Posted on 31 May 2021
Australia's New South Wales (NSW) state government has granted critical infrastructure status to domestic steel producer BlueScope Steel's planned reline of the blast furnace at its 2.1mn t/yr Port Kembla steelworks, in an effort to ensure it will be ready to operate when the existing furnace is decommissioned in 2026.
BlueScope plans to reline its non-operational No.6 blast furnace at Port Kembla to replace its No.5 blast furnace, which is due to come to the end of its lifespan in 2026. This will cost around A$700mn-800mn ($540mn-618mn) and imply a 20-year commitment to traditional steel production using iron ore and coking coal, although BlueScope will consider alternatives sooner if they became economically viable.
BlueScope does not regard low-emissions steel production technology advanced enough to offer a viable alternative for the reline of the No.6 blast furnace, prompting it to commit to using coking coal for another two decades. This will come as a blow to Australian iron ore mining firm Fortescue Metals' founder Andrew Forrest, who aims to develop a 2mn t/yr LNG and hydrogen import facility at Port Kembla and is promoting the demise of coal-fired blast furnaces in favour of green hydrogen and green ammonia.
BlueScope has found that using hydrogen from renewable sources is currently about six times more expensive than natural gas. Replacing the blast furnace with an electric arc furnace will be inefficient, it said, because of the high cost of electricity and lack of scrap availability in Australia.
BlueScope will still consider the reline even if it loses supplies of coking coal from the Dendrobium mine, which may have to close in 2024 after the NSW government rejected an expansion. The firm prefers local supplies of coking coal but will look at alternatives if necessary.
Coking coal prices have been weaker over the past year because of the impact of Covid-19 and Beijing's ban on Australian imports, although they have started to rise as trade flows adjust. Argus last assessed the premium hard low-volatile coking coal price at $150.85/t fob Australia on 28 May, up from $109.25/t on 10 May. It accessed the hard mid-volatile coking coal price at $114.50/t fob Australia the same day, up from $108/t on 19 May.
Source:Argus
