Decarbonisation needs metals, technology investment; steel benefits

Meeting increasing demand from the highly metals-intensive process of decarbonisation will require substantial capital allocation to the production and recycling of these metals, says BHP. The additional steel demand created will more than offset waning demand from fossil fuel industries.

However, investors will need to engage constructively with the sector to help drive down emissions from the production of metals by ensuring clean energy alternatives beat carbon-emitting technologies.

“Significant technological progression will be required to feasibly and affordably address the emissions from industrial activity, notably steelmaking,” among others, BHP says in a joint report with asset-management firm LGIM.

“If rapid technological progress does not occur, then these harder-to-abate sectors would have to explore the viability of decarbonising at considerable cost and potential delay, both at the individual plant level and via broader infrastructure requirements, by deploying known but very expensive technology options, such as the deployment of green hydrogen direct reduced iron steelmaking,” the report seen by Kallanish continues.

Besides servicing traditional sectors, metals producers will need to “provide the material building blocks of the hardware required to radically reconstitute how we produce energy and use land,” the report observes. This will include wind turbines and carbon capture infrastructure, and result in climate adaptation and rising material intensity.

In the coming 30 years, cumulative demand for metals is expected to grow substantially compared with the prior 30 years. In the 1.5°C scenario that BHP described in its Climate Change Report 2020, demand for iron ore and coking coal is forecasted to increase by 1.8 and 1.5 times respectively.

“Steelmaking raw materials do a little better than one might think in the scenario – with an uplift over traditional crude steel ranges due to additional demand from extra wind turbines and carbon distribution pipelines, which should be more than enough to offset a loss of steel demand from the fossil fuel industries as their output falls in the long run,” the report states.

Adam Smith Germany