OREANDA-NEWS. September 26, 2011. Rio de Janeiro-based miner Vale is developing a new pig iron production technologywhich will cut steel production costs by up to 30 percent,increase productivity and cut carbon and particulate matteremission, a Vale executive said.

Vale started up the first pig iron demonstration plant inPindamonhangaba, in Sao Paulo state, on Sept. 12. The newtechnology allows the use of lower quality, cheaper, rawmaterials to produce pig iron, a key steelmaking ingredient andit also cuts processing costs, Vale said.

“The technical feasibility is there, now we have to provethat this technology is commercially viable,” Pedro Gutemberg,Vale’s global head of marketing, told Reuters in a telephoneinterview on Friday.

“If it is commercially successful, it will be easier for usto attract partners for new steelmaking projects,” he added,underlining that at least two years will be necessary to provethe commercial viability of the technology.

Vale, the world's second-largest mining company, suppliesabout half the iron ore used by steel mills in its home market,an amount expected to slip to 30 percent by 2015, a Valeexecutive said earlier this year.

To regain Brazilian iron-ore market share, Vale isinvesting in local steel production by taking minority stakes inBrazilian mills, partially abandoning a decade-old policy aimedat avoiding competition with its steelmaking clients.

Vale’s new technology will enable it to produce pig ironfrom ultrafine iron ore and lower quality coal such as PCI,anthracite, or even biomass, which generally cannot be used inblast furnaces, Gutemberg said.

It will eliminate the need to use facilities forsinterization. Among the environmental advantages Vale named an emissioncut of up to 5 percent for carbon, a reduction of about 85percent in particulate matter production and a 95 percent cut of nitrogen oxide emissions.

“The other advantage is the plant's modularity. It’s is mucheasier to shut down or to expand capacity,” Gutemberg added.

Vale owns 43 percent of the company developing this project,called Tecnored Desenvolvimento Tecnologico, while partners Brazil development bank BNDES and Logos Tecnocom, a company thatrepresents the researchers who developed the technology, own a32 percent and 25 percent stake respectively.