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Case study that illustrates magnetite difficulties in Australia

Yes — Fortescue Metals Group (FMG), particularly through its Iron Bridge Magnetite Project, has faced exactly the kinds of infrastructure and resource constraints that illustrate how challenging magnetite development can be in Australia, even for a major miner.

🔧 Iron Bridge Project: A Case Study

Location: Pilbara region, Western Australia

JV Partners: Fortescue (69%), Formosa Steel IB (31%)

Target Output: ~22 million tonnes/year of high-grade magnetite concentrate (67%+ Fe)

🚱 Water Access Issues

Fortescue originally planned to use local groundwater sources, but regulatory limits and aquifer sustainability concerns restricted allocations.

As a result, FMG constructed a 144 km high-pressure water pipeline from the Canning Basin to Iron Bridge — a significant cost and engineering challenge.

The pipeline was necessary to support:

Wet processing of low-grade magnetite ore

Tailings and dust suppression

Ore slurry transport

➡️ Impact: Water availability, quality, and rights negotiations delayed the project and added to capital expenditure.

💰 Cost Blowouts and Delays

Initial cost estimate: ~$2.6 billion

Final cost: >$4 billion

Delays of more than 12 months due in part to:

Engineering complexity

Water and energy infrastructure

Labour and logistics in remote terrain

⚡ Energy Demand

Iron Bridge also required:

Dedicated gas-fired generation

Future planning for renewables and hydrogen integration

Fortescue is now investing in green hydrogen and renewables (via Fortescue Future Industries) to reduce reliance on fossil fuel-based energy

🔍 Takeaway

Fortescue’s experience highlights:

Even major players face serious hurdles developing magnetite in remote Australia

Water access is a critical, non-trivial challenge — regulatory, technical, and logistical

Infrastructure (water, power, transport) must be developed upfront, adding billions in capex

Long-term payoffs are attractive due to demand for DRI-suitable, high-grade magnetite, but upfront hurdles are steep

This case reinforces that policy support, permitting certainty, and co-investment in shared infrastructure are essential for scaling magnetite to meet global green steel demand.

The penny is finally dropping that Australia's iron ore industry isn't fit for purpose...

BULK BUYS: CALLS FOR AUSSIE GREEN IRON GROW, BUT WE’RE MISSING THE CRUCIAL INGREDIENT

Mining 10 hours ago Josh Chiat

....To really curb emissions you need a direct reduced iron plant, which tends to operate with natural gas as the reducing agent. Theoretically, this process could be emissions free if that gas can be swapped out for hydrogen, something which has been studied for a while in Europe.

But there’s a bigger limitation. Australia has great stores of natural gas and abundant wind and solar resources to power a hypothetical hydrogen production process.

However, it’s the very specific grade of iron ore needed to produce DRI steel that will be the blocker.

Australian iron ore producers ship hematite, which has a high (but in the Pilbara’s case declining) grade in the ground. But it is magnetite concentrates, which need to be beneficiated to deliver higher grades with lower impurities to the market, that are key for DRI.

“With abundant high-grade iron ore resources and processing facilities, countries like Brazil, Canada and Sweden are better positioned for this transition. If it wants to remain competitive, Australia must focus on developing its magnetite iron ore sector,” IEEFA energy finance analyst Sorough Basirat warned.

https://stockhead.com.au/resources/bulk-buys-calls-for-aussie-green-iron-grow-but-were-missing-the-crucial-ingredient/

> However the Middle East has got abundant natural gas, and then a clear pathway to green hydrogen via renewable (solar and wind) power.

>> The Saudis and Emiratis must be in readying to out bid each other for Zanaga.

News soon....

With my ear to the door I hear positive noises. We are 2 of 3 months through 2Q now. That plus of late ZIOC has been moving 48/72hrs ahead of news - so, after 9.00p deals today, Tuesday/Wednesday it is......

We shall see, of course.

PROJECT DEVELOPMENT STRATEGY UPDATE

18 Mar 2025 16:45

Pellet Plant Feasibility Study

Conclusion: Study to be conducted to evaluate the opportunity to monetise a pellet plant strategy at sites well-suited to host Zanaga's downstream pelletisation facilities with a potential to increase the NPV of up to US$1bn targeted. Priority will be given to evaluation of sites in the Pointe-Indienne SEZ in Republic of Congo, or sites identified in the Middle East. Further, the Company has received interest from various groups in Saudi Arabia and the United Arab Emirates (UAE) and is exploring these opportunities.

> Meanwhile Saudi Arabia's Manara Minerals has yet to secure any of their mandated high grade iron ore (to feed pellet plants), and nor has Orion-Abu Dhabi, the UAE JV between the ADQ and Orion Resource Partners.

>> What are they waiting on?

>>> Join the dots.

https://www.manaraminerals.com/Investments.html

https://www.adq.ae/newsroom/adq-and-orion-resource-partners-to-establish-usd-1-2-billion-abu-dhabi-based-joint-venture-to-invest-in-and-secure-the-supply-of-strategic-metals-and-minerals/

No wonder Marty exercised his options on Friday.

Pressing on with 'cold pellets' and BSL.....along with DR grade (surely achieved) these are the key product and tech that will generate our $6bn (plus) increase in NPV.

To date cold pellet production has been limited to 2t/h in the test plant at BSL Deeside, or just 17,500tpa at most. However last week saw a scale change of several orders of magnitude for the company and product: the new Rotterdam project will be 400,000tpa rising to 1-3mtpa.

Better still is that the port's 50:50 owners are Macquarie and Goldman Sachs, amongst the largest infrastructure financiers globally.

> You can bet that cold pellets are now on the map, and so is Zanaga. Tick tock....

HES INTERNATIONAL AND BINDING SOLUTIONS SIGN A MOU TO ASSESS POTENTIAL FOR IRON ORE COLD PELLETISING PLANT AT HES BULK TERMINAL ROTTERDAM (HBTR)

19th May 2025 – Rotterdam, The Netherlands: HES International B.V. and Binding Solutions Limited are pleased to announce the signing of a Memorandum of Understanding (“MOU”) to assess the potential for a state-of-the-art iron ore cold pelletising plant at HES’s HBTR terminal in Rotterdam, the Netherlands. HES is a leading European provider of bulk handling services for industrial customers across the continent. BSL is a technology company that has developed a patented and proprietary process for producing cold agglomerated pellets (“CAPs”) that can enable Green Steel production at scale.

The parties’ aim is that the project at HBTR will produce high value iron ore CAPs. Compared to traditional high-temperature processes, BSL’s cold agglomeration technology reduces energy requirements by up to 80% and cuts up to 70% of CO2 emissions, making it a key enabler for industries transitioning to greener production processes.

The envisaged first phase of the project involves the construction of a 400k tons per year capacity plant, with future expansions envisioned to increase capacity to between 1 and 3 million metric tons per year.

The HBTR terminal is the largest dry bulk terminal in Europe. The pelletising plant aligns with HES’s long-term vision to solidify HBTR’s position as an important hub in the European steel supply chain, enhancing its capacity to support sustainable steel production and logistics.

(HES International is headquartered in Rotterdam and has already been carefully handling bulk raw materials since 1908. Macquarie Asset Management, via Macquarie European Infrastructure Fund 5, and West Street Infrastructure Partners III, managed by the Goldman Sachs Asset Management Infrastructure business, each indirectly control 50% of the shares of HES International B.V. For more information, please visit www.hesinternational.eu.)

https://www.bindingsolutions.uk/2025/05/hes-international-and-binding-solutions-sign-a-mou-to-assess-potential-for-iron-ore-cold-pelletising-plant-at-hes-bulk-terminal-rotterdam-hbtr/

To confirm my theory I turned to GROK and posed this question,

Q. Company A (BSL, obvs) has innovative IP (polymers and process of cold bonding pellets) yet with a charge over it.

Company B (ZIOC obvs, but also Greymont) wished to use that IP to build a global business.

What problems could arise that prevent a deal between A and B?

GROK:

Several issues could prevent a deal between Company A and Company B regarding the use of Company A's intellectual property (IP) with a charge over it:

Charge/Lien on IP: The charge (e.g., a security interest or lien) on Company A's IP means a third party, such as a creditor or lender, has a legal claim over it. This could restrict Company A's ability to license or transfer the IP to Company B without the creditor's consent, complicating or blocking the deal.

Creditor Consent: If the IP is secured as collateral, the creditor holding the charge may need to approve any licensing or transfer. If the creditor perceives the deal with Company B as risky or devaluing their security, they may withhold consent, stalling negotiations.

Valuation Disputes: The charge may affect the perceived value of the IP. Company B may undervalue the IP due to the encumbrance, while Company A may demand a premium for its innovative nature, leading to disagreements over licensing fees or purchase price.

Exclusivity and Scope: Company B may seek exclusive rights to use the IP globally, but the charge may limit Company A's ability to grant such rights. Alternatively, Company A may only offer non-exclusive or geographically limited licenses, which may not align with Company B’s global business ambitions.

Due Diligence Concerns: Company B’s due diligence may uncover risks, such as potential IP disputes, unclear ownership, or the possibility of the IP being seized if Company A defaults on its obligations to the creditor. These risks could deter Company B from proceeding.

IP Infringement Risks: If the IP’s scope or validity is unclear due to the charge or related disputes, Company B may fear potential infringement claims from third parties, reducing their willingness to invest in the deal.

Exit Strategy Concerns: Company B may want assurances about what happens if Company A’s creditor enforces the charge (e.g., by seizing the IP). Without clear protections, such as indemnities or escrow arrangements, Company B may see the deal as too risky.

To mitigate these issues, both parties would need to conduct thorough due diligence, negotiate clear terms (e.g., addressing creditor rights), and possibly involve the creditor in discussions to ensure all parties’ interests are aligned. Legal advice would be critical to navigate the complexities of the charge.

> In other words ZIOC use of the BSL tech would have been problematical for any number of reasons

>> The satisfaction of this charge (25th March) removed these issues enabling Greymont investment into ZIOC the very next day.

>>> Now ZIOC are working o

Returning to the subject from last week, and in the interest of full disclosure, my assertion that the company are assessing 'cold-bonded pellets' (almost certainly via re-engagement with BSL) was based on direct messaging from the company. For further clarity they are looking at both hot and cold processes at a number of locations of interest. This we could all take to be the Point Noire SEZ plus the Gulf, very likely the green steel mega hubs at Ras Al Khair in Saudi Arabia, the UAE, and possibly Oman.

This insight of cold-bonded pellets is what sent me looking at the recent ZIOC RNSs, and also on a hunch at Binding Solution's Companies House filings.

Firstly, from the 3rd March RNBS, there was the curious 2nd tranche from Greymont such that, "The second tranche will consist of the issue of 79,069,768 Ordinary Shares for gross process of US$4.08 million and will be conditional on the admission of the Second Tranche Subscription Shares to trading on AIM on or around 26 March 2025 ."

ZIOC detailed that, "Greymont Bay will be immediately working with the Company's management team, via a newly established Zanaga Technical Committee, to assess the opportunity to accelerate key Project workstreams and targeted milestones." and "The Company believes that the provision of this additional funding would secure its ability to progress a number of key metallurgical testwork initiatives with the potential to provide significant upside value.."

> So what did they immediately start (3rd March) and which would accelerate key Project workstreams such that additional funding (on or around 26th March) would secure its ability to progress a number of key metallurgical testwork initiatives with the potential to provide significant upside value???

Straight to CH where Binding Solutions filed on 25th March that 'charge on the company' had been satisfied. This charge dated from 22 Oct 2019 and was secured effectively over **all the company's assets; intellectual, physical and financial**.

From the dates (BSL charge of 22/10/2019 satisfied on 25th March 2025, Greymont Tranche 2 on 26th March) I concluded that the charge and security was an effective block on ZIOC adopting the tech., and the lifting of which triggered Greymont's second tranche into ZIOC.

BSL'S FILING HISTORY

https://find-and-update.company-information.service.gov.uk/company/10394084/filing-history?page=2

GROK:

WHY MK EXERCISED OPTIONS NOW

The RNS does not explicitly state MK’s reasons, but the context (low SP, anticipated SP rise, French tax residency) suggests the following motivations:

Low Share Price (SP):

The current SP is low, minimizing the acquisition gain (fair market value (FMV) at exercise minus exercise price), reducing immediate tax liability (especially for non-qualified options) and locking in a low cost basis for future capital gains.

MK anticipates a significant SP rise, making it advantageous to exercise now to secure shares at a lower cost.

Tax Timing and Efficiency (French Tax Law):

Non-Qualified Options: The acquisition gain is taxed at exercise as ordinary income (up to 45% + 17.2% social contributions + 3-4% CEHR if income exceeds €500,000 for married couples in 2025). A low SP reduces this gain, minimizing tax.

Qualified Options/BSPCE: Tax is deferred until share sale (30% PFU or 12.8% for BSPCE if employed ≥3 years + 17.2% social contributions). Exercising now sets a low FMV as the cost basis, reducing future capital gains tax when the SP rises.

Exercising at a low SP optimizes tax efficiency, especially for long-term holding with capital gains allowances (50% for 2-8 years, 65% for 8+ years under progressive rates).

Anticipated SP Rise:

MK’s expectation of an SP increase suggests he wants to secure shares before the market reflects this value, benefiting from the full appreciation when selling later.

Strategic Positioning:

Exercising demonstrates confidence in ZIOC’s future, aligning with shareholder interests. It may signal to the market that MK expects positive developments, boosting investor confidence.

Now why would he do that? I mean, really........

Meanwhile this is very funny as Argus Media turn themselves inside out trying to give the impression that all is well in Pilbara.

The 62% PBF benchmark is being abandoned. The new mark is at 61%. This even as Rio are delivering 60.8%. All the while green/er steel producers are demanding 65%+ if not 67.5%+ DR spec..

WHAT DO CHANGING IRON ORE GRADES MEAN FOR THE IRON ORE PRICING MECHANISM?

As iron ore deposits mature and product specifications evolve, the relationship between physical iron ore grades and the 62% Fe benchmark is entering a period of transition

22 May 2025

Market: Metals, Steel & Raw Materials

This white paper examines how declining ore quality — particularly changes to key products like Pilbara Blend Fines — is driving the most significant shift in iron ore pricing in over 15 years.

While the 62% Fe benchmark remains a key reference in global trade, these developments are prompting the introduction of complementary tools, such as a 61% Fe index. Launched by Argus next month, this new assessment aims to better reflect current market conditions and align pricing mechanisms more closely with today’s physical realities.

Download the full paper to explore:

How declining ore grades are widening differentials and complicating index-based pricing

The impact of reduced availability and changing specifications of key products

Why the 62% Fe benchmark specification is increasingly less reflective of the majority of traded products

The role of new indexes, such as the 61% Fe assessment, in improving market alignment

https://www.argusmedia.com/en/news-and-insights/market-insight-papers/what-do-changing-iron-ore-grades-mean-for-the-iron-ore-pricing-mechanism

"Have you spotted an explicitly smoking gun somewhere?"

Well yes, yes I have.

There was a coded reference in the 3rd March RNS,

BSL's corporate filings dovetail with ZIOC's timeline for the above, and

The company have detailed as much in direct messaging.

So as of now cold-bonded DR-grade pellets are being actively investigated ...

... actively investigated AGAIN after they were first achieved in 2018 - although then at sub-DR specifications of 67.4%Fe and 5.9% gangue.

Me, yesterday: "Oh......and they are assessing cold-bonded pellets."

And no-one took me up on it, more so as they lead to a super-premium product.

I couldn't agree more with Mr Friedland....

FRIEDLAND’S IVANHOE ATLANTIC URGES US TO LIST IRON ORE AS CRITICAL MINERAL

Cecilia Jamasmie | May 21, 2025 | 8:10 am Critical Minerals Markets Africa USA Copper Iron Ore Lithium

Mining billionaire Robert Friedland’s latest venture, Ivanhoe Atlantic, is reportedly lobbying the US government to add HIGH-GRADE IRON ORE to the country’s list of critical minerals.

The move aims to align with Washington’s broader push to secure materials essential for military manufacturing, as part of a national strategy to boost defence capabilities.

“You can’t build battleships without high-grade, high-tensile steel, so I think there is going to come a point where it goes on the critical minerals supply list in the US,” Ivanhoe Atlantic president and chief executive, Bronwyn Barnes, said speaking at an industry event Wednesday.

“The US critical mineral supply list is dominated by materials that are required for the defence sector…NOT HAVING HIGH-GRADE IRON ORE ON THAT CRITICAL MINERAL SUPPLY LIST IS A SHORTCOMING.”

According to the Australian Financial Review, Barnes confirmed the company began lobbying the White House two years ago and has continued those efforts under the current administration.

HIGH-PURITY IRON ORE PLAYS A CRUCIAL ROLE IN PRODUCING SO-CALLED GREEN STEEL, which uses less energy and emits fewer greenhouse gases during production. Ivanhoe Atlantic is advancing two major iron ore projects in Guinea — Kon Kweni and Nimba — both known for their exceptionally high-grade ore.

https://www.mining.com/friedlands-ivanhoe-atlantic-urges-us-to-list-iron-ore-as-critical-mineral/

In the last couple of hours Andrew Forrest has kicked over the hornets' nest.

The Chinese are restructuring their steel industry to EAF (necessitating DR grade iron ore) to go green, and heading to Brazil and Africa for their raw material:

CHINA MOVING ON FROM PILBARA IRON ORE UNFIT FOR GREEN STEEL: FORREST

May 21, 2025 – 11.50am

Fortescue’s billionaire chairman Andrew Forrest has warned that Australian miners risk being left behind as Chinese manufacturers upgrade plants and pivot to iron ore better suited for lower emissions steel making.

Forrest is the largest shareholder in Fortescue, the country’s third-largest iron ore miner after BHP and Rio Tinto. All three companies are grappling with falling ore grades in the Pilbara as mines age, and Forrest said Chinese buyers were shifting their attention to African and Brazilian deposits.

Andrew Forrest at the Financial Review Mining Summit on Wednesday. Ross Swanborough

“They are going to shut down the old-fashioned, two-century-old technology of burning sticks and logs, putting in coal, putting in iron ore, burning it all and sending up masses of pollution into the atmosphere and producing steel,” he told the Financial Review Mining Summit in Perth.

“They’re looking straight into a future that may or may not include Western Australia. China will base its green steel industry on other ores that are specific to Brazil or Africa, but not specific to our lower grades.”

CHINA MOVING ON FROM PILBARA IRON ORE UNFIT FOR GREEN STEEL: FORREST

https://www.afr.com/companies/mining/china-moving-on-from-pilbara-iron-ore-unfit-for-green-steel-forrest-20250521-p5m0yr

No need to labour the very obvious point, that the major mining houses need DR grade, and need it now.

Meanwhile.....ZIOC have moved beyond beneficiation of Zanaga's upper layers of 66% Hematite into DR grade and are now understood to be exploring where to build the pellet plant...Pointe Noire or the Gulf.

This being the case they will have achieved DR grade.

Oh......and they are assessing cold-bonded pellets.

68%+Fe DR-grade cold-bonded pellets would enable the production of very low CO2 green steel and which bypasses carbon taxes. Such pellets would hence command a super-premium price of perhaps $215/t ...... this at current market prices, and before future demand kicks in.

Do the maths on that at 30mtpa...

As the steel industry aims for high grade, ideally DR super premium, for green steel, Rio Tinto (and shortly BHP) are being forced down market as Pilbara grades succumb to depletion.

> Last week Rio Tinto abandoned the 62% Fe benchmark for Pilbara blend.

A magnitude 8 earthquake that everyone has slept through....

RIO TINTO SELLS FIRST PBF CARGO WITH NEW SPECIFICATION

14.05.25

UK-Australian metal producer Rio Tinto on 13 May sold its first cargo of Pilbara Blend Fines (PBF) iron ore with a revised iron content specification of 60.8pc. Years of grade challenges have led to declining volumes of the blended product, which previously contained 61.6pc Fe.

Rio Tinto continues to review product strategy, based on consumer needs and available ore grades, the company told Argus on 13 May. It has notified consumers of Pilbara Blend specification changes and is engaging with them, a spokesperson added.

https://www.argusmedia.com/de/news-and-insights/latest-market-news/2688237-rio-tinto-sells-first-pbf-cargo-with-new-specification

AI OVERVIEW

Rio Tinto is reducing the iron content of its Pilbara Blend Fines product, from 61.6% to 60.8%, due to the gradual quality degradation of its orebodies. This change is likely to be implemented between July and September 2025. The downgrade also involves an increase in impurities like silica, alumina, and phosphorus. This change is part of a broader strategy by Rio Tinto to address declining grades and replace older mines with new, higher-grade resources.

Here's a more detailed breakdown:

Declining Grades:

Rio Tinto has been producing lower-grade iron ore in its Pilbara operations, with higher proportions of lower-grade SP10 lump and fines.

Pilbara Blend Fines Downgrade:

The company has notified its Asian customers that the iron content of its flagship Pilbara Blend Fines product will be reduced from 61.6% to 60.8%, which would likely be adjusted below 61% Fe.

New Projects:

Rio Tinto is actively working on replacement projects like Rhodes Ridge, Western Range, and Brockman Syncline 1, which are expected to deliver higher-grade ore.

Blending Strategy:

Rio Tinto is exploring blending opportunities, including blending ore from Rhodes Ridge and the Simandou mine in Guinea, to improve the overall quality of its products.

Impact on Steelmakers:

The change in grade will likely lead to increased costs for steelmakers, as they will need to adjust their processes to handle lower-grade ore and potentially face penalties for higher alumina content.

Long-Term Strategy:

Rio Tinto is reviewing its future product strategy, considering both customer requirements and available ore grades, and exploring global blending opportunities to maintain the quality of its products

No research over the weekend? Funny how it works.

Anyway...the major development last week bodes well. Thoughts?

I was thinking of doing a thread on how I arrived at 'super-premium', but strangely the feeling passed. It might return this weekend - though I hope it doesn't.

Yesterday the day's 3rd buy of 250,000 went thru after the close.