To meet global climate goals, emissions from the steel industry must be reduced. We are committed to helping the sector’s pursuit of decarbonisation – from collaborating with industry players across the value chain, to how we transport product around the globe.
Steelmaking is among the industrial processes with the most critical impact on our world, responsible for 11% of carbon dioxide and 7% of greenhouse gas emissions globally1; emissions that are among the hardest to abate.
With steel an essential building block for almost all infrastructure – providing the backbone of the low carbon economy and long-term socioeconomic development – the sector will continue to play a key role in society’s long-term future. In fact, the International Energy Agency (IEA) has projected global demand for steel to increase by more than a third through to 20502.
Our ambition is to reduce our Scope 3 emissions (or emissions in our value chain) by at least 50% by 2040, against a 2020 baseline. This is particularly important when it comes to the steel value chain, where the majority of our Scope 3 emissions are related to the processing and end-use of our products.
Our approach to contribute to the collective action being taken to drive the sector’s decarbonisation is predicated on pulling four levers: the composition of our portfolio (the quality or profile of products we supply); logistics; the investments we make; and the partnerships we form to support our customers’ efforts to decarbonise.
When it comes to steelmaking, there are two main production processes – the blast furnace-basic oxygen furnace (BF-BOF) route, which represents 90% of primary production3, and the direct reduced iron (DRI) method which, using an electric arc furnace (EAF), has the lowest CO2 emissions of any commercially-proven steelmaking route4.
To enable lower emitting steelmaking, other less carbon intensive processes need to be explored and advanced, including the use of green hydrogen as a reductant in DRI steelmaking – a process which uses less carbon, but requires higher iron ore grades.
There are significant barriers to overcome to make such processes commercially viable, including the need for technological innovation, and the challenge of scaling both DRI capacity and hydrogen infrastructure.
Another potential obstacle, according to the International Iron and Metallics Association (IIMA), is the availability of high quality iron ore pellets, required for DRI-EAF steelmaking. In a recent article, a chief advisor from the IIMA wrote: “From the quantitative perspective, iron ore supply should not be an issue […]. However, from the qualitative perspective, there is a potentially serious problem.
“IIMA’s analysis for demand […] indicates there should be an adequate supply by the middle of the current decade. The picture changes as we approach the early 2030s. Looking to the longer term […] the challenge is significantly greater.”5
Our iron ore business provides customers with high iron content ore. In South Africa, our Kumba Iron Ore Sishen and Kolomela mines produce high grade and high quality lump ore, and a premium fine ore. The lump iron ore produced from Kumba’s operations has excellent physical strength and high iron content (64–65% average Fe content).
In Brazil, our Minas-Rio operation – which consists of an open pit mine and beneficiation plant – produces a high grade pellet feed product, with low levels of contaminants. Minas-Rio’s pellet feed product has ultra-low contaminant levels and high iron content (c.67% Fe content).
Both products support more efficient, and therefore lower emitting, steelmaking and can be of great value to producers who want to minimise their emissions while boosting productivity.
Joining forces for a low-carbon future
When the challenge to be solved is as complex as this, a collaboration-driven approach to providing essential resources can make all the difference. Our collaboration with long-standing customer, Bahrain Steel is one example.
Under a three-year contract signed in 2021, Bahrain Steel will convert up to two million tonnes of Minas-Rio’s pellet feed into high grade iron ore pellets annually. This enhanced product, supplied to steelmakers worldwide, is an important addition to our high quality product portfolio, as well as an important feedstock for DRI steelmaking.
High quality pellets are well-suited to DRI steelmaking because the iron ore that is fed into the production process is discharged at the end, minus its oxygen content and any impurities. It’s very much a case of ‘you get out what you put in’. The pellets can also be used as feedstock for BOF-BF steelmaking where, courtesy of their high iron ore content and ability to transfer heat more effectively than other iron-based input materials, they make the process more efficient.
Innovative collaborations will redefine the way the steel industry operates, helping it meet its sustainability targets and the evolving expectations of consumers and society more broadly. As part of this approach, we have signed agreements with a number of major steelmakers in Europe and Asia to help advance decarbonisation efforts industry wide.
We are working with German steelmaker, Salzgitter Flachstahl, under a collaboration agreement signed in August 2021 aimed at researching feed materials for lower carbon steelmaking. This agreement has been followed, more recently, by a memorandum of understanding with Japan’s Nippon Steel Corporation.
Developing high quality feedstock for lower carbon steel production is at the centre of these collaboration efforts, which we hope will be a catalyst for driving towards system-level decarbonisation in the sector.
Anglo American has also joined forces with representatives from 62 companies, universities, and organisations from 15 countries as part of an alliance initiated by China’s Baowu, a leading steel producer, with the objective of advancing the engineering and industrialising of low carbon steelmaking technologies.
This approach extends to industry forums too. In the steelmaking field, we are a member of Responsible Steel, the industry’s first global multi-stakeholder standard and certification initiative, which has the objective to enhance the responsible sourcing, production, use and recycling of steel.
Initiatives like this can provide a platform through which to engage with other like-minded players on low carbon technological innovation, share knowledge and find greater co-operation opportunities. They also allow us to advocate through a common voice to enhance global policy and industry response to climate change.
While the efficient use of high-quality materials and multiple players working to achieve a common goal help, alone, they are not enough. New technologies – including innovations yet to be commercialised – and production methods also play an important role.
Here, our efforts have a particular focus on unlocking the hydrogen value chain to enable a swift transition to a more sustainable energy mix; both to facilitate green steelmaking and to advance the use of PGMs, key enablers of the hydrogen economy.
As well as screening, selecting and funding opportunities to bridge the gap between R&D and product commercialisation, we also pursue new projects with the potential to be transformed into commercially viable technologies and businesses, in areas that will impact positively on our Scope 3 emissions.
The transition to scrap-based production will also be an imperative, with demand for scrap metal rising at a faster rate than that for primary material. The scrap share of total steel production is expected to rise from approximately 32% today to more than 40% by 20506. With a mindset of providing materials solutions to our customers, Anglo American has a role to play in this growing area.
Our Marketing business has developed in-depth knowledge of metal recycling segments and identified potential opportunities to apply the expertise and core competencies within the business to contribute to the circular economy, which would support a reduction in the overall carbon intensity of the steel value chain.
Our decarbonisation framework also extends to the way we connect our mines with customers. We are exploring a comprehensive range of long-term actions designed to facilitate sustainable shipping operations, complemented by regular performance and emissions reporting. As part of this approach, we have set an ambition to achieve carbon neutrality by 2040 for the ocean freight activities we control, with an interim 30% reduction in emissions by 2030 against a 2020 baseline.
As our efforts progress, we continue to look holistically at how we decarbonise our own operations, while at the same time exploring opportunities to help our customers and value chain in their pursuit of the same.
1 Pedal to the metal – no time to delay decarbonising the global steel sector, C. Swalec and C. Shearer, Global Energy Monitor, June 2021, https://bit.ly/3CrW4lt
2 Iron and Steel Technology Roadmap, IEA, 2020, https://bit.ly/3KeqSYF
3 Driving Energy Efficiency in Heavy Industries, IEA, 2021, https://bit.ly/3wtbDpc
4 ‘Ultra-Low CO2 Ironmaking: Transitioning to the Hydrogen Economy’, V. F. Chevrier, PhD, Midrex, https://bit.ly/3CDId8B
5 The iron ore challenge for direct reduction on road to carbon-neutral steelmaking, Direct from MIDREX, 2nd Quarter 2022, P. 4-5, https://bit.ly/3dKoaOu
6 Iron and Steel Technology Roadmap, IEA, 2020, https://bit.ly/3Bg6yU0