Magnum Mining and Exploration has concluded a study that confirms the viability of a 1.1 million tonnes/year capacity HIsmelt zero-emission pig iron plant in Saudi Arabia using magnetite concentrate feedstock imported from the US.

The plant would use feedstock from Magnum’s fully-owned prospective Buena Vista iron ore mine and beneficiation plant in Nevada, as well as Saudi domestic steel mill waste. Waste palm oil biomass will meanwhile be converted to biochar in Malaysia and then used as the iron ore reductant.

“The use of renewable biochar will potentially attract a ‘green’ pricing premium for the GHPPI [green, high-purity pig iron],” Magnum says in a bourse filing seen by Kallanish.

Magnum has signed a memorandum of understanding with Saudi-based Middle East for Metallic Industrial (Midmetal). This will see Midmetal seek to become a 50/50 partner in the project and facilitate access to existing steel mills in the kingdom, potentially manage the establishment of the facility at the King Fahad Industrial Port, and port, and procure customers for the HIsmelt product, Magnum says.

“The project will need to undergo a thorough Prefeasibility Study, Feasibility Study, with permitting, and approvals, and engineering design required before construction and commissioning can proceed. It is estimated by the company that this can be done in 24 to 48 months,” Magnum notes.

The study estimates a capital requirement of approximately $410 million (base case) or $205.3m to $615.8m at the ±50% study accuracy. An additional $82.4m ($41.2-123.6m) is estimated for the BioChar facility in Malaysia. Operating costs estimated at $381.57/tonne (base case, $193.76 to $581.27 at the accuracy of the study) of GHPPI indicate the project is economically viable at the assumed premium GHPPI market price of $700/t, the firm explains.

A full financial model has not yet been completed due to the project’s early phase and regulatory constraints. Magnum’s board is satisfied the project represents a compelling business case for development, it adds.

Magnum has a licencing agreement with HIsmelt intellectual property owner Petroleum Machinery Company Limited (Molong) to build and operate a HIsmelt plant . There are now several more HIsmelt facilities in various stages of design and construction in China, including three plants for Xingtai Iron and Steel Co.

“It is expected that, as USA and European steel companies replace aging blast furnaces with electric arc furnaces that cannot run on raw ores, the pig iron price is expected to rise,” Magnum says. “In addition, the imposition of carbon taxes such as the EU’s proposed Carbon Border Adjustment Mechanism is expected to increase the price of green pig iron … In the EU, the proposed CBAM tariff is expected to be in the order of US$130/t. This study assumes a more conservative US$100/t premium.”

Midmetal is exploring the utilisation of the latest technologies to produce pig iron in Saudi Arabia as part of the Nusaned Initiative. The firm has been granted a certificate of acceptance supporting its proposal to build a pig iron production plant in the kingdom. Funding will be provided by the Saudi Investment Development Fund.