Posted on 21 Feb 2023
Australia-based steel producer BlueScope Steel has warned that the reline of a blast furnace at its 2.1mn t/yr Port Kembla steelworks could depend on favourable emissions legislation.
The firm has also been struggling with a hydrogen electrolyser project that underpins a move to green steel.
BlueScope will make its submission on Canberra's planned reforms of the safeguard mechanism, which covers Australia's emissions-intensive trade-exposed (EITE) industries, this week ahead of the final deadline on 24 February. The outcome of this consultation could impact on the viability of Port Kembla's existing operations and the planned A$1bn reline of its blast furnace.
BlueScope was Australia's 13th largest emitter of greenhouse gases (GHGs) in the year to 30 June 2021, behind power generators and gas firms, as well as aluminium and iron ore producer Rio Tinto. It spent A$120mn on initial work on the blast furnace reline in the year to 30 June 2022, but gave no update on progress in its half-year financial results released on 20 February 2023. The reline of blast furnace No. 6 is designed to replace No. 5, when it comes to the end of its lifespan in 2026, to continue traditional steelmaking beyond 2040.
The safeguard reforms that are under consultation envisage BlueScope cutting emissions by 5pc each year to 2030. Commercially proven technology that would allow this to occur is not yet available, BlueScope chief executive Mark Vassella said. This could see steelmaking closed in Australia and replaced by imports of steel from less regulated regions.
BlueScope had been working with Rio Tinto to use hydrogen to produce low carbon direct reduced iron (DRI) at Port Kembla, but has not made the progress it had wanted on the electrolyser project to provide the hydrogen. "We are thinking about if this is the right model for us going forward," Vassella told analysts on 20 February.
BlueScope has been looking for alternate investors for its planned 10MW pilot scale electrolyser plant after Shell withdrew from the project in August. Vassella believes that commercial steel production using hydrogen instead of coking coal is still decades away, with the reline of blast furnace No. 6 required to fill the gap. The firm has a 2050 net zero goal.
BlueScope, which operates steel making and distribution facilities in Australia, the US, New Zealand and Asia, reported earnings of A$599mn in the half year to 31 December 2022, down by 64pc on the a year earlier largely owing to lower steel to iron ore and coking coal spreads, lower volumes and higher costs.
Source:Argus Media
