BHP Group Ltd (ASX: BHP) could be getting closer to 'green steel'.
There is a growing focus to try to decarbonise operations and industries where possible. But some areas are easier to decarbonise than others. Typically, producing steel can be fairly carbon-intensive and pollutive because of the process involved.
According to the International Energy Agency, the iron and steel industry accounts for approximately 6.7% of total world CO2 emissions. Around 1.9 tonnes of CO2 are emitted for each tonne of steel produced.
Green steel could be the answer. What's green steel? It's the idea that steel can be made with zero emissions using some sort of green or renewable energy for the process.
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Is BHP getting closer to green steel?
BHP is one of the world's biggest producers of iron ore. BHP's iron ore division makes billions of dollars, so it is an important segment. What part can BHP do in a decarbonising world?
The ASX's resources giant is reportedly in discussions with a business called Boston Metal about bringing some new technology to Australia "very shortly" according to reporting by the ABC.
Boston Metal is aiming to deliver commercial quantities of green steel by 2025 without using hydrogen, coal or a blast furnace. The technique is called molten oxide electrolysis which utilises renewable electricity to transform iron ore into liquefied metal which can then be used for the next step like casting or rolling.
The ABC reported that when Boston Metal raised $50 million last year, BHP was one of the entities that was involved, along with Bill Gates's Breakthrough Energy Ventures.
Is green steel realistic?
It has reportedly already happened. The Swedish company SSAB has shipped some green steel, made using hydrogen, to the carmaker Volvo.
There are several different businesses and organisations trying to get involved with green steel.
The race is on
Boston Metal is obviously one of the contenders. Fortescue Metals Group Limited (ASX: FMG) is one ASX share that's working on green steel.
BlueScope Steel Limited (ASX: BSL) is another business that is thinking about green steel, as Australia's biggest steel producer. It is working on a plan to make green steel by using green hydrogen by utilising an electrolyser (powered by renewable energy) to split water into hydrogen and water. However, this uses a lot more electricity.
Rio Tinto Limited (ASX: RIO) and BlueScope are working together to explore low-carbon steelmaking using Pilbara iron ore. Last year, the two businesses signed a memorandum of understanding (MOU) to research and design low-emissions processes for the steel value chain, including iron ore processing, iron and steelmaking and related technologies.
Rio Tinto and BlueScope will prioritise studying the use of green hydrogen at the Port Kembla Steelworks in Australia.
BHP is looking to reduce its carbon emissions across its operations. It has also decided to divest its petroleum operations.
