Green steel 20 years away: BlueScope Steel

Australia-based steel producer BlueScope Steel will begin work on a planned reline of its blast furnace at its 2.1mn t/yr Port Kembla steelworks because it does not believe that low emissions steelmaking technology is advanced enough to offer a viable alternative.

BlueScope plans to reline its non-operational blast furnace No.6 at Port Kembla in New South Wales (NSW) to replace its blast furnace No.5, which is due to come to the end of its campaign life in 2026-30. This would cost around A$700mn-800mn ($550mn-630mn) and imply a 20-year commitment to traditional steelmaking using iron ore and coking coal, although BlueScope would consider alternatives sooner than that if they became economically viable, chief executive Mark Vassella said.

"Prospective green iron making technologies are interesting, but are in an early stage of development, which will continue through the 2020s and 2030s, before we see larger scale take up in the 2040s," he added.

BlueScope has found that using hydrogen from renewable sources would currently be about six times more expensive than natural gas, and that replacing the blast furnace with an electric arc furnace would be inefficient because of the high cost of power and lack of scrap availability in Australia.

BlueScope reported a July-December first-half profit of A$330.3mn, up from A$186mn a year earlier. This was based on earnings before tax and interest (ebit) of A$531mn. It expects ebit to be A$750mn-830mn for January-June, based on an east Asian hot-rolled coil (HRC) price of $610/t, a 62pc Fe iron ore price of $150/t cfr China and a hard coking coal price of $140/t fob Australia.

The firm's Australian steel division delivered ebit of A$259mn for July-December, which was more than double from a year earlier and up by 46pc from January-July. It is struggling to meet demand from the domestic residential building because of government stimulus and a trend towards lower density regional dwellings that use more steel in construction. The realised spread has improved more than global averages and volumes were at the highest levels in more than a decade.

BlueScope will still consider undertaking the reline even if it loses supply of coking coal from the Dendrobium coking coal mine, which may have to close in 2024 after the NSW state government rejected an expansion. "Local supply of coking coal is good for Port Kembla, but there are alternatives," Vassella said.

Argus last assessed Asia-Pacific HRC at $650.50/t on 19 February, down from a recent high of $698/t on 24 December but up from $506/t on 19 August.

By Jo Clarke