Carbon Capture viability in steelmaking decarbonisation seen fading

It is becoming increasingly clearer that carbon capture utilisation and storage (CCUS) will not play a meaningful role in steel decarbonisation, says the Institute for Energy Economics and Financial Analysis (IEEFA).

This follows the announcement last week by Rio Tinto, BHP and BlueScope Steel that they are working together on making Pilbara iron ore suitable for direct reduced iron.

DRI-EAF steelmaking, the preferred decarbonisation route globally, requires a higher grade of iron ore than the great majority of production in the Pilbara. A shift away from coal-consuming blast furnaces to DRI is therefore a major long-term challenge to Australia’s biggest export, IEEFA points out.

A promising way of enabling the use of lower-quality iron ore in DRI making is via an electric smelting furnace (ESF) – combining a DRI shaft furnace with a melting step to allow the removal of impurities, it adds.

Three of the Big Four iron ore miners, Vale, Rio Tinto and Fortescue, are investing in DR-grade ore supply. The outlier is BHP, which is not targeting high-grade ore and is instead leaning more heavily on unproven carbon capture solutions that would allow the continued use of its metallurgical coal.

Virtually all steel companies that plan to build low-carbon steelmaking capacity at commercial scale have opted for hydrogen-based or hydrogen-ready DRI plants, not CCUS.

“At this relatively early stage of the steel technology transition, it’s already time for steelmakers and iron ore miners like BHP to drop the idea that CCUS will play a major role in decarbonising the steel industry,” the IEEFA’s Simon Nicholas says in a note seen by Kallanish. Funding the new DRI collaboration would be a better way to “future proof” Australia’s biggest export and its steel industry, he adds.

This coincides with comments made by Fortescue Metals chairman Andrew Forrest during a Paris conference on Tuesday, at which he called CCUS “a complete falsehood”.

He is quoted by Reuters as saying: “We’re going to keep burning fossil fuels and somehow magically get rid of the carbon down into the ground where there is no proof that it will stay there, but heaps of proof that it fails. I say for policy makers everywhere do not be the next idiot waiting for the old lie to be trotted out and say I believe in carbon sequestration. It has only failed for 75 years.”

Adam Smith Poland