ArcelorMittal operates a number of iron ore mines as part of fully integrated steel facilities. However, it also runs two standalone mines, in Canada and Liberia, that supply iron ore to other ArcelorMittal steel plants and the global sea-borne export market. Steel Thoughts talks to Kleber Silva, Chief Executive of ArcelorMittal Mining, about the two operations and how they fit into the group’s strategic plans.

 

What is the strategic rationale for ArcelorMittal operating standalone iron ore mines?

Iron ore is a key raw material for making steel, and ArcelorMittal has been mining it for many years as part of its strategy for fully integrated plants. That means we know a great deal about iron ore mining and iron ore marketing. It’s in our DNA almost as much as steel itself.

Run safely and well, iron-ore mines can be great businesses and create significant value. Margins and return on capital are good, and prospects for growth and cash generation for shareholders are strong.

You just mentioned safety, which is ArcelorMittal’s top priority. How is the mining business performing in terms of safety?

Of course, safety comes before everything. We have a duty to keep our people safe, there is nothing more important. And we know how to do it. There are mining assets in our group - our Andrade mine in Brazil for example – that have gone decades without a fatality or serious injury. I visited there recently with members of the leadership teams from our Canadian and Liberian mining operations so we could all see first hand how they do it. We have the same rules and regulations, policies and procedures everywhere, the difference we saw at the Andrade mine was the culture. Every employee feels empowered when it comes to safety, feels they can speak up if they see an unsafe situation, stop work if they see a need to. And everyone looks out for each other. Safety is a real value in Brazil, it’s everyone’s top priority. That’s the culture we need to ensure we have everywhere.

We are getting there - there are good signs of progress. If you look at our lost-time injury frequency rate, it has halved over the past four years, from 0.32x in 2021 to 0.16x in the first half of this year. So good progress, but we know we have more to do to ensure we’re fatality and serious injury free everywhere, all the time.

Let’s move onto growth - do the same drivers apply in Canada and Liberia?

As you can imagine, they’re quite different businesses aimed at different opportunities. In Canada, our open-pit mines in the Labrador Trough in Northern Quebec are very established with strong safety controls. They’ve been in operation for the last 50 years and have another 30 years of mine-life ahead of them. That means the infrastructure is all in place, including a wholly owned 420 km private railway to Port-Cartier.  The priority and main drivers now for our mines in Canada are to improve the overall equipment effectiveness – its reliability, utilisation and productivity - and to increase production.  

Our mines in Quebec produce some of the highest-grade iron ore in the world, with a 65% iron content. That makes it ideal as a feedstock for Direct Reduction Iron (DRI) steel plants. This technology represents the future of the steel industry as it is a much lower carbon intensity.

Are the CO₂ savings really that big?

It’s a game-changer. A tonne of steel produced in a traditional blast furnace, using coal as a reductant, emits around 2 tonnes of CO₂. A tonne of steel made from DRI in an Electric Arc Furnace (EAF) using renewable electricity and with natural gas as a reductant (in the DRI furnace) emits just under half that.

Importantly, only around 15% of the iron ore mined globally meets the level of purity suitable for DRI. That’s one of the main reasons why the Canadian government has recently designated high-purity iron ore as a critical mineral, crucial to the domestic economy and energy transition.

It sounds like you should be ramping up production as much as possible?

At the moment, we’re producing around 25 million tonnes of concentrate a year. Of that, roughly 10 million tonnes is turned into pellets, which are then sold on to ArcelorMittal steel plants in Europe and Canada, or exported to third parties.

Given the pressure on the steel industry to reduce CO₂ emissions, our strategy is all about maximising the production of DRI-grade pellets. At the moment, around a third of our pelletized iron ore – 3 million tonnes - is the top grade suitable for DRI. However, we’re upgrading our pelletizing plant with flotation technology that will boost output of premium DRI-grade pellets to 100% or 10 million tonnes a year.

Impressive. And what about Liberia?

The story in Liberia is slightly different. The ore body is world-class, producing concentrate with roughly 65% iron content, putting it in the DRI ballpark. But the mine is still very much in its infancy. ArcelorMittal only entered Liberia in 2005, after the end of a civil war, and by 2018 our production was only 5 million tonnes a year of Direct Shipping Ore, the basic grade.

However, the good news is that there’s an estimated 4 billion tonnes of resource, so there’s huge scope for expansion.

You mentioned civil war. Isn’t Liberia a risky and difficult place to do business?

We were the first private foreign investor to go into Liberia after the war and have been a major contributor to the country’s reconstruction efforts. We’ve rehabilitated railways, built roads and houses, and upgraded ports. In addition to paying taxes and royalties, we employ over 2,000 staff directly, and over 5,000 people as contractors. It’s those relationships, along with the quality of the ore body and our workforce, that gave us the confidence to embark on our expansion plans in 2022.

It would be good to hear more about the plan. How big is it?

In dollar terms, it’s very large - $1.4 billion. That’s the single biggest investment in post-war Liberia and one of the biggest mining projects anywhere in Africa. Much of the investment is in a state-of-the-art concentrator plant, but we’re also upgrading the rail and port infrastructure. Overall, it will expand annual capacity to 15 million tonnes of high-grade, high-value concentrate, with 65% iron content.

As in Quebec, that makes it suitable for DRI production – a premium product that can deliver significant CO₂ emissions savings for ArcelorMittal steel plants around the world and third parties.

We are also studying plans to grow production further, to 30 million tonnes and take advantage of the ore quality by producing, in full or part, DRI quality feed.