BHP Billiton decarbonization Phase II: iron and Steel Industry

Iron and steel is not only the cornerstone of modernization, but also the second largest commodity industry chain in the world after crude oil. Steel supports all aspects of people's daily life. With the global response to climate change and the promotion of energy transformation, key industries have taken action to join the ranks of climate change mitigation and decarbonization, in which the iron and steel industry will play a mainstay role.

The steel industry accounts for about 7% of global greenhouse gas emissions. Without lowering human living standards in the future, whether the global economy can achieve low-carbon transformation will depend to a large extent on the success of the steel industry in reducing emissions. Therefore, iron and steel enterprises should take the lead in reducing the carbon emissions generated by their own operations.

BHP Billiton is ready to go and is willing to join hands with customers on the road of decarbonization. As one of the world's leading suppliers of steelmaking raw materials, BHP Billiton has always been at the forefront of dealing with climate change, and we have identified specific emission reduction targets and action plans in the Climate change report 2020. to help reduce greenhouse gas emissions from the lower reaches of the industry chain covered by scope 3 (Scope 3) when using BHP Billiton's resource products. We meet this challenge together with our strong technical capabilities and our long-term partnership with our customers in major steelmaking regions around the world.

First of all, let's take a look at today's steel refining process.

At present, two main processes are adopted in global iron and steel production (see figure 1):

The first is the long-process steelmaking process, which is dominated by blast furnace / converter process (BF/BOF), with iron ore as the main iron-bearing raw material.

The second is the short-flow steelmaking process, which is mainly electric furnace (EAF) process, with scrap or direct reduction iron (DRI) as the main iron-containing raw material.

At present, long-process steelmaking is the mainstream process of global steel production, and its output accounts for about 72% of the total global steel output, but there are differences between different regions, depending on the economy of long and short steelmaking processes, such as scrap supply, fuel cost and other factors. In regions where scrap supplies are abundant and / or natural gas prices are relatively low, such as North America, the Middle East and North Africa, EAF steelmaking processes account for a higher proportion of steel production.

Next, let's take a closer look at these processes.

In the long process of steelmaking, iron ore (mainly containing iron oxide) is converted into metallic iron by "reduction" chemical reaction in the blast furnace. This process uses metallurgical coal (coke) and injection coal as reducing agents to remove oxygen from iron ore and then form metallic iron. The highest temperature in the blast furnace exceeds 2000 °C, so that the metallic iron will melt into high-carbon molten iron, which is transported to the converter after tapping from the blast furnace and smelted by using gases such as oxygen and adding fluxes (such as limestone and dolomite). Through slagging to remove carbon, silicon, phosphorus and other impurities, and eventually become molten steel.

Iron and steel enterprises are faced with two choices: one is to decommission the blast furnace ahead of time and switch to low-carbon smelting process; the other is to carry out regular overhaul of the existing blast furnace until the end of its service life. Under the current policy, iron and steel enterprises prefer the latter.

The reason is very simple and can be understood by comparing a set of data. The investment cost of a long process with a capacity of 4 million tonnes is about billions of dollars, while the cost of overhauling the blast furnace is much lower, with a rough estimate of between $50 million and $200m, which varies from region to region. For iron and steel enterprises in China, India and other countries that have developed rapidly in recent years, the actual age of blast furnaces is generally short and is expected to be used for another 30 to 40 years. In North America, the average age of blast furnaces is close to 50 years (some may be longer), so steelmakers in North America may be the first to decide to withdraw from the long-process steelmaking process on a large scale. But at the same time, we also note that in similar developed regions, such as Europe, some iron and steel enterprises are still through technological innovation to achieve blast furnace carbon reduction, in order to prolong the service life of blast furnace equipment.

The main difference between the EAF steelmaking process and the long-process steelmaking process is that the iron-containing charge of the electric furnace, such as scrap or direct reduction iron (DRI), has been "reduced" to metal form, so only these scrap / direct reduction iron can be melted to produce molten steel.

In the process of producing DRI, lump ores and pellets are reduced to solid metal iron instead of liquid iron with a long process. At present, the global annual production of DRI is about 100 million tons, most of which is using modified natural gas (essentially decomposing natural gas into hydrogen and carbon monoxide) to remove oxygen from iron ore. The direct reducing iron (DRI) or hot pressed iron block (HBI), produced by it is a kind of multi-purpose raw material, which can not only be used in blast furnace-converter process to increase utilization coefficient and reduce fuel consumption, but also can be used instead of scrap in electric furnace to reduce the content of impurities in molten steel so as to produce higher quality steel. Because some steel mills do not have scrap resources or the scrap price is too high, their electric furnaces use 100% direct reducing iron (DRI) as steelmaking charge.

In the electric furnace steelmaking process, if all scrap steel is used as raw material, the quality of steel is often not high, mainly because scrap contains copper and other impurities, which are difficult to remove in the steelmaking process, thus affecting the mechanical properties of steel. Therefore, in order to produce steel with better performance, such as automobile plate or high-grade pipe, it is necessary to add high quality direct reducing iron (DRI) or pig iron to the EAF steelmaking process in order to better control the impurities in the steel.

The carbon emissions per ton of steel in the two main steelmaking processes are quite different. In the long-process steelmaking process of blast furnace, the average carbon dioxide emission per ton of steel is about two tons directly and indirectly (such as from off-plant power supply facilities). The emissions of direct reduction iron process depend on the fuel source: the average carbon dioxide / ton steel of coal-based direct reduction iron process in India is 2.4 tons of carbon dioxide / ton steel, while the average of natural gas direct reduction iron process is 1.4 tons of carbon dioxide / ton steel. At present, among all the commercial steelmaking technologies, the electric furnace steelmaking process based on scrap is the most environmentally friendly, and its emission coefficient is about 0.4 tons of carbon dioxide per ton of steel. Overall, the average emission intensity of global iron and steel enterprises is about 1.7 tons of carbon dioxide per ton of steel. (see figure 2)

In the process of dealing with the challenge of decarbonization, why don't iron and steel enterprises directly increase the proportion of electric furnace steelmaking?

The reason is very simple, whether scrap or direct reduction iron, its output is limited, and from a global point of view, there is a serious shortage of supply and demand. We expect that the use of scrap will be increased in major steel producing areas around the world in the future. However, the rate of change mainly depends on the supply of scrap steel, and the supply of scrap steel depends to a large extent on the amount of scrapped steel. In this regard, we have done very in-depth research. We estimate the current and future scrap / steel ratios in major steel producing areas and draw the following conclusions (see figure 3).

Based on BHP Billiton's benchmark scenario analysis, scrap will be in short supply until at least 2050, and the global scrap / steel ratio is likely to remain below 50 per cent.

Even according to BHP's low-carbon scenario analysis, assuming that the development of circular economy can boost scrap collection, the share of the global blast furnace / converter (BF/BOF) steelmaking process will remain above 50 per cent by 2050.

Similar to the situation of scrap, the direct reduction ferroelectric furnace steelmaking process requires the use of high-grade iron ore, and its output is also very limited, which is far from being able to meet the global steel demand. As impurities such as silicon dioxide, alumina and phosphorus will seriously affect the efficiency and competitiveness of the EAF steelmaking (EAF) process, it is necessary to use the best quality iron ore as raw material to produce direct reducing iron, with an average iron content of 67%, but the reserves of such iron ore resources are very limited. If the medium and high grade iron ore can not be effectively utilized through process innovation, the stringency of raw materials in the direct reduction ferroelectric furnace steelmaking process will greatly limit its competitiveness.

So how can the iron and steel industry reduce the intensity of carbon emissions?

In short, there are three options for the steel industry. We believe that all three options can play an important role in the decarbonization process:

Reduce or eliminate direct emissions from steelmaking plants;

Use renewable energy to reduce or eliminate carbon emissions from electricity; and / or

Carbon is captured for reuse or sequestration.

Based on our in-depth understanding of the steelmaking process and using the generalized prediction tool technology diffusion law (Laws of Technological Diffusion), we have established a BHP Billiton exclusive steel decarburization technology framework. The framework defines the three stages that iron and steel production areas must go through on the road of decarbonization, and outlines the related technologies of each stage (see figure 4).

These three stages are: the optimization stage, the transition stage and the final green stage. At present, most iron and steel production areas are still in the optimization stage in terms of decarbonization technology.

Let's take a detailed look at the technologies and strategies applied at each stage.

Optimization stage

First of all, iron and steel enterprises can use the existing low-cost emission reduction technology to reduce the carbon emissions of the current long-process steelmaking process. For example: the use of renewable energy, the recovery of energy-rich gases and heat and so on. At present, the industry leader has reached a high level in this respect. With the implementation of advanced process control and industry 4.0, more steel mills will be on a par with the industry leader. This helps to further reduce fuel consumption, which in turn reduces related carbon emissions.

We believe that scrap will also play an important role in the optimization stage. We not only notice that the proportion of scrap EAF steelmaking process in iron and steel production is increasing year by year, but also find that the scrap ratio of long-process steelmaking in some iron and steel production areas is gradually increasing. From a technical point of view, in the converter (BOF) steelmaking process, scrap accounts for up to 30% of the charge, while the current average level is only half of it. We believe that this proportion will be further increased. Even in the blast furnace (BF) process (that is, ironmaking), more metal materials such as direct reducing iron (DRI) or (hot-pressed iron block) HBI can be used.

Due to the differences in the supply of the most cost-competitive raw materials (mineral-based raw materials and scrap), plant configuration and the final mix of iron and steel products, the optimal optimization techniques of steel mills are also different. But overall, we estimate that with the current carbon emission level as the baseline, that is, about 2 tons of carbon dioxide per ton of steel, the optimization phase can help steelmakers reduce the carbon emission intensity of long-process steelmaking by about 20%.

transition stage

This stage is mainly the use of low-carbon technology to transform the existing long-process steelmaking process, which can reduce the carbon emission intensity per ton of steel by 50%, 60%, up to 80%. We believe that this stage is the only way to achieve substantial carbon reduction in the iron and steel industry in the medium term. After that, with the further maturity of technology, economy and infrastructure, the steel industry will move towards a green stage. Many of the technologies adopted in the transition phase will improve the efficiency of blast furnace ironmaking, but may at the same time prevent steel mills from using exhaust gas to generate electricity, which in turn will require the purchase of electricity from external Electroweb. Therefore, only by realizing the power supply of renewable energy can the potential of these technologies be brought into full play.

Carbon capture, utilization and storage of (CCUS): BHP Billiton believes that in the transition stage, CCUS technology will play a vital role in decarbonization in the iron and steel industry. Depending on the application of the technology, it can reduce the carbon emission intensity of the long-process steelmaking process by up to 60%. Although there are still some technical and cost barriers and CCUS technology has not been applied to the long-process steelmaking process, we believe that these problems will be gradually overcome in the next decade. The advantage of carbon capture technology is that it can also be used in many industries such as power generation, cement production and chemical industry. In this way, the breakthroughs made in some areas and the economies of scale brought by the wide application of CCUS technology to major industries that are difficult to reduce carbon will reduce the cost of using the technology in iron and steel enterprises.

Oxygen blast furnace: by using pure oxygen injection, this technology can improve the smelting and operation of the existing blast furnace. The combination of higher oxygen concentration and recirculating gas system (top gas circulation) can not only improve the smelting efficiency of blast furnace, but also reduce its overall carbon emission intensity by about 15% and 20%. Oxygen blast furnace is one of the technical routes of the EU ultra-low carbon dioxide steelmaking technology research and development project (ULCOS). China Baowu Group, the world's largest steel manufacturer, is also developing oxygen blast furnace low-carbon smelting technology 4. A key feature of this technology is the higher concentration of carbon dioxide in blast furnace tail gas (nearly 40 per cent, compared with about 20 per cent in conventional blast furnaces), so it is very suitable for application in combination with CCUS technology.

Smelting reduction: the Hlsarna process conceived by the EU ULCOS project and developed by Tata Steel Europe is one of the most promising technologies of its kind. Although this technology still uses coal as reducing agent, it does not rely on coke to provide support to the charge in the furnace. The concentration of CO2 in the tail gas of the HIsarna process is extremely high (about 90 per cent), making it very suitable to be used in combination with CCUS technology, which can reduce carbon emission intensity by up to 80 per cent.

Blast furnace hydrogen-rich injection: this technology mainly injects hydrogen from the blast furnace tuyere, which can be either pure hydrogen or hydrogen-rich gas, such as coke oven gas (hydrogen content is about 55%) or natural gas. The hydrogen injected through the tuyere can be used not only as a heat source, but also as a reducing agent to partially replace injected coal. Currently, ArcelorMittal (ArcelorMittal), China Baowu Group and ThyssenKrupp Steel are studying the technology. 6.7.8 although this technology has a certain prospect, its injection ratio is limited due to the endothermic heat absorption of hydrogen reduction reaction, so it can only reduce the carbon emission intensity by about 15% at most. This technology is also one of the technical routes of the Japanese national project COURSE50 (CO2 Ultimate Reduction in Steelmaking Process by Innovative Technology for Cool Earth 50). nine

The use of biomass: the source of biomass as fuel or reducing agent can run through the whole long process steel process. In the sintering process, it can directly replace coal or other fuels; in coke production, it can be used as raw material; in blast furnace, it can directly replace coke or injected coal; it can also be used as a carbon source in the steelmaking process. Biomass from renewable resources is expected to reduce the carbon emission intensity of the entire long-term steelmaking process by up to 50%, but we think 10% Murray 20% is more realistic. Due to the lack of sustainable biomass resources and the competition for biomass demand in other industries, we think that biomass may not be a widely used means of emission reduction.

Green stage

Finally, thanks to the maturity of cutting-edge technology, iron and steel production will eventually enter the green stage, that is, to achieve zero or near zero emissions. To achieve this goal, the steel industry needs to obtain renewable energy electricity that is cost competitive and can be used on a large scale, allowing all kinds of low-carbon technologies to compete, prompting steel mills to phase out existing blast furnace facilities. At present, we believe that hydrogen-based direct reducing iron ((DRI)) and EAF steelmaking (EAF) process are the only feasible decarburization technology routes that can be implemented on a large scale in the iron and steel industry. The use of hydrogen in the direct reducing iron (DRI) process is not a new concept. In the current natural gas direct reducing iron (DRI) process, hydrogen accounts for 60% of the total reducing agent. At the beginning of its design, the existing DRI (DRI) facility takes into account the demand for future use of hydrogen and supports the switching to hydrogen mode. Therefore, strictly speaking, hydrogen-based direct reduction is not limited by technical links, but an economic problem: whether there is enough, low-cost renewable or green hydrogen to meet the needs of the entire iron and steel industry. And whether there are supporting hydrogen transmission and storage facilities.

Not surprisingly, considering the scale of the supporting infrastructure, the hydrogen-based direct reduction iron ((DRI)) steelmaking process is facing huge economic challenges. It is estimated that the production cost of hydrogen needs to be reduced to US $1-2 per kilogram, coupled with the help of high carbon tax, the hydrogen-based direct reducing iron ((DRI)) steelmaking process can compete with the long-process steelmaking process. Nevertheless, steel mills are increasingly interested in the technology. Recently, as part of the Swedish key technology project HYBRIT (Breakthrough hydrogen ironmaking Technology) 10, the first hydrogen-based direct reducing iron ((DRI)) plant in Sweden has been officially launched.

In the long run, we think that emerging technologies such as direct electrolytic ironmaking may also become one of the technical routes. Today, almost all electrolytic aluminum and copper are produced through electrochemical processes. The challenge for steel mills to adopt this technology is how to obtain enough renewable energy to achieve large-scale production. Take Japan, which has an annual output of about 100 million tons of iron and steel, as an example, if electrolytic ironmaking technology is adopted, the amount of renewable energy needed is twice as much as the total amount of renewable energy generated in Japan. Nevertheless, the advantage of electrolysis technology is that iron ore can be reduced directly by electricity without the need to produce hydrogen. Therefore, we believe that under the condition that the cost of hydrogen can not be reduced, we can continue to develop electrolysis technology as another route in addition to the hydrogen-based steelmaking process.