On 23 March 2023, BHP signed an agreement with global engineering firm Hatch to design an Electric Smelting Furnace (ESF) pilot plant with the aim of demonstrating a pathway to lower carbon dioxide (CO2) emissions intensity in steel production using iron ore from our Western Australia Iron Ore (WAIO) mining operations. This pilot plant will be a vital asset to seek to optimise and de-risk the technology to support our customers who are considering deploying it at full scale. In this episode of our pathways to decarbonisation series, we examine the inner workings of the ESF and the important role it can play in our updated steel decarbonisation framework.

The global iron and steel supply chain is immense, producing nearly 2 billion tonnes of steel products annually1, which are used in our buildings, cars, whitegoods, wind turbines and numerous other steel-containing goods and infrastructure. As the steel industry collectively works towards addressing the challenge of climate change, navigation is uncertain. As we discussed in episode six of this series, there are multiple paths to explore and many steps that may be taken toward a potential Green end state, which is the stage of our steel decarbonisation framework where widespread ‘near zero emission steel’2 production could be achievable. In this context, maintaining supply chain resilience is paramount to ensure that steel demand is met throughout the energy transition.

The supply chain configurations that prevail in the transition towards a Green end state will need to deliver deep GHG emissions abatement cost effectively, while maintaining reliability and flexibility.

Accelerating steel decarbonisation while maintaining supply chain integrity involves the entire value chain. We operate at the start of the chain, and focus on ensuring that we deliver high performance and consistent iron ores and metallurgical coals to our customers as we work to decarbonise our operations. For value chain emissions outside our direct control, we have set a goal for 2030 to support steelmakers to develop technologies and pathways capable of 30% emissions intensity reduction in integrated steelmaking, with widespread adoption expected post 2030. In addition, we are pursuing the long-term goal of net zero Scope 3 GHG emissions by 2050 for our steelmaking and other customers, our suppliers and the shipping of BHP products. Achievement of this goal is uncertain, particularly given the challenges of a net zero pathway for our customers in steelmaking, and we cannot ensure the outcome alone. For integrated steelmaking — the largest contributor to BHP’s reported Scope 3 emissions inventory today — we are pursuing these goals through research programs, BHP Ventures investments and partnerships with our customers, research institutions and technology vendors.

Drawing upon our extensive research and expertise in steelmaking process technology, we have identified potential pathways via four process routes for primary steelmaking that are most promising for reaching the Green end state (n.b. primary steelmaking is iron ore-based steel production, where most GHG emissions are generated, rather than scrap-based steel production, which generates less emissions but is constrained by scrap availability). The four primary steelmaking process routes identified are:

Modified Blast Furnace with carbon capture, utilisation and storage (CCUS)
Direct Reduced Iron with Electric Smelting Furnace
Direct Reduced Iron with Electric Arc Furnace
Electrochemical reduction by electrolysis
Advancing the industry along any of the possible pathways via these process routes requires extensive development of applicable technologies, operational capabilities and supporting infrastructure. Not all these developments will be successful and for those that are, local conditions will influence where, when, in what combination and to what extent they are adopted by steelmakers. It is therefore prudent that pathways for all four process routes are pursued.

Route 1: Abating the Blast Furnace is essential if the industry is to materially reduce the GHG emissions intensity of primary steel production in the 2030s.

The Blast Furnace (BF) route is efficient, reliable, large in scale, and can process a wide variety of iron ores. It pervades the steel industry today, accounting for ~70%, or ~1.4 billion tonnes of annual crude steel production globally (the proportion in China is higher at ~90%, or ~0.9 billion tonnes per annum)3. Abatement technologies that can be integrated with, or ‘plugged into', existing BF route infrastructure present vital opportunities for accelerating emissions abatement through this decade and the next. They can leverage the vast capital stock that is already invested in the sector and bypass the low turnover rate of the industry, as they have the potential to be applied across the large share of primary steel production that the enduring BF fleet will retain. It is our view that to materially reduce the GHG emissions intensity of primary steel production in the 2030s, which is within the operating lifetime of many of these assets, development and widespread deployment of BF modification technologies that abate emissions are required in parallel with those for other process routes, which we think are likely to take longer to diffuse sufficiently from a low or zero share of production capacity today.

BHP is contributing to the development of BF route abatement through technical collaborations with leading steelmakers. These technologies include top gas recycling, CCUS, hydrogen injection and substitution of fossil carbon with biogenic carbon. Not all technologies will reach commercial viability in all regions, but we believe considerable cost-effective abatement will become increasingly accessible to steelmakers.

Raw material enhancements play an important enabling role for these technologies. To this end, we are progressing assessments of low ash coking coals, trialling enhancements of our iron ore lump product and supporting customer uptake of WAIO products for pellet production.

BHP is not dismissing early stage, high abatement potential technologies. We are investing in nascent electrolysis technologies that, if successful, will realise a new process route (Route 4: Electrochemical reduction by electrolysis), including Boston Metal’s Molten Oxide Electrolysis and Electra’s Low Temperature Iron. However, an entirely new process route in the technically demanding domain of steelmaking faces challenges to be commercially viable in multiple locations/regions. If it does, these technologies also need to demonstrate equivalent unit productivity and a pathway to integration with existing production lines for mainstream deployment.

In this episode, we focus on the two process routes that lie between these bookends; those that utilise Direct Reduced Iron (DRI) coupled with either an Electric Arc Furnace (EAF) or an Electric Smelting Furnace (ESF), which can replace retiring Blast Furnaces or deliver new capacity for primary steelmaking.

Typical Electric Arc Furnace and Electric Smelting Furnace operation cycles using DRI produced from Pilbara-type iron ore.4,5,6


Direct Reduced Iron routes facilitate growth in electrified steelmaking.

DRI is a solid metallised form of iron ore produced by a DRI plant that operates at a temperature below the melting point of the feed ore. The electric furnace routes that use DRI are appealing for deep GHG emissions abatement as, unlike the BF, the DRI plant does not require carbon-containing coke to operate and instead uses hydrogen-containing gas mixtures to chemically convert iron ore into iron, which lowers the CO2 emissions intensity. Presently, these process gas mixtures are derived from fossil fuels,7 but in the future there is the potential to transition DRI process gas toward 100% hydrogen. Furthermore, no melting occurs in the DRI unit and the energy for melting is instead delivered primarily by electricity in a separate electric furnace. Generation of electrolytic ‘green’ hydrogen and operation of the electric furnace can be powered with firmed renewable power supply when it is economical to do so, bringing near zero emission steel production within reach. There are good reasons for caution here, however. There are significant technical hurdles to overcome and carbon still needs to be introduced at some point in the process route, as steel is a carbon-containing alloy of iron. In addition, the sheer scale of renewable electricity demand that this pathway implies is enormous. As we noted in episode two of this series, a single DRI plant of typical size (i.e. 2 million tonnes of DRI per annum) needs the equivalent renewable power supply of a small nuclear power station just to provide the required hydrogen. Including the power for the electric furnace brings the total firmed renewable power demand into the vicinity of a typical mid-sized nuclear power plant of 1.0 GW. Replacing all BF route plants in operation today would require ~1,000 plants of this scale.

Presently, the EAF is the incumbent electric furnace design for the consumption of DRI, but this design has narrow operating thresholds. BHP has been investigating the ESF as an alternative furnace design that may deliver superior performance and feedstock flexibility compared to the EAF8. We have conducted research to determine its suitability for further development and advocated for ESF consideration with our customers. In partnership with Hatch, we have now commenced a design study for an ESF pilot plant.

The ESF has also been recently selected for development by major steelmakers Tata Steel Europe, ThyssenKrupp, voestalpine, BlueScope and POSCO.

Figure 1: four primary steelmaking process routes provide potential pathways to the Green end state in our steel decarbonisation framework.

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https://www.bhp.com/news/prospects/2023/06/pathways-to-decarbonisation-episode-seven-the-electric-smelting-furnace