Yes, definitely following the broader market in regards to green steel - that is what will pull some magnetite projects into production.
I do genuinely believe that green steel will become a reality. I think there are two driving forces behind this. The first is the EU's Carbon Border Adjustment Mechanism ("CBAM") and to a lesser degree, China's Clear Skies policy. China will be a longer and slower transition. But the EU's CBAM is happening. I recently watched a CRU Group webinar (CRU not a stock code, but firm that does market research for businesses). The message I took from that is CBAM is happening, it will not be delayed and other countries are taking notice and will piggy back of that initiative and collect their own carbon tax rather than let the EU collect the funds from carbon tax.
If you accept that the cost of steel will increase because the carbon released in production will be taxed, then you need to look at ways that steel can be made while releasing less carbon. Direct Reduction Iron ("DRI") in Electric Arc Furnace is the only currently available option to produce green steel in commercial quantities. There are other processes being researched and while some will probably be successful, they will all cost more to make steel. Therefore, there is likely to be a range of solutions to make green steel in the future.
However, if you want to make commercial quantities of green steel within the next five or so years, the solution is DRI in EAF. Any companies that decide to go down that path and build EAF plant capacity (which is starting to happen), will want to ensure a reliable supply of DRI. Magnetite iron ore is easier to beneficiate into DRI than hematite and some projects will not be able to reach DRI standards.
Therefore, I believe that the expected demand for DRI will mean that a number of magnetite projects will get developed.
However, and it took me a while to accept this, just because there will be increased demand for DRI and therefore magnetite, it does not mean that every magnetite project will get developed. I started thinking about this, and started asking, what makes the magnetite project that I invested in more or less likely to get developed that the 10's or hundreds or other magnetite projects around the world. There is a wide choice of options to invest in if you are a steel producer looking to secure DRI feedstock. I therefore decided not to have all my eggs in one basket, and have invested in a second magnetite project.
I keep an eye on a number of magnetite resources, MGT being one of those, to consider their progress and whether that changes my thoughts on which resources are more or less likely to get developed (and whether I should change my investment mix between projects), because even though I believe in green steel, not every magnetite project will get developed and even fewer will start mining in the next five to ten years.
@BoogieB - I'm interested in how you are following green steel and how they might differ from my thoughts.
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