Australian-Japanese coking coal joint venture BHP Mitsubishi Alliance (BMA) has applied to extend the life of its high-grade 6mn t/yr Peak Downs hard coking coal mine by up to 93 years, as the future of green steel remains uncertain.
BHP is the only one of the big four Western Australian iron ore mining firms to operate major coking coal exporting facilities. All four, BHP, Fortescue, Rio Tinto and Roy Hill, have been investing in green steel development. BHP's efforts have focused on reducing emissions from traditional blast furnace steel production using coking coal. But Fortescue plans to use new technology to produce steel using iron ore and green hydrogen.
The planned 93-year extension to the Peak Downs mine in Queensland further cements BHP's commitment to using metallurgical coal in steelmaking, despite its promise to cut all investment in its Queensland coking coal business. BHP and Mitsubishi each own 50pc of BMA, with BHP as the operator.
Australian steelmaker BlueScope — spun out of BHP in 2002 — is investing in relining its existing blast furnace in New South Wales, rather than moving to new green-steel technology. The firm thinks that commercialising the technology is still decades away. Its efforts to cut carbon emissions at its Port Kembla steel works were dealt a blow in August when Shell withdrew from a project to develop a 10MW pilot-scale renewable hydrogen electrolyser to test the use of green hydrogen in the blast furnace. BlueScope still has a joint venture with Rio Tinto to explore green steel production using hydrogen.
BHP also thinks that the commercial production of green steel using hydrogen is decades away, with the best intermediate option is to utilise high-grade coking coal, such as those produced at Peak Downs, with carbon capture and storage. This drive towards higher grade coking coal informed BHP's sale of its 80pc interest in lower grade BHP Mitsui Coal to Australian producer Stanmore.
Argus last assessed the premium hard low-volatile coking coal price at $275.50/t fob Australia on 7 October, up from $244.65/t on 15 August, but down from $664/t on 15 March. The premium for this highest-grade coking coal to lower grade hard mid-volatile coking coal has shrunk to around $25/t from $60/t a year ago, as poor steelmaking margins eroded steelmakers incentive to pay for higher grade coking coals. Argusmedia
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