The report’s author and IEEFA Global Steel Energy Finance Analyst Soroush Basirat provides a detailed assessment of high-quality iron ore and the emerging opportunities for its producers.
The report highlights that direct reduction (DR) technology considered the primary pathway for decarbonizing steel production is significantly increasing demand for high-grade iron ore. The projected supply gap for DR-grade iron ore is creating major opportunities, particularly for new suppliers. Efforts to capitalize on this opportunity are being led by established producers in Canada, Brazil, and the Nordic region, as well as potential new entrants in Africa.
Basirat states: “Globally, a growing number of new DR plants are coming online without domestic access to DR-grade raw materials. This will place increasing pressure on the seaborne market for DR ore. Many forecasts indicate a likely supply shortfall. The market for high-quality iron ore presents a clear opportunity for new suppliers that should not be overlooked.”
The report also draws attention to Australia’s position. Iron ore is the country’s largest export, but its current production largely consists of lower-grade ores or materials suited to traditional blast furnace-based steelmaking. The global shift toward low-emission steel production via DR especially driven by demand from China is expected to put long-term downward pressure on Australia’s blast furnace-grade ore exports.
Basirat emphasizes that a strategic shift toward DR-grade ore is critical for Australia to diversify its demand base and strengthen its position in the global market: “Without participating in the supply of high-grade materials, Australia risks losing its strategic importance in a market increasingly shaped by decarbonization and demand for premium iron ore products.”
Although Australia does not currently produce the highest-grade ores, it possesses significant magnetite resources, which are critical for high-quality iron ore production. However, developing new production capacity from these deposits requires long lead times. Most forecasts suggest that a supply gap for DR-grade ore will emerge after 2030, leaving Australia with a narrow but crucial window to position itself in support of decarbonization efforts among its traditional trading partners in Asia.
Basirat adds: “Timely and decisive action will be critical for Australia to keep pace with global developments in low-emission iron production. Bringing new deposits into production can take up to a decade, but this timeline could align with the expected wave of new DRI projects globally.”
The report also notes that opportunities for DR-grade ore production extend beyond Australia. While producers in Canada, Brazil, and Scandinavia stand out due to their existing infrastructure and expertise, new players in regions such as Africa and the Middle East are also actively taking steps to enter the DR-grade raw materials market.
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