Brazilian iron ore producer Samarco in March started shipments of direct reduction (DR) pellets, expanding pellet qualities shipped since the company restarted operations in January.
Ships loaded at Samarco's Ponta Ubu since mid-March were bound for the Egyptian port of El Dekheila as well as to Argentina and Brazil, according to data from S&P Global Platts trade flow software cFlow. Companies owned by Ezzsteel Group, ArcelorMittal and Techint operate direct reduction iron (DRI) plants and blast furnaces in the three countries.
The Koundouros is next due to arrive into Ponta Ubu, in Espirito Santo state, on April 30 to load 170,000 mt, according to Samarco's port line-up. The ship typically discharges iron ore at Chinese ports, according to cFlow data.
Samarco has already contracted pellets for sale in 2021 worldwide, with customers in the Americas, Europe, Asia, and Middle East and North Africa, according to a March presentation from Rodrigo Franklin, head of business intelligence at Samarco. The miner tapped existing steel and DRI customers, whose plants lost supply since the operation was idled in 2015 after a tailing dam collapse.
Samarco, owned jointly by BHP and Vale, restarted with blast furnace iron ore pellets shipped since Jan. 11, and is understood to be able to offer various qualities in both BF and DR pellet grades, with low overall impurities.
Samarco's return to the market this year aided global supply after a shortage in pellet feed in Brazil and operational issues in Sweden. Strong pellet demand from recovering global steel markets and high steel prices and margins led pellet premium offers to rise this year from multi-year lows in 2020.
S&P Global Platts assessed March Atlantic BF contract pellet premiums at $45/dry mt, up from $44/dmt in February. Platts DR pellet premiums $46.25/dmt off a 65%-Fe fines index basis. In China, the Platts spot 65% Fe iron ore pellet premium averaged at $46.63/dmt in February, and $60.95/dmt on March 24.
Samarco's pellets have low silica and alumina, and have good reducibility, helping reduce met coke and natural gas consumption which saves energy costs, according to the company. A focus on lower carbon emissions, and higher energy and carbon credit prices in major markets such as China, the US and Europe since the second half of 2020, may also be boosting pellet usage, despite higher premiums.
Samarco restarted pellet production on Dec. 23 at a reduced rate, with new operating processes following a five-year halt. The Germano mining and beneficiation operation in Minas Gerais is operating one concentrator, based on the company's first phase 7.5 million mt/year pellet production plan. The company is currently operating only Pellet Plant 4 at the Ubu Complex, with three other plants idled.
Samarco expects its second concentrator in Germano will be restarted in about six years' time, to take output to 14 million-16 million mt/year of pellets, with the third concentrator coming online in nine years, bringing production up to 22 million-24 million/year. The company has 30.5 million mt/year pelletizing capacity with the four pellet plants on the coast fed by a slurry pipeline.
