machinery on site

Taking carbon out of steelmaking is worth the candle

Article originally published in Australian Financial Review, Apr 11, 2023

Reducing carbon emissions from steelmaking is a complex area that requires a comprehensive approach, including improvements in energy efficiency, carbon capture, and the development of new technologies.

But the game is worth the candle.

The steel industry accounts for 7-10 per cent of global greenhouse gas (GHG) emissions, making it a significant factor in the global efforts required to address climate change.

wind turbines in field

The steel industry is a major player that needs to be considered in climate change conversations.


While BHP is not a steelmaker, it is a major producer of iron ore and metallurgical coal, the two principal commodities used by steelmakers across globe.

To better understand how to support its customers to reduce their operational GHG emissions, the resources giant has developed a proprietary Steel Decarbonisation Framework that describes the stages a steelmaking region must pass through on its decarbonisation journey.

This framework outlines the technology options associated with each stage.

The three stages are Optimisation – where the majority of steelmaking sits today – followed by Transition and then ultimately, a Green end state.

In the Optimisation stage, several low-cost abatement levers are available to reduce GHG emissions from the existing integrated steelmaking process.

These include the use of renewable power, recycling of energy-rich gases and heat, supported by the implementation of advanced process control and Industry 4.0.

Using higher-quality raw materials like BHP’s metallurgical coal and iron ore is another avenue to reduce GHG emissions intensity.

BHP believes scrap will also play an important role in the Optimisation stage, as the share of scrap-based electric arc furnace steelmaking increases over time, and some regions increase their use of scrap within the integrated steelmaking process.
In the Transition stage, the industry will need to invest in low carbon technologies such as modifications to the BF-BOF (blast furnace - basic oxygen furnace) route, and increased use of renewable energy and low carbon fuels to seek to further reduce GHG emissions.

Achieving the Green end state, where steel can be produced with zero or near-zero direct GHG emissions, would require the adoption of transformative technologies.

To achieve this, the industry will require access to renewable electricity that is cost competitive for deployment at scale.

wind turbines in field

Harnessing renewable electricity is key to reducing the environmental impact of the steel industry.


Fiona Wild, BHP Group Climate & Sustainability Officer, says the company’s strategy to support lower GHG emission steelmaking “is to partner, innovate, advocate and supply the optimal products across these stages”.

“Access by steelmakers to higher-quality metallurgical coal and iron ore products, which enables them to be more efficient and lower emissions intensity, is an important component of the transition to a low-carbon future,” says Wild.

“To support this, we are assessing the opportunity to implement beneficiation at our Jimblebar iron ore operation and metallurgical coal product improvements at our BHP Mitsubishi Alliance operations.”

BHP has also forged partnerships with overseas steelmaking giants Tata Steel, POSCO, Baowu, JFE, HBIS and ArcelorMittal, companies which together represent approximately 17 per cent of reported 2021 global steel production capacity.

“It’s important to note that we are working with these companies on options that could reduce their Scope 1 emissions, which in turn reduces Scope 3 emissions for BHP,” says Wild.

The 2022 BHP Annual Report shows that Scope 3 emissions, value chain GHG emissions, reported by BHP are many times larger than its operational GHG emissions, and that steelmaking represents the bulk of them.

BHP has committed to invest up to $US75 million in research and development to support these steel partnerships.

To put these Scope 3 GHG emissions into perspective, Australia is the world’s largest producer and exporter of iron ore. In most years, it is our largest export.

The nation produces nearly 40 per cent of the global total of iron ore.

But as far as steel goes, we have a few relatively small producers who primarily serve our domestic market. Australian steel makes up under half a per cent of global production.

Steven Vercammen, global steel expert for consultancy giant McKinsey & Company says the world’s thirst for steel is such that removing carbon from its production is vital.

“The world’s hunger for steel products is not going away, not in the next 2-300 years at least, and with the industrialisation of China, India and Africa, it will increase.

“If you look at the whole of our green ambitions – if you want to transport carbon, if you want to sequester it, all the renewable power that will have to be created, all the technologies that will have to address carbon emissions will need steel.”
Steel occupies a place as one of the most important materials in modern life, says Vercammen.

“Making steel is also highly carbon intensive. Making one metric ton of steel results in 1.8 metric tonnes of CO2 emissions, on average.”
McKinsey’s sustainability lead for Australia, David Dyer, says completely decarbonising all steel production would “solve a big chunk of global emissions, which would be very exciting in itself”.

BHP’s Wild says steel is one of the materials that will be “vital” to help decarbonise the global economy.

“As a producer of materials that are essential building blocks of decarbonisation, BHP is supporting the global transition to a more sustainable development trajectory by evolving the solutions we provide to our customers and the solutions we procure from our suppliers and partners,” says Wild.