Global push for green steel could affect Australia’s $ 150 billion iron ore exports if miners don’t adapt, report says | Mining
BHP, Fortescue and other major Australian iron ore miners could be left behind in a global shift to hydrogen-based steelmaking due to the country’s relatively poor quality ores, Bloomberg report says New Energy Finance.
The conclusion is contained in the report by consultancy firm “Decarbonising Steel: A Net-Zero Pathway” released on Tuesday. He identified different ways in which one of the largest greenhouse gas-emitting industries could wean itself off from fossil fuels.
The report estimated that the transition to net zero emissions would require up to US $ 278 billion (AU $ 388 billion) in additional investment, a shift to greater use of recycled steel and also a price range. carbon.
The report noted that the switch to electric arc furnaces, preferably powered by renewable energy, would generally require high-quality iron ore pellets as a raw material.
“There is currently a limited amount of high grade ore in production, mainly in the Americas, Europe and the Middle East, although there are good quality reserves in South Africa, India, Russia and the Middle East. Brazil, ”the report says.
“Lower grade ore producers in Australia will need to further refine their product to make it suitable for hydrogen [electric arc furnaces], potentially increasing production costs, ”he said.
“This problem could hamper the adoption of direct hydrogen reduction technology, or conversely, it could lead to a reconciliation of iron ore production and possibly green steel production capacity of producers. of higher grade ore. “
Iron ore is Australia’s largest export, valued at around $ 150 billion through June. With the ore prices falling, the product is expected to bring in around $ 113 billion by 2022-2023, the government said earlier this year.
Representing around 7% of global emissions, the steel industry will be at the forefront of efforts to reduce carbon pollution if dangerous climate change is to be avoided. Hydrogen, especially made from renewable energies, offers a potential substitute for metallurgical coal burnt in the steelmaking process if fuel production can be increased and prices fall.
Academics such as Associate Professor at Australian National University John Pye have also identified the threat to Australia’s predicted mineral wealth if green steel developments end up favoring minerals other than those found in the region. Pilbara in Western Australia.
“This is so important to Australia’s track record,” Pye said, adding that “the jury has determined how competitive we can be in a carbon-free steel industry.”
Pye said that a process known as enrichment – which removes impurities from the ore – would be needed to raise the quality of Australian minerals to that of Brazil or other rivals, “but that would increase costs and reduce costs. benefits of minors.
Likewise, green hydrogen processes can favor magnetite ores over hematite ores that dominate in Pilbara, Pye said.
The region, however, is not without magnetite. Fortescue is currently building a magnetite operation in Pilbara called Iron Bridge, with first production slated for late 2022. It would be the only one of the big three to have a magnetite operation when it goes online.
Elizabeth Gaines, chief executive of Fortescue, said her company, along with Fortescue Future Industries, is evaluating a range of avenues to produce green iron that could eliminate the need for coal. These ranged from the electrochemical conversion of iron ore to green iron at low temperature without coal and the use of green hydrogen for the direct reduction of iron ore.
“As part of our preliminary test work, we were successful in producing high purity green iron from low temperature Fortescue ores without carbon, and we are now focusing on scaling up the process,” Gaines said. .
“In line with our strategy of investing in the future of our core iron ore business and diversifying into raw materials that support decarbonization, we are taking a broad value chain approach,” she said, adding that the Iron Bridge Magnetite project was one of the few such projects. companies globally and will supply 22 million tonnes per year of high grade 67% Fe magnetite concentrate.
BloombergNEF’s global head of industry decarbonization, Kobad Bhavnagri, said the switch to green steel “could cause both great disruption and great opportunity for Australian iron ore miners.”
“Many studies show that green hydrogen is fast becoming the cheapest and most convenient way to make green steel,” Bhavnagri said. “But this technological change poses a challenge for Australia. Not only will this virtually eliminate metallurgical coal exports, but iron ore exports could also suffer if the miners do not adapt.
He said miners and investors betting on a slow transition to hydrogen could be left behind, as has happened to power companies that have been slow to adjust to falling prices for new solar farms and wind turbines.
Bhagnagri said it was not inevitable that Australia’s iron ore producers would lose out, as the country’s abundance of low-cost renewables gives the country the opportunity to modernize onshore iron ore production. and attract more of the steel industry to Australia.
“Australian businesses will have to take the lead in shaping the future of the industry in their favor, or risk it evolving in a way that treats them,” he said.
The Guardian Australia has contacted several iron ore producers and steelmakers for comment.