The potential of using biomass in ironmaking is investigated by simulation. Biomass is used to partially replace fossil reductants in the blast furnace process, which is described mathematically by a thermodynamic model. The model is cast in linear form to facilitate an efficient economic optimization of the production of raw steel, considering costs of raw materials, energy and CO₂ emissions of the unit processes up to the basic oxygen furnace. The high oxygen content and low heating value of biomass makes it necessary to study a possible external pyrolysis of it prior to injection into the furnace. The economy of biomass injection and its dependence on the price structure of raw materials and emissions are investigated. The results throws light on how the prices of biomass and emission rights, compared to the price of coal and coke, affect the optimal biomass pre-processing (pyrolysis) and injection rate.