If one could pick a word to describe Magnum Mining and Exploration Ltd’s (ASX:MGU) progression of the Buena Vista Magnetite Project and the associated HIsmelt Green Pig Iron Project in Saudi Arabia, it would be ‘relationship’.
Because advancement of these two projects is set to combine Magnum’s unique ‘HIsmelt’ technology and the Kingdom of Saudi Arabia’s focus on moving towards ‘net zero’ by 2060, with the end goal of producing ‘green’ pig iron from Buena Vista ore processed at a ‘HIsmelt’ plant in Saudi’s King Fahad Industrial Port in Jubail.
Magnum first floated the idea in November, announcing a feasibility study to produce zero-carbon ‘green’ pig iron from such a plant, with this being jointly funded by a syndicate of Saudi investors known as Midmetal (or Middle East for Metallic Industrial), with the two working together on agreements for overall project funding and pig iron offtake.
With the completion of an engineering study showing the viability of this project in January, Magnum – which now holds a 50% stake in Midmetal – has steamed ahead this year with talks with a Saudi investor for a capital raising of US$210 million and metallurgical testing which showed that a high-grade concentrate of 68.3 percent iron could be produced from Buena Vista through a relatively simple grinding process.
The race to ‘net zero’ and the green energy transition in Saudi Arabia
At the heart of the collaboration between Magnum and Midmetal is the Saudi Arabia ‘Green Initiative 2030’ (or SGI), which was launched in October 2021 by Crown Prince and Prime Minister HRH Prince Mohammed bin Salman bin Abdulaziz.
This is a national plan to reach net zero emissions by 2060 through the circular economy, contributing to global plans of achieving a green energy transition by 2030.
(As part of the latter, Saudi Arabia joins more than 140 countries which have raced to set a net-zero target – including major polluters China, the United States, India and the European Union – with this covering about 88% of global emissions.)
The SGI aims to unify Saudi Arabia’s sustainability efforts, and now comprises 88 initiatives equalling more than SAR $705 billion to help drive sustainable growth, with the country aiming for an energy market built on 50% sustainable sources by 2030.
A ‘disruptor’ technology
One key element in the SGI plan is Saudi Arabia’s investment in green steel: and this is where Magnum comes in, with the benefits provided by its HIsmelt technology, with the use of biochar in particular playing a central role in its net zero criteria.
Managing director and CEO Neil Goodman said these benefits were twofold.
“First, HIsmelt can produce green pig iron economically today without the need for expensive hydrogen,” he said.
“This is effected by replacing coal with sustainably sourced biochar.
“Secondly, HIsmelt can directly use waste materials from Saudi steel mills such as DRI dust, pellet chips, slags and millscale: these waste materials are high in iron and available locally for low cost.”
This will be done through Magnum’s Saudi-based plant, which is set to produce 1.1 million tonnes of green pig iron a year.
A magnetite mine in friendly territory
Of course, all of these ‘green steel’ dreams need to be built on a strong mining foundation, so Magnum’s completion of feasibility studies for Buena Vista represents an important achievement for the company.
These studies suggest Buena Vista will have a long-term production potential, yielding high-grade magnetite with no harmful impurities, in a district – close to the city of Reno – which is friendly to mining.
Indicative of this is the decision by Nevada’s Department of Conservation and Natural Resources to grant water rights for the life of the mine.
Other infrastructure factors are also positive, with the project located 40 kilometres from grid power, and around 50 kilometres from the Union Pacific rail line which connects it with export ports including Stockton, San Francisco, West Sacramento, Oakland and Richmond (Levin).
What’s the deal with steel?
It’s also undeniable that since the United States is the world’s largest importer of pre steel products such as pig iron, being able to guarantee this in ‘green’ form adds significant value to a company.
This is underscored by the fact that steel production generates around 7% of all man-made emissions, with 70% of steel being produced using coal. For this coal produced steel, two tonnes of CO2 are generated from each ton of steel produced.
Therefore, Magnum’s drive to become a leading green pig iron company – based on a project in Nevada – makes it well situated to draw upon steel material demand in the country (and around the world), as well as fitting into the Saudi plans for a green future.