Green steel to kill the Pilbara

Friday 21 April 2023

Morgan Stanley with a fascinating note on how steel decarbonisation will hurt the Pilbara.

# More high quality iron ore is needed to curb steelmaking emissions – in particular the highest quality ore suitable for direct reduction steelmaking.
# However, iron ore miners cannot easily adjust their product mix, and the quality of iron ore has been trending lower for many years.
# We estimate that today only around 4% (or c.70Mt) of the seaborne iron ore market comes close to DR standards.
# Upgrading ‘swing’ quality iron ore is needed to meet the demand growth we expect for DR-grade ore – but this will require investment in processing.
# We see Vale as well positioned to be a relative beneficiary among iron ore miners under current decarbonization and green steel trends.

U-turn needed to meet changing demand dynamics

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific's leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.