Commodities, Features, Iron ore

Hawsons Iron’s green steel opportunity

green steel

As steelmakers adapt to decarbonise their operations, they will require high-grade iron ore for ‘green steel’ production. Hawsons Iron has this in spades.

Just outside Broken Hill lies one of the world’s most promising undeveloped iron ore projects.

The Hawsons Iron project in New South Wales is gaining global attention for its Hawsons Supergrade product which, at 70 per cent iron (Fe), is poised to be one of the highest-grade Fe products on the seaborne market.

McKinsey & Company partner Christiaan Heyning didn’t mince his words when he spoke about the market at the 2021 AusIMM Iron Ore Conference in November.

“Demand for products will differentiate depending on what is sold and, to make it very simple, the purer the better and the higher Fe grade the better,” he said.

The backdrop to the conference was “green steel” and the important role Australian iron ore producers can play in the world’s net-zero aspirations.

Steelmakers have an obligation to reduce their emissions and can only do so if their steel is derived from a high-grade Fe product.

This is what makes the Hawsons Iron project so important, not to mention intriguing.

Hawsons Iron’s magnetite orebody sits within siltstone, making it a softer resource than the hard-rock orebodies found in Western Australia and internationally.

The fact the ore is soft means less power is required to extract and process the magnetite to a higher grade, but the absence of clay in the orebody also means less water is needed in the processing phase.

Using less power and water means a lower-cost operation and a more sustainable project.

“We’ve got a very soft ore compared to the mines in the west,” Hawsons Iron executive chairman Bryan Granzien said. “Our studies are showing, and we’ll confirm, that the energy consumption for crushing and grinding our magnetite could be up to 75 per cent less than the magnetites in the west.”

Magnetite is lower grade in the ground compared to hematite but results in a higher-grade end product. This is because magnetite has fewer impurities – another key differentiator of the Hawsons Iron orebody.

“Magnetite has been a bit of a poor cousin to hematite in the past, but magnetite is very much the future because of the higher grade,” Granzien said. “To reduce carbon you need higher-grade products and ours at 70 per cent is top of the tree.

“Hematite is diminishing in terms of resources available, but clearly it’s not as good of a feedstock for low-emissions steelmaking.”

Due to the ‘softness’ of the Hawsons orebody, rigs are achieving 200–250m per shift.

Located 60km south-west of Broken Hill in mining heartland, the Hawsons Iron project is close to key infrastructure such as solar and wind power, meaning the project has established renewable energy sources on its doorstep.

In February, the company expanded its bankable feasibility study (BFS) to include an option with a potential production capacity of 20 million tonnes per annum (Mtpa), an extra 10Mtpa from the project’s 2017 prefeasibility study (PFS).

The option will explore a direct-to-port underground slurry pipeline and port opportunities within the eastern Spencer Gulf of South Australia, with the potential to further improve the project’s environmental, social and governance (ESG) credentials.

The original PFS transport option included a slurry pipeline from site to Broken Hill and then rail to port, which could be a more carbon-intensive pathway.

The Hawsons Iron BFS is due for completion in December 2022.

“This is a compelling opportunity to maximise the value of the Hawsons Iron project,” Granzien said in a statement. “The 20Mpta option has been enabled by the mineral resource upgrade announced on October 19 2021, which increased indicated and inferred resources by nine and 18 per cent, respectively, compared to the 2017 PFS.

“Whilst the expanded scope will assess the economic viability of this option, we expect the transport cost savings may be significant and we also expect a reduced-carbon logistics footprint and other ESG benefits.”

The BFS budget would be increased by $12.4 million to cater for the 20Mtpa option, with an extra $7.4 million attributed to an associated environmental impact study and $5 million for the pipeline and port component.

Hawsons Iron has received letters of intent and potential offtake interest for 12Mtpa of its Hawsons Supergrade product.

Granzien said the market knew a quality product when it sees it.

“Buyers will strongly influence which projects get developed,” he said. “They will be willing to support new high-grade supply that is sustainable through the value chain and they will pay a premium for it. This makes Hawsons Iron economically viable despite iron ore price fluctuations.

“There are cutting-edge steelmakers producing low-to-no-carbon-emission ‘green steel’. They need this ore and we’re ready to provide it.”

Hawsons Iron executive chairman Bryan Granzien inspects samples with the team.

In December 2021, Hawsons signed an equity funding agreement with LDA Capital. As part of this deal, Hawsons can draw down up to $200 million by issuing ordinary Hawsons shares to the US investment group.

In the lead-up to the BFS, Hawsons continues to advance discussions with other potential financiers, including financial institutions, steel mills and commodity trading houses.

Hawsons upgraded its mineral resource to 400 million tonnes in October and drill programs continue to shore up the deposit. With up to seven drill rigs mobilised on-site, the project’s BFS is advancing on schedule and rigs can achieve 200–250m of drilling per shift due to the softness of the orebody.

As the world’s most essential construction material, steel is responsible for seven per cent of global carbon emissions, and that figure is rising.

And as steel demand continues to increase in an ever-urbanising and -industrialising world, steelmakers are reaching a fork in the road. They must consider the variables that contribute to their carbon footprint, and what iron ore product and emerging technologies they will need to embrace.

In an industry that’s becoming high-grade or the highway, Hawsons Iron has the unique opportunity to not only be a participant in the green steel revolution, but to be a catalyst for positive change.   

This feature appeared in the April issue of Australian Resources & Investment.

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