The cost to transform the mining and steel sectors into zero-carbon industries could exceed US$1 trillion, according to Vale’s (NYSE: VALE) CFO, Gustavo Pimenta.
“When we model the entire production chain, we’re talking about more than a trillion,” said the Vale executive during the Fronteiras da Mineração conference, organized by Brazil Journal.
He added that the potential investment is higher than the combined market value of all the world’s steelmakers.
Pimenta said that on the upside, there are no longer technological challenges in generating zero-carbon energy. Rather, scaling up production and reducing costs are the issue. The cost of hydrogen, for example, would have to be cut in half to make sense for it to be used in steelmaking, he told the news outlet.
According to Pimenta, the adoption of zero-carbon technologies is likely to be asymmetrical and quite gradual, with the United States transforming more quickly thanks to subsidies and other supports.
Pimenta also highlighted the role of intermediate solutions, such as carbon capture.
In addition, the way countries tax carbon will also be essential to direct capital allocation and provide incentives for producers, Brazil Journal reported.
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