Hematite represents the vast majority of iron ore exported from Australia as the development and processing cost of magnetite is generally seen as a barrier to the development of vast magnetite resources. However, a number of magnetite projects have attracted a significant amount of interest and investment from large Chinese steelmakers.This paper compares the relative merits of the development of Australian magnetite and hematite ore from the point of view of the steelmaker, taking into account the factors that influence the capital costs of the development of the ore types and the relative costs of operating the process plants to treat these ores. By modelling the relative operating cost for the production of hot rolled coil in China for the two ore categories, the paper demonstrates the economic drivers behind the Chinese steelmakers' large investments in the magnetite resources of Western Australia. It does this by estimating the potential value of magnetite concentrate to the steelmaker in the event that the maximum potential is realised by operating the blast furnace with a 100 per cent pellet burden.Under the conditions described, it was found that direct reduction (DR)-grade magnetite concentrate could command a price premium over 62 per cent Fe fines of up to 46 per cent (December 2014 on a cost and freight (CFR) basis). The corresponding premium for blast furnace (BF)-grade magnetite concentrate is 17 per cent, which demonstrates the dependency on grade.The capital expenses for a 14 Mt/a concentrate plant is estimated at US$3.1 B for BF-grade magnetite and US$3.35 B for DR-grade, with operating expenses at US$45 and US$50 respectively. The corresponding free on board price for a break-even net present value is calculated at US$82/t for BF-grade magnetite and US$90/t for DR-grade. The minimum long-term iron ore price (62 per cent Fe) that would be required to underpin such a project is estimated at US$78/t CFR for BF-grade magnetite and US$68/t CFR for DR-grade concentrate.Apart from the financial benefits, it is demonstrated that the use of magnetite concentrate in ironmaking has the potential to reduce CO2 emissions by approximately 400 kg per tonne of hot rolled coil.CITATION:Mouton, A J J and Edwards, K, 2015. Magnetite - a higher-grade blast furnace feed and its potential benefits for the ironmaker, in Proceedings Iron Ore 2015, pp 613-620 (The Australasian Institute of Mining and Metallurgy: Melbourne).