BHP needs to review its ineffective decarbonisation strategy – IEEFA

The company’s indirect emissions are rising rapidly

The appointment of Brandon Craig as Chief Executive of mining giant BHP, effective 1 July, presents the company with an opportunity to radically change its approach to the environmental transformation of the steel industry. According to a new analysis by the Institute for Energy Economics and Financial Analysis (IEEFA), BHP’s current strategy is ineffective and lags behind global trends.

At present, BHP remains among the laggards in the field of decarbonisation. Its indirect emissions (Scope 3) are rising rapidly and reached 378 million tonnes in the 2025 financial year. Instead of genuinely reducing its carbon footprint, the company is focusing on carbon capture, utilisation and storage (CCUS) technologies. This allows it to continue selling its own coking coal and iron ore for blast furnaces, but does little to bring the industry closer to its climate targets.

IEEFA experts emphasise that CCUS technology has shown a complete lack of progress: there is still not a single commercial facility of this type based on blast furnace production anywhere in the world. Furthermore, CCUS does not address the issue of methane emissions from the company’s coal mines, which is a cause for concern among major investors.

BHP’s strategy relies heavily on expectations of long-term demand for coking coal from India. However, analysis shows that the Indian steel sector is actively diversifying its imports, systematically reducing its dependence on Australian raw materials for the sake of energy security. In the long term, India will focus on domestic production, the use of environmentally friendly hydrogen and the processing of scrap metal.

The most promising route to decarbonisation at present is direct reduced iron (DRI) technology using gas or hydrogen, which completely eliminates the use of coal.

As reported by the GMK Centre, BHP Group is scaling back key decarbonisation projects at its iron ore operations in Western Australia. In particular, BHP has postponed a project, approved by the board of directors, to build a solar power station and battery storage facility at the Jimblebar mine, and has also delayed a 500 MW solar, wind and battery storage system project. Furthermore, the company has abandoned plans for a low-emission iron ore processing plant.