ASX-listed Magnum Mining & Exploration has successfully completed an engineering study into the technical and economic viability of establishing a green, high-purity pig iron (GHPPI) project, in Saudi Arabia.

The proposed project will make use of HIsmelt technology to produce GHPPI, with the feed material for the Saudi facility to be sourced from imported magnetite concentrate produced at Magnum’s Buena Vista iron project, in Nevada, in the US, as well as from iron waste materials from existing iron-ore processing facilities in Saudi Arabia and other potential locations.

The engineering study assessed a 1.1-million-tonne-a-year HIsmelt-based pig iron production facility in Saudi Arabia to capitalise on that country’s drive for low-emissions steel production.

The study determined an estimated capital cost of about $410-million for the project, along with an additional capital cost of $82.4-million for the establishment of a biochar facility, in Malaysia.

Operating costs are estimated at $381.57/t of GHPPI and indicate that the project is economically viable at the assumed premium GHPPI market price of $700/t, Magnum points out.

The project will still need to undergo thorough prefeasibility and feasibility studies, but the Magnum board is satisfied that the project “represents a compelling business case”.

Magnum entered into a memorandum of understanding with Saudi Arabia-based company Middle East for Metallic Industrial (Midmetal) to potentially establish a 50:50 partnership to develop a GHPPI project in Saudi Arabia.

The project is expected to be located in, or close to, the industrial areas adjacent to the King Fahad Industrial Port in the city of Jubail.

The project will make use of waste palm oil biomass that will be converted to biochar, in Malaysia, in the iron reduction process, which the partners believe may attract a “green” pricing premium for the GHPPI produced at the Saudi Arabian facility.

The HIsmelt technology was originally developed by Rio Tinto but the intellectual property rights were later sold to Chinese company Molong Petroleum Machinery Company. Magnum has a licensing agreement with Molong to build and operate a HIsmelt plant.

Magnum and Midmetal are working to source financing for the GHPPI project. Magnum states that it may be necessary to engage with a major investor to fund the Buena Vista project, the Malaysian biochar facility and the HIsmelt facility.

Magnum has already started initial discussions with international commodities trading houses for financing and prepayment offtake funding options, as well as with steel manufacturers in Asia and the Persian Gulf region.

Going forward, Magnum and Midmetal will collaborate on formalising agreements with biochar suppliers in Malaysia and South East Asia; formalising agreements for iron-ore and steel plant waste materials supplies; and continuing due diligence with potential investors.