Monsters of Rock: green steel in the hour of chaos and UBS grows with iron ore and copper | spcilvly

  • POSCO subsidiary submits bid to EPA to build huge green iron plant in Pilbara
  • The South Korean conglomerate signed a deal last year to study the hot iron briquette game with Gina Rinehart’s Hancock Prospecting.
  • UBS raises long-term forecasts for iron ore and copper, with positive forecasts for BHP, Rio and FMG

Because of the disruptive status of all the green metal players who multiply like the children of El-ahrairah (it is a Sunken ship reference…because we’re too intellectual to just say ‘like rabbits’) they sure love generic names that have little of the ‘will become a verb’ tone of the Ubers, Tinders and Twitters of the Silicon Valley bull market.

Australia’s emerging but little-heralded crop of green steel hopefuls has little more imagination than the lithium explorers they are following into Western Australia’s “critical minerals” market.

The didactically named Port Hedland Green Steel Pty Ltd is the latest offending party, one more in the line of “what the tin says” players attempting to revive WA’s currently vacant local scene.

We have checked it through ASIC and it appears to be a subsidiary of South Korea’s POSCO, a producer of around 35 Mtpa of crude steel, varying from year to year, and a major supporter of the State resources scene.

It has a 30% stake in the Ravensthorpe nickel mine, interests in the Pilbara iron ore deposits including 12.5% ​​of Gina Rinehart’s Roy Hill mine and a downstream processing joint venture to develop a 43,000 tpa lithium hydroxide in-house using spodumene from Pilbara Minerals (ASX). :PLS) Operation Pilgangoora near Port Hedland.

Today’s EPA proposal by Port Hedland Green Steel Pty Ltd is not entirely surprising, given that POSCO and Rinehart’s Hancock Prospecting have announced plans to invest in a feasibility study on the 2Mtpa hot iron briquetting plant in March of last year.

The Port Hedland Green Steel project would be located in the Boodarie strategic industrial area, 10km south-west of the Pilbara city, the world’s largest iron ore export hub where major players BHP (ASX:BHP) , Roy Hill, Hancock, Fortescue ( ASX:FMG) and MinRes (ASX:MIN) dump millions and millions of tonnes of red dirt a year for China and the rest of Asia.

The HBI plant would take Australia and its excavation and ship mining sector further down the value chain, launching a product that its exponents (who already plan to open two HBI mini-factories in South Korea in 2027) say will help the sector with its extraordinary carbon emission. fingerprint.

How would I do that?

POSCO expects to produce around 3.5 Mtpa of iron ore pellets from magnetite concentrate at the Port Hedland plant, converting them into 2 Mtpa of HBI and 700,000 tpa of pellets for sale to low-cost steelmaking facilities. carbon content abroad.

Presumably, it would require the development of new resources by Hancock or an agreement with some other party. Hancock’s Roy Hill and Atlas Iron operations produce lower quality hematite, a product typically unsuitable for low-emission steelmaking and largely consumed in conventional blast furnaces.

But it is understood to be studying the potential to produce magnetite iron ore (similar in style to FMG’s new Iron Bridge mine) at projects in the Pilbara and Yilgarn.

The HBI project would take 2.5 years to build, with an expected start date of January 1, 2025, and an extraordinary operational life of 99 years.

During that time, POSCO predicts emissions will decline as Net Zero 2050 timelines approach and hydrogen reduction technology is developed to displace natural gas as a reducer in the production process, something they say is lacking. at least between 5 and 10 years.

“HBI production based on 100% hydrogen technology is not being considered, as the necessary technology has not yet been developed profitably,” the reference notes.

“It will be considered for incorporation into the proposal in the future when it is developed and viable (expected to be within 5 to 10 years).”

Production is expected to begin with 1% hydrogen blended with natural gas and carbon capture and storage technology with an emissions footprint of 1,288Mt of CO2 equivalent in its first year (1.6Mt unmitigated).

By the fifth year of operations, the plant would reduce its emissions by 27% at its unmitigated emissions level, 46% by year 10, 63% by year 15, 72% by year 20 and 77% to 350,000tpa by 2050.

It comes the same year the WA Mineral Research Institute compiled a study for the WA Government into a potential multi-million pound 4.8 Mtpa HBI plant, which would reduce total emissions in the steelmaking process (around 8% of global CO2 emissions) by approximately 60%, but seriously increase the amount generated on our own shores.

Another investment bank obtains iron ore and copper

UBS is mining iron ore and copper, raising long-term price forecasts in predictions that would be extremely positive for ASX majors Rio Tinto and BHP.

With higher costs and prolonged strength in the old world commodity, iron ore prices are expected to remain in the range of $100-130/t over the next six months.

But longer term, UBS has inflated its assumption from $65/t to $85/t, $10 above consensus and a major deal for iron ore miners if that’s the case, given they generate strong margins with C1 costs 20 USD. /t range.

UBS price targets for BHP, Rio Tinto and FMG have been raised in the range of 20-25% from $36 to $43 for BHP, $95 to $115 for RIO and $15.20 to $20.30 for FMG.

Meanwhile, despite weak copper prices, UBS forecasts a tight market in 2024 with a deficit emerging from 2025, as energy transition drivers increase demand by more than 3%.

With incentive prices for new projects rising, UBS has raised its long-term Cu forecast from $7,700/t to $3.50/lb to $8,800/t to $4/lb.

The materials sector rose 0.36% today. Gold stocks dominated as bullion prices rose in a safe haven that sheltered investors after a deadly Hamas attack in Israel that led to a declaration of war by Prime Minister Benjamin Netanyahu.

Aeris Resources (ASX:AIS) was the biggest gainer, rising more than 12% after the under-pressure copper and gold miner said it met production guidance for the September quarter at its Tritton mines , Cracow and Mt Colin.

It placed the WA Jaguar zinc-copper mine on care and maintenance during the quarter, and feasibility studies on its restart plans there will begin in the middle of this month.

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