BHP, Posco to explore steel decarbonisation

UK-Australian resources firm BHP will invest up to $10mn over the next five years to explore technology to reduce greenhouse gas emissions in steel production with South Korean steel producer Posco.

The two companies have agreed an initial deal for pilot and plant trials to cut carbon in the steel-producing process, BHP said today. The joint measures will include exploring ways to optimise coke quality and assessing carbon capture storage and utilisation options.

Posco and BHP will also share research on hydrogen-based direct reduction technology, the use of biomass in steel production and the potential to leverage BHP's carbon offsetting capability in the development of "carbon neutral" steel products.

BHP's investment will be drawn from its $400mn climate investment programme announced in 2019. BHP and Posco will also work together on the reporting of carbon emissions through the steel value chain.

Posco and UK-Australian mining firm Rio Tinto in July this year announced that they will jointly explore and develop technology to transition to a low-carbon emissions' steel value chain.

BHP and Chinese steel producer China Baowu last year entered into a five-year partnership to focus on the development of low-carbon technology. BHP this year agreed similar initial deals with Japan's JFE Steel and China's HBIS Group.

The company has set itself a target of net-zero operational emissions by 2050, although it has excluded steel from its scope 3 emissions, or those emitted by the customers of the commodities it produces. BHP is the world's top producer of metallurgical coal and one of the four largest iron ore producers.

Seaborne metallurgical coal prices are at record highs on tighter supplies and firmer demand, especially from China. Seaborne iron ore prices have come down by around 40pc from the record levels in May this year, with Chinese steel producers cutting production to meet the government's decarbonisation targets.

By Deepali Sharma