November 2021
On average, over one billion tonnes of metallurgical coal are used per year to produce most of the 1.7 billion tonnes of crude steel manufactured globally. In the last decade, the steel industry has focused its attention on the decarbonisation of steel production in a try to make renewable alternatives cost-effective.

However, the path to decarbonisation becomes uncertain when considering the large-scale implementation of emerging technologies.

Global crude steel production is split between two primary production methods, the basic oxygen furnace (BOF) method and the electric arc furnace (EAF) method. The BOF method primarily uses iron ore and metallurgical coal, supplemented with other sources such as scrap and direct reduced iron (DRI), as the raw material to produce crude steel. There is currently no substitute for metallurgical coal in the BOF process.

On the other hand, steelmaking in the electric arc furnace, either scrap-based or based on hydrogen direct reduced iron, will in future contribute substantially to the reduction of carbon emissions from the iron and steel industry. However, it will still be necessary to introduce carbon into the EAF process, either to carburise the steel or to create foaming slag to improve the energy efficiency of the melting process.

Implementation of the EAF method is dependent on the availability of scrap steel for feedstock. China’s steel scrap supply is currently limited, and these shortages are unlikely to ease in the short to medium term. However, in the long term, AME expects that China’s domestic steel scrap supply will increase significantly on the back of rapid growth in the country’s steel consumption. It is estimated that it will be at least 15 years before China can source the scrap required to implement the anticipated BOF to EAF transition.

Other constraints and limitations hindering China from utilising EAFs over BOFs relate to electricity use. Most Chinese blast furnaces are modern and efficient, with minimal emission levels. The majority have been built within the last 15 years, and so it will be a significant financial burden for Chinese steel producers to switch to EAFs with the associated material efficiency loss. In addition, in terms of demand, a large quantity of China’s steel production consists of flat products for the automotive industry, which cannot be manufactured by the EAF method.

Despite a movement towards EAFs in recent years, BOF production continues to comprise a larger proportion of steel production than EAF production, with most large-scale producers in China and Korea having BOFs as their primary steel production route. However, the substitution of some BOFs with EAFs is expected in future, supported by rising scrap availability and electricity supply in the region, as well as increasing environmental regulation.

Other Alternative Technologies

In order to counteract some of the limitations of coke-making, such as restrictions on coal types, pollutant emissions and energy use, a number of coke-making substitutes and steelmaking technologies have been developed around the world. Some of the most advanced technologies include HYBRIT, hydrogen-injection blast furnace production, FINEX and COREX

Hydrogen technologies are being actively developed to help the steel industry move away from coke in the fight against climate change. As a result, hydrogen-based steelmaking technology has attracted significant investment and government support in an attempt to achieve “zero-emissions” steel production. The use of hydrogen in the steel industry is at an advanced stage of R&D, with pilot facilities currently being developed.

Hydrogen–HYBRIT

Three Swedish companies – the steelmaker SSAB, the mining firm LKAB, and the energy company Vattenfall – have combined efforts to build the world’s first pilot plant for fossil-free steel, with the goal of using hydrogen as a coking coal replacement in steelmaking. The venture aims to begin developing the pilot plant in 2023. In July, SSAB AB produced what they called the first fossil-free steel using green hydrogen, with Volvo Group buying the first delivery. The hydrogen HYBRIT initiative is expected to be able to reduce the carbon emissions of Sweden and Finland by 10% and 7%, respectively. Based on the feasibility study conducted in 2017, operational costs are expected to be 20-30% higher than those of conventional blast furnaces. The program commenced in 2016 with plans to establish the demo plant by 2025. Commercial volume plant trials and transformation are scheduled to occurred between 2030 and 2040, with the company expecting to reach fossil-free production by 2045.

Hydrogen-Injection

In 2019, German ThyssenKrupp initiated a series of investigations into the use of hydrogen in a working blast furnace to minimise carbon emissions from steel production. A particular focus of the first test phase was the effect on plant technology of the use of hydrogen. To this end, injection of hydrogen was tested on one of the 28 tuyères of “Blast furnace 9” at the Duisburg site.

In the second test phase, scheduled to start in 2022, the tests will be extended to all 28 tuyères of the blast furnace to test the viability of the technology for large-scale industrial use. The research will be focused on the impact of hydrogen technology on the metallurgical processes in the blast furnace. The company’s goal is to switch to hydrogen-based steel production by 2050.

Although hydrogen is a genuine alternative to coking coal, most of the technology is still in early stages of development with no planned date for commercial production. AME expects economics and scalability to be the major issues when it comes to commercialising the plant, and it will be difficult to replace reliable and cost-effective metallurgical coal in the medium term.

FINEX

The closest competitor to blast furnace technology, with the potential to revolutionise the industry in the short term, is likely to be FINEX. FINEX is a combination of two technologies, the Finmet multiple fluidised bed process and the COREX melter-gasifier. The FINEX process has been in development by POSCO and Siemens VAI since 1992, in which time the technology has progressed from a 1.5tpd lab-scale research unit to a 2Mtpa commercial-scale plant, which has been in operation at the Pohang Steelworks in South Korea since January 2014. POSCO is considering a million-ton demo plant from 2023 and aims to put the eco-friendly steel production system using hydrogen as a reducing agent into actual operation in 2027.

COREX

With COREX, all metallurgical work is carried out in two separate process reactors – the reduction shaft and the melter-gasifier. Iron ore (lump ore, pellets, or a mixture thereof) is charged into the reduction shaft, where it is reduced to direct reduced iron (DRI) by the reduction gas in counterflow. Discharge screws convey the DRI into the melter-gasifier, where final reduction and melting take place, in addition to all other metallurgical reactions. Hot metal and slag are tapped, as in conventional blast furnace practice.

Like hydrogen, all these technologies are in relatively early stages of development, with no large-scale or commercial plants operating at this stage to compete with blast furnace technology. As a result, AME does not expect that these technologies pose an imminent substitution risk to metallurgical coal.