By Gabriel Chiappini
19/05/2026

Brazil Iron plans to transform an iron ore deposit in the south-central region of Bahia into a decarbonized iron production platform aimed at the international market, betting on natural gas as a pathway to reducing emissions.

The plan is to use natural gas in the project’s first phase, targeting an initial reduction of more than 70% in emissions compared to traditional coal-based steelmaking routes. The remaining emissions could be captured or offset.

The project, with operations expected to begin in 2030 or 2031, estimates investments of US$ 5.7 billion and aims to produce HBI (Hot Briquetted Iron), an intermediate input between iron ore and steel that is considered strategic for the new era of the steel industry.

According to Emerson Souza, Vice President of Institutional Relations at the London-based company, mining represents only a small portion of the venture.

“Today, it is an HBI production project,” the executive said in an interview with Agência eixos.

According to him, between 10% and 20% of the Capex is directly related to mining activity itself.

“The rest is steelmaking and logistics,” he explains.

The company says it has already certified 1.7 billion tons of high-purity iron ore in Bahia, with potential for reserve expansion in the municipalities of Piatã, Abaíra, and Jussiape.

According to Souza, the distinguishing feature of the asset lies in the quality of the ore, its low contaminant content, and its malleability — characteristics considered essential for HBI production.

“We discovered that we were sitting on top of a material that was not simply a mining opportunity, but an opportunity to transform the global steelmaking chain,” he says.

Natural Gas Now, Hydrogen Later

“The plan for the first phase is natural gas, thinking about something we already have available,” says Souza.

The company is also monitoring the possibility of using biomethane in the region, which could further increase the decarbonization of the final product.

Green hydrogen, meanwhile, is viewed as a future bet, dependent on the technological and economic evolution of the market.

“We have a green hydrogen plan, it is included in our strategy, but it is still an unknown,” he says.

According to the executive, the company is working with a four- to five-year horizon before operations begin and believes the technological landscape could change significantly within that period.

“If nothing changes, the first phase will use natural gas, which will already guarantee us a reduction of more than 70% in emissions,” he says.

To neutralize the remaining emissions, the company is evaluating alternatives such as carbon capture and storage (CCS), in addition to the purchase of carbon credits.

“Our goal is for the product to already leave the plant 100% green,” says Souza.

Even so, green hydrogen remains on the company’s radar.

“If hydrogen takes off economically, we will absolutely be a player in that market. We will have a plant in the same area dedicated to the production of green hydrogen.”

Foreign Market Drives the Project

The company’s commercial focus is on international markets, especially Europe and Asia, where regulatory pressure for steel industry decarbonization is increasing.

According to Souza, green HBI produced in Bahia could reach prices significantly higher than traditional iron ore.

“Today, it already has a market value of around US$350 per ton,” he says.

The company is betting on the combination of advancing international climate policies and the expected global supply deficit of decarbonized steelmaking inputs to sustain future demand.

“The CBAM came into effect on January 1st,” the executive said, referring to the European Union’s Carbon Border Adjustment Mechanism, which taxes imported products whose emissions exceed the limits established by the economic bloc.

According to Souza, studies by consulting firm McKinsey & Company indicate that there could be a deficit of 109 million tons per year of green iron starting in 2030.

The company says it already has pre-contracts equivalent to 100% of the projected initial production — 5 million tons of HBI annually — for ten years.

“Everything I produce through 2040 is already sold,” Souza says. According to him, the agreements involve one European buyer and one Asian buyer.

Logistics Infrastructure Is a Critical Condition

The project depends on the implementation of railway and port infrastructure in southern Bahia.

The company’s priority strategy involves using the FIOL railway (West-East Integration Railway) connected to Porto Sul in Ilhéus. Both logistics projects, however, still remain only on paper and are under concession to Bahia Mineração (Bamin), which also owns an iron ore reserve neighboring Brazil Iron’s area.

Brazil Iron’s ore would initially be processed into pellet feed in the interior of the state and transported by a railway branch line to the coast, where the final pelletizing and HBI transformation stages would occur.

“Plan A is the future Porto Sul,” Souza says.

According to him, the company already has authorization to build a railway branch connecting its plant to the FIOL network in Brumado.

“If within a year we see that the FIOL and Porto Sul solution is feasible and at a good level of plausibility, we will move forward with that plan,” he says.

If the projects do not advance, the company is considering using FCA rail infrastructure and alternative port facilities, such as the Port of Aratu.

The executive highlighted that the logistics corridor is of interest not only to the mining sector, but also to agribusiness in western Bahia.

“You have the entire western Bahia region producing soybeans and cotton,” he says.

Souza also cites the region’s potential for critical minerals such as lithium, nickel, niobium, and rare earth elements, which could use the same logistics infrastructure.

Critical Minerals and Public Policies on the Radar

Brazil Iron is following discussions in Brasília regarding the future national policy for critical and strategic minerals, which still needs to officially define which raw materials may be included.

According to Souza, high-purity iron ore has characteristics that could qualify it for this group.

“In Canada, high-purity iron ore is considered a strategic critical mineral,” he explains.

The executive argues that there should be a distinction between conventional iron ore and high-purity iron ore aimed at HBI production.

“There is a general understanding that high-purity iron ore should indeed be viewed as a strategic critical mineral,” he says.

More than tax incentives, the company sees regulatory acceleration measures and easier financing as priorities.

“Having greater speed in bureaucratic processes is something important,” he argues.

The company is also following discussions about opening and reducing costs in Brazil’s natural gas market.

“It would be very good if there were a transformation in this gas market to the point where there could be a reduction in production costs,” Souza says.

In the case of green hydrogen, the company is monitoring debates about incentive mechanisms for both producers and consumers, which are expected to be addressed in the regulatory decree for the low-carbon hydrogen legal framework, promised by the government months ago.

Photo: Disclosure

Source: Brazil Iron wants to produce “green iron” using natural gas in Bahia.