thyssenkrupp: Long-Established Essen-based Group Battles Rising Costs
The long-established Essen-based group thyssenkrupp exemplifies the enormous complexity of restructuring heavy industry. At its Duisburg site, the company is building a direct reduction plant around 140 m high for approximately EUR 3 billion to process iron ore without coke in future. As thyssenkrupp suspended the tender for up to 143,000 t of green hydrogen annually in 2025 because prices were too high, management is having to adjust the start-up strategy. According to Reuters, thyssenkrupp is permitted to operate the large-scale plant in Duisburg initially on conventional natural gas without losing government funding commitments. Technically, however, the feedstock requirement remains unchanged: both gases need high-purity pellets with extremely low impurity levels. While thyssenkrupp has already cut or outsourced 4,000 of the approximately 11,000 planned positions, the flexible transition to hydrogen safeguards the plant’s future operations. The group has bought itself time.Rio Tinto: Mining Giant Secures Europe’s Supply
Mining giant Rio Tinto is already demonstrating how the supply of direct reduction pellets to the European steel industry can be structured. Through its majority-owned Canadian subsidiary, Iron Ore Company of Canada, the mining group has contractually committed to supplying DR pellets to Stegra, the Swedish flagship plant in Boden. IOC has a nominal pellet capacity of 12.5 million tonnes per year, part of which is DR-grade. The strategic relevance of this supply chain is growing: LKAB, which accounts for around 80% of EU iron ore production, had to shut down a pellet plant from April to November 2026 because of rock mechanics problems in Kiruna, costing around 2 million tonnes of deliveries. The fact that Stegra recently acknowledged it needs more capital to complete the entire plant increases the importance of reliable suppliers from North America.Strategic Resources: A Potential Solution from Canada
Canadian developer Strategic Resources could offer a way out of the structural raw material bottleneck. With the BlackRock project, the company is advancing a processing plant at Port Saguenay in Québec that could produce up to 4 million tonnes of high-purity iron ore pellets per year. The site gives Strategic Resources year-round deep-water access to the St Lawrence River and allows it to supply direct reduction plants in Europe. A March 2024 study estimates capital costs of USD 470 million for the pellet plant (estimate accuracy −30/+50%) and a construction period of 25 months. Assuming a direct reduction premium of USD 70 per tonne, the company forecasts annual EBITDA of USD 173 million. The project study shows an after-tax net present value of USD 957 million at a discount rate of 8% and an internal rate of return (IRR) of 25%. The study puts the conversion costs alone at USD 16.31 per tonne. The site offers access to hydropower and natural gas; a new electricity contract with Hydro-Québec is still pending. In May 2026, the company announced it had submitted final, comprehensive technical answers to all queries raised by Québec’s Ministère de l’Environnement regarding the permit extension from 1.5 to 4 million tonnes. Now it is a matter of waiting for their decision.Strategic Resources: Active in Europe and Canada
Alongside the planned processing plant in Canada, Strategic Resources is also active in Europe. In June 2026, Finland’s University of Oulu selected concentrate from Strategic Resources’ Mustavaara project for tests on hydrogen-based ironmaking as part of its FutSteel research programme, funded with EUR 17 million. Steel group SSAB is also involved in the programme. Management had already optimised costs in North America in early 2024 by relinquishing old electricity contracts for the BlackRock project and releasing the associated letters of credit. In addition, the financially strong anchor shareholders Orion Resource Partners and Investissement Québec each hold over 40% of the company’s shares and underpin the development of the projects.Strategic Resources: Conclusions on the Green Steel Market
The European steel industry is undergoing an unprecedented market shift in which producers’ enormous fixed costs dictate demand for raw materials. When groups invest billions in new plants, these capital costs force operators to run facilities at maximum capacity utilisation, so feedstock prices are unlikely to be the most important factor. While steelmakers operate under the protective umbrella of new EU quotas, pricing power is likely to shift increasingly towards pellet suppliers. Investors in development companies such as Strategic Resources must bear in mind that these projects are subject to typical permitting risks, volatile commodity prices and construction delays, and that the company must secure capital for construction as well as concentrate supplies for the plant in Saguenay. If the plant is successfully implemented, Strategic Resources will occupy a promising niche.Conflict of interest
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