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‘Green steel’ is still decades away in Asia as hydrogen struggles to replace coal-fired furnaces, says mining giant BHP

  • The youth of the region’s blast furnace steel plants makes it difficult to justify the costs of converting to hydrogen-enabled facilities
  • Steel contributed 15 per cent of China’s carbon dioxide emissions, the second-highest proportion after the power generation sector

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Environmentally-friendly steel on a commercial scale in Asia is still decades away, according to Australian mining giant BHP. Photo: Shutterstock
Eric Ng
Environmentally-friendly steel on a commercial scale in Asia is still decades away as the use of hydrogen to replace coal-fired furnaces in production is a long way from being commercially viable, according to Australian mining giant BHP.
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The relative youth of the region’s fleet of traditional blast furnace steel plants – averaging 12 years in China and 18 years in India – means it would be difficult to justify the costs of converting them to hydrogen-enabled “direct reduced iron” (DRI) facilities, said chief development officer Johan van Jaarsveld.

“The adoption of hydrogen in steel making – the replacement of blast furnace iron with direct reduced iron – is something possible in the future,” he said. “However, we don’t think that is something that is going to happen in material quantities in this part of the world for another few decades. The reason is just costs.”

For DRI to be economically sustainable in Asia, the price of each tonne of carbon dioxide emitted would need to rise to US$100, and the price of green hydrogen fall to US$1 per kilogram, he said.

Carbon has traded between 56 yuan and 62 yuan (US$7.8-US$8.6) a tonne in China’s national carbon market so far this year. In Europe, where “green steel” production is more advanced, carbon permits fetched €58-€98 (US$56-US$102) a tonne.
Johan van Jaarsveld, chief development officer of Australian mining giant BHP. Photo: HANDOUT
Johan van Jaarsveld, chief development officer of Australian mining giant BHP. Photo: HANDOUT

The cost of green hydrogen, made by splitting water into oxygen and hydrogen using renewable energy, could take until 2050 to fall to US$0.7-US$1.60 per kg in most parts of the world, from US$2.5-US$4.5 in 2019, according to BloombergNEF, a clean-energy industry data provider.

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