Nordic developer Blastr, Cargill to work on iron ore pellets, steel sourcing

Norwegian developer Blastr Green Steel AS said July 4 it had signed a strategic framework agreement with US trading group Cargill to jointly develop Blastr’s supply of iron ore and pellets and sell low-carbon steel.

The terms build on Cargill’s support developing Blastr’s projects under an October 2022 memorandum of understanding, with the trader now committing $10 million in Blastr’s planned Series A financing round, the Lysaker-based start-up company said in statement. Blastr was set up in 2021 to pursue low-carbon steel led by a 2.5 million mt/year finished steel project, and backed by shareholder investment fund Vanir Green Industries. A final investment decision for the steel and pellet plants is due by 2025, the company website states.

Cargill and Blastr will finalize definitive agreements covering the areas included in the strategic accord over the next few months, Blastr added.

Cargill’s agreement covers the supply of iron ore feed to Blastr’s pellet plant, along with offtakes and sales of direct reduction pellets, hot briquetted iron (HBI) and low-carbon steel products. Further, Cargill will be involved in ferrous scrap sourcing, low-carbon shipping and logistics, along with supply of working capital and risk management services to Blastr, it said.

Cargill will work with Blastr across the supply chain and enable “the development of transparent certified supply chains,” along with supplying steel customers, growing the low-carbon steel segment, according to Lee Kirk, Cargill Metals’ managing director.

Cargill will support Blastr in developing and commercializing low-carbon steel products for the European market, it added.

Blastr said it is initially developing a 6 million mt/year DR-grade pellet plant in Gildeskal, Norway, and a 2.5 million mt/year direct-reduced iron plant and an electric arc furnace in Inkoo, Finland, with its own green hydrogen production, supporting a major reduction in primary ironmaking emissions compared to using coal-based fuel in blast furnace processes.

Blastr said it targets the potential to deliver more than a 90% reduction of Scope 1-3 C02 emissions per ton of steel.

“Cargill’s access to raw materials and end-customers, combined with innovative trading, shipping, and offtake solutions, bring us a giant leap forward in realizing green steel production at scale”, said Blastr CEO Hans Fredrik Wittusen.

Cargill is expected to consider regional and global sources of iron ore to meet quality requirements and available supply with the project’s timelines. Iron ore mines in Norway and Sweden, along with other sources may have suitable qualities with industry plans to grow high-grade supplies over the next few years. Regional iron ores are already used in several pellet plants. Usage for pelletizing may also depend on grinding capacity and pricing terms.

H2 Green Steel is seeking to develop a green DRI and EAF-based steel plant close to Lulea in northern Sweden, and is projected to start supplying material to markets earlier, with several sales accords with end-users. Cargill in June signed up to a multi-year agreement with H2 Green Steel for the supply of low-carbon steel. H2 Green Steel intends to secure supplies of DR pellets and feedstocks from the markets, with ferrous scrap also planned for usage.

Industry interest to secure low-carbon, or near zero carbon steel has increased in some sectors, with premiums and associated pricing establishing a market for certified steel demonstrating emissions reductions. Auto sector end-users and suppliers across flat and long steel, as well as service centers close to the industry, have signed up to available low-carbon steel supply and future volumes.

However, market observers note that European steel demand is not projected to grow materially to absorb additional supplies, after recent declines in consumption rates. Critics state new greenfield steel projects, including those which have not secured raw materials and energy needed and may be susceptible to volatile pricing risks, may put at risk existing European steel production and employment, as well as accelerating changes in the iron and steel industry. Steel users may increase exposure to plants with renewable energy supplies and utility market prices, as well as depend on growth in related wind and hydro generating capacity to support new DRI and EAF needs.

Author Hector Forster