By Gabriel Garcia
June 17, 2026

Brazil Iron believes that so-called “green iron” will not compete directly with traditional iron ore in the global market.

In an interview with Mapa da Mina, CNN Brasil’s program dedicated to the mining industry, Emerson Souza, Vice President of Institutional Relations at Brazil Iron, said the product will serve its own market, targeting steelmakers and industrial companies under increasing pressure to reduce carbon emissions.

According to Souza, the company’s objective is not to completely replace the iron ore currently used by the steel industry, but rather to occupy a specific segment of the value chain associated with the decarbonization of steel production.

“If we look at the global iron ore market, this product will not be positioned at the same level as traditional iron ore. We are not talking about replacing conventional iron ore 100%. What will happen is an expansion in the use of green iron in steel production for several reasons,” he said.

Brazil Iron is developing an integrated mining and Hot Briquetted Iron (HBI) production project in the state of Bahia. HBI is a compacted form of Direct Reduced Iron (DRI) used as a feedstock by the steel industry.

In practice, it is an intermediate product between iron ore and steel. HBI undergoes an additional industrial processing stage, giving it higher added value, and can be used in steelmaking routes with significantly lower carbon emissions than the traditional coal-based process.

Souza argues that demand for this type of product will be driven by climate policies, government regulations, and decarbonization commitments made by steel producers and major industrial consumers.

One of the most significant examples is the Carbon Border Adjustment Mechanism (CBAM) adopted by the European Union. The mechanism imposes a carbon price on emissions embedded in certain imported products, including iron and steel. The European Commission describes CBAM as a way to ensure that imported goods bear a carbon cost equivalent to that faced by domestic producers.

According to Brazil Iron, mechanisms such as CBAM are expected to increase demand for lower-emission raw materials, particularly in Europe and Asia.

The executive also cited Japan as an example of a country implementing policies to finance industrial decarbonization. The country has introduced public support measures, including climate-transition subsidies, to encourage investments in new steelmaking technologies such as electric arc furnaces and production routes that are less dependent on coal.

Despite the company’s optimism, there are still uncertainties within the market regarding the actual size of future demand and, more importantly, whether buyers will be willing to pay a premium for lower-emission products.

The so-called “green premium” remains one of the central issues in this discussion.

In theory, steelmakers and end-users may be willing to pay more for low-emission materials in order to meet climate targets, comply with environmental regulations, or market products with a lower carbon footprint. In practice, however, this willingness depends on the continued advancement of ESG initiatives, stronger government policies, carbon pricing regulations, and demand from industries such as automotive manufacturing, construction, and industrial equipment.

Several major European steel producers have already indicated that the cost of the transition remains a significant challenge and that the market does not yet consistently support premiums high enough for lower-emission steel.

As a result, while green iron is widely viewed as a promising pathway for reducing emissions in the steel industry, its large-scale commercial viability still depends on a combination of factors: stricter climate regulations, public financing, customers willing to pay a premium, reliable carbon-footprint certification, and long-term commercial agreements.

Souza argues, however, that Brazil Iron’s own future sales agreements demonstrate that there is already concrete demand for the product.

The company states that it has secured two highly committed offtake agreements, representing ten years of projected production and valued at approximately US$30 billion. According to the executive, the buyers are located primarily in Asia and Europe.

Offtake agreements are contracts for the future purchase of products signed before production begins. In the mining industry, they are considered important because they help demonstrate market demand and provide greater confidence to lenders, investors, and potential business partners.

“Our customers include both steelmakers and end-user industries. They are primarily located in Asia and Europe. These are the markets most interested in this product,” Souza said.

Brazil Iron’s position is that green iron will operate under a different commercial model than conventional iron ore. While the traditional iron ore market is heavily influenced by Chinese demand, ore grade, and global construction and industrial cycles, low-emission HBI is expected to be traded in a more specialized market focused on the energy transition and the decarbonization of steelmaking.

The company’s project is located in Bahia and integrates mining operations, mineral processing, pellet production, and HBI manufacturing. Brazil Iron estimates total investment at US$5.7 billion.

The production route initially proposed by the company relies on natural gas, resulting in substantially lower emissions than conventional coal-based production. In the future, Brazil Iron plans to transition to green hydrogen and incorporate carbon capture technologies.

The project, however, must still overcome several critical milestones before becoming operational. Key challenges include securing financing, advancing environmental licensing, developing the required logistics infrastructure, contracting energy and natural gas supplies, certifying the product’s carbon footprint, and demonstrating that sufficient market demand exists for low-carbon iron.

Photo: Disclosure

Source: Brazil Iron Rules Out Competition Between “Green Iron” and Traditional Iron Ore.