It will take decades to produce green steel in Asia — BHP

According to the Australian mining giant BHP, it will take decades to produce environmentally friendly steel on an industrial scale. South China Morning Post writes about it.

It is currently unprofitable for steelmakers in the region to invest in direct reduction iron (DRI) plants using hydrogen, as the operating blast furnaces are relatively “young”. The average age of blast furnaces in China is 12 years, in India – 18 years, says BHP development director Johan van Jaarsveld.

“The adoption of hydrogen in steel making – the replacement of blast furnace iron with direct reduced iron – is something possible in the future. However, we don’t think that is something that is going to happen in material quantities in this part of the world for another few decades. The reason is just costs,” he noted.

According to Johan van Jaarsveld, for the transition to DRI in Asia to be economically feasible, the price of a ton of carbon emissions here should rise to $100, and the price of green hydrogen should fall to $1 per kg. In 2022, China’s national market price for CO₂ emissions is 56 to 62 yuan per ton ($7.8 to 8.6). In Europe, where green steel production is more developed, carbon permits cost 58-98 euros ($56-102) per ton.

According to BloombergNEF, the cost of green hydrogen by 2050 in most parts of the world could fall from $2.5-4.5 in 2019 to $0.7-1.60 per kg.

Two-thirds of BHP’s annual sales – mostly iron ore and coking coal – come from China, the world’s biggest emitter of greenhouse gases. China aims to reach the peak of carbon emissions by 2030, and carbon neutrality by 2060. The steel sector accounts for 15% of carbon emissions in the country, which is the second largest share after the electricity generation sector (40%).

Another way to dramatically reduce CO₂ emissions in the steel industry in China and India is to replace blast furnaces with scrap electric arc furnaces (EAF). But progress here will be gradual due to conversion costs and limited availability of scrap metal.

The Chinese authorities plan to increase the share of EAF in the total steel production in the country to more than 15% by 2025, compared to 10% in 2020. However, the conversion is too slow. According to a report published in 2021 by the American think tank Global Energy Monitor, China accounts for 45% of the world’s blast furnace capacity under construction or planned to be built. In total, about 72% percent of the world’s steelmaking capacities under construction are intended for blast furnaces.

As GMK Center reported earlier, the International Steel Group is calling on the US and EU to adopt a global emission standard to achieve the decarbonization of the steel industry by 2050 and meet consumer demand for green steel products.