BlueScope and Rio Tinto green steel each other for carbon reductions


Memoranda of Understanding typically have people nodding and smiling and waiting for subsequent announcements to put some meat on their bones. This joint Rio Tinto-BlueScope announcement, comes hot on the heels of Rio’s ramping of its Scope 1 and 2 emissions reduction target to 50% by 2030, and declares both companies’ intention to “focus on utilising green hydrogen for direct reduction of Rio Tinto’s Pilbara iron ores”, said BlueScope Chief Executive Mark Vassella in an announcement on Friday.

Their statement went on to declare that, “The first phase of the collaboration will be to determine the scale of a pilot plant,” at BlueScope’s Port Kembla steelworks, which will consist of a hydrogen electrolyser, direct reduction process and melter.

What the experts say

In June, Jessica Allen (an expert in low-emissions energy technologies and thermal transformations) and Tom Honeyhands, Director at the Centre of Ironmaking Materials Research, both the University of Newcastle, wrote an article in The Conversation explaining that direct reduced iron (DRI) technology offers the greatest opportunity for the use of green hydrogen.

The process currently accounts for less than 5% of steel production and often uses methane gas to produce hydrogen and carbon monoxide which are then used to transform iron ore into iron.

Allen and Honeyhands wrote that, “Up to 70% of the hydrogen derived from methane could be replaced with green hydrogen without having to modify the production process too much”, and added that development of a process using 100% green hydrogen as feedstock is under way.

Honeyhands and Allen point out that the green-hydrogen reduction method still produces CO2 emissions, and requires more electricity than the currently dominant blast-furnace method based on coking coal, but that its “overall emission intensity can be substantially lower”.

BlueScope and Rio Tinto intend further processing the iron ore reduced using green hydrogen “in an electric melter to produce metallic iron suitable to be finished into steel” — they say that, like the electricity used to power the hydrogen electrolysers, the electricity running the melter would also be sourced from renewables.

According to recent studies two tonnes (averaged over different feedstocks and processes used worldwide) of CO2 are produced per tonne of steel manufactured; the steel sector accounts for around 7% of all anthropomorphic CO2 emissions; and steel production is expected to grow by 25-30% by 2050.

For DRI to be an effective antidote to current and future emissions, it would have to become the dominant technology in steel manufacturing the world over, and Australia has an opportunity to become a world leader in using this method and meeting future demand for green steel.

A multi-pronged stainless steel approach?

The BlueScope-Rio Tinto MOU also encompasses the enhancement of existing processes to reduce emissions, and allows “more projects to be added” as promising technologies mature, the statement said.

Rio Tinto already uses gas-fed DRI in the northern hemisphere, and BlueScope deploys electric melters at its Glenbrook Steelworks in New Zealand; experience that the two companies say will benefit their green-steel ambitions.

BlueScope and Rio Tinto are also among the indirect recipients of government funding to lower their emissions: that is, the Australian Renewable Energy Agency in July announced a $2 million boost to its existing $300,000 support of Monash University’s Australian Industry Energy Transitions Initiative.

This initiative works to develop pathways for Australian industry that accelerate action towards net-zero emissions across supply chains — such as iron and steel, alumina and aluminium and liquefied natural gas — considered critical to the Australian economy.

Money talks

In its Climate Action report released in September, BlueScope itself announced a climate action fund of up to $150 million; while a Rio Tinto investment seminar held in October said its accelerated 2030 emissions target is “supported by around $7.5 billion of direct investments to lower emissions between 2022 and 2030”.

That’s a worldwide decarbonising fund bucket spread across the miner’s commodity portfolio. In Australia, it said it was focused on developing renewable power sources for iron ore in the Pilbara and for its aluminium smelters, including commitments of “$0.5 billion per year from 2022 to 2024”.

These figures give some an indication of Rio’s understanding of the risks of not acting, and the opportunities for carbon-reduced product in a near-future global economy.

In May last year analysis in the Grattan Institute report Start with steel: A practical plan to support carbon workers and cut emissions showed that if Australia could capture 6.5% of the global steel market, it “would generate about $65 billion in annual export revenue and could create 25,000 manufacturing jobs in Queensland and NSW”.

The report emphasised however that green steel would rapidly become a competitive field, and that while the investment needed to deliver on such a global-scale opportunity “can only come from the private sector”, governments should plan for this future now, and help facilitate it.

In the statement issued by Rio and BlueScope on Friday, Rio Tinto Iron OreChief Executive Simon Trott said of the intentions outlined in the MOU, “It’s early days, but given both BlueScope and a Rio Tinto are committed to net zero carbon emissions by 2050, we realise we need to investigate multiple pathways and strike partnerships across the steel value chain.”

Vassella laid the groundwork for wider collaboration saying the DRI focus, “is an important program — one which will need broad support from governments, regulators, customers and suppliers”.


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