The global market for high-grade iron ore is expected to expand significantly as the steel industry accelerates its transition toward low-emission production technologies, according to a report by the US-based Institute for Energy Economics and Financial Analysis (IEEFA).
The shift is being driven by the increasing adoption of direct reduction (DR), which is emerging as a key pathway for decarbonizing steel production.
Rising demand linked to DRI-based steelmaking
The report highlights that DR-based steelmaking requires higher-grade iron ore, particularly DR-grade material, to produce low-emission steel. As steelmakers move away from traditional blast furnace routes, demand for these higher-quality inputs is expected to rise sharply. IEEFA noted that this structural shift is reshaping raw material requirements across the global steel industry.
Despite growing investment, supply is not expected to keep pace with demand. IEEFA forecasts a global supply deficit for DR-grade iron ore, with shortages emerging in the coming years and potentially widening beyond 2030. Under certain scenarios, deficits could reach up to 16.4 million mt by 2034.
Established suppliers in Canada, Brazil and the Nordic region are already increasing production of high-grade iron ore, while new projects are being developed in Africa and the Middle East.
At the same time, major miners are pursuing:
- capacity expansions at existing operations,
- upgrades to improve ore quality,
- and new greenfield developments to meet future demand.
Australia faces competitive pressure
The report also points to increasing global competition, noting that Australia must adapt its strategy to remain competitive in the emerging green iron market. While the country remains a major low-cost supplier, its ability to participate in the low-emissions steel transition will depend on developing high-grade ore production capacity. Based on the maturity of various technologies in the pipeline, and considering the urgency of moving to a green economy, Australia is unlikely to become a green iron superpower without producing high-grade ore for DRI production.
