge integrated steel works in Aviles and Gijon, northern Spain, which will also feed the group's existing electric arc furnace in Sestao, Basque region.

ArcelorMittal seeks solar power-based green hydrogen production for its DRI project, with natural gas as a back up until hydrogen supplies become commercially available. Spain was Europe's biggest LNG importer in 2020, and also relies on gas imports by pipeline from Algeria.

H2GS said several possible locations in the Iberian Peninsular are currently being considered for its project, with DRI production intended to start in 2025 or 2026. H2GS was set up to build a 5 million mt/year integrated DRI and ferrous scrap-based EAF steel project in Boden, northern Sweden, close to high-grade iron ore resources mined by LKAB and Kaunis Iron, and to hydropower.

"The locations that H2 Green Steel and Iberdrola are assessing will all have access to cost-effective renewable electricity and the infrastructure required to successfully operate a green hydrogen, green iron and green steel business," it said.

The plan to develop the Iberian project will "reduce the technical risk in our Boden project," H2GS CEO Henrik Henriksson said in the statement.

"Our project in Boden in northern Sweden has proved that there is a very strong demand for green steel from a broad customer base," H2GS Executive Vice President Kajsa Ryttberg-Wallgren said.

"The collaboration with Iberdrola will strengthen and refine our Boden platform, infrastructure, and project execution. With two European locations, we will make an even greater impact, get closer to customers, and meet the demand of an expanding market."

Tata Steel in IJmuiden plans to harness North Sea wind power to generate green hydrogen for its proposed DRI plant, which will see the first unit start by 2030, according to the company.

Green steel projects in Europe will likely require electrolyzers to be built on site to generate hydrogen from renewable power sources, given the efficiencies in transporting electricity over piping hydrogen, said Joachim von Scheele, global commercial director at Linde. He expects more than 400 MW electrolyzer capacity to be needed for every 1 million mt/year of DRI.

"In general, the pace of transition will be determined by the availability of viable green power," he said. "If viable green power cannot be supplied where the steelmakers are, the steelmakers must move their production to where this viable green power is available."

DRI plants typically require DR-grade low impurity iron ore pellets, which are suited for the hydrogen-fueled iron ore reduction process. For iron ore qualities with lower purity and higher gangue and non pelletized iron ores, alternative routes to lower-emissions processing are being trialed.

Companies including Rio Tinto, JFE and Vale have highlighted potential to adapt steel plants to use melters, biomass, iron ore briquettes and ferrocoke to boost efficiencies.

Rio Tinto is looking at scaling up a project using Pilbara iron ore resources and biomass to form briquettes with microwave technology to be processed in a melter to use in existing steelmaking and EAF processes, said Simon Downes, general manager for steel decarbonization, at the S&P Global Platts Hydrogen Markets Europe conference on Nov. 26.

DR pellet premiums have been supported by lower availability of suitable iron ore feed, along with new DRI capacity coming onstream in Russia, Algeria and the US, with a recovery in rates in the Middle East and North Africa region.