Fortescue Metals Group Ltd. CEO Elizabeth Gaines said some leading Asian economies are more than a decade away from using hydrogen in their steelmaking processes to help achieve their aggressive climate goals, which would also help cut the miner's emission levels that are tied to end users of its products.
Gaines said Fortescue's conversations with iron ore customers had revealed that while there is "no doubt" Asian steel mills are looking at using hydrogen in their processes, it is unlikely to be adopted until at least 2030.
Fortescue announced a partnership in November 2018 to fund the Commonwealth Scientific and Industrial Research Organisation's, or CSIRO's, efforts to develop and commercialize hydrogen technology as a clean energy solution for the company's own West Australian operations and, longer-term, as a bulk export commodity.
Iron ore miners generally use a combination of diesel and gas for their mine sites but are looking into various forms of renewable energy and see hydrogen as a potential alternative. Mining heavyweight BHP Group became a co-sponsor of CSIRO's "hydrogen road map" in 2018.
CSIRO said the transition from iron ore to steel relies heavily on its reaction with coking coal inside a blast furnace to remove oxygen, but a similar reaction can also occur using hydrogen, with the resulting iron then placed in an electric arc blast furnace to produce steel.
Gaines said on an Aug. 26 earnings call that Fortescue is interested in the technology not only to help reduce its carbon footprint but also as a cheaper power option for its own mine sites, which use up about 500 million liters of diesel every year.
Exporting hydrogen would also improve its Scope 3 emissions, which are those generated indirectly such as through the transportation, distribution and processing of its iron ore product. Gaines flagged Japan and South Korea as potential customers.
"We know that in Japan, they are looking at future hydrogen as an energy source in the steelmaking process," Gaines said, adding that Fortescue would work with customers and "potential customers" on the potential hydrogen market. Apart from possible financial benefits, becoming a hydrogen supplier would also lead to "to an overall improvement" in carbon emissions levels for Fortescue.
CSIRO's road map named Singapore, China, South Korea and Japan as key hydrogen export jurisdictions for Australia's fledgling hydrogen industry, but Gaines said more work is required to understand how hydrogen technology can be developed on a commercial scale.
"We have the partnership, technology has been developed, but it needs to be further tested before it can be [done] on commercial scale," Gaines said.
CSIRO's hydrogen road map cautioned that while hydrogen can be used in processing iron ore for steel production, the technology is "relatively early stage, high cost and unlikely to be rolled out at scale by 2030."
Gaines said Japan and South Korea are not only net importers of energy but also have their own hydrogen road maps and will need a supply of hydrogen to meet future demand.
The CEO told S&P Global Market Intelligence in an emailed statement that Fortescue is also developing medium-term "absolute" emissions reduction targets that align with Australia's commitment to the Paris Agreement on climate change to cut emissions by between 26% and 28% by 2030 relative to 2005 levels.
The company also supports the United Nations Framework Convention on Climate Change, which mandates that individual nations take responsibility for emissions within their own borders, Gaines added.
Elsewhere, the Chinese city of Datong has a "new goal" to transform into a "hydrogen hub" as its coal industry is "gradually losing competitiveness," state-run Xinhua News Agency reported Aug. 25. Under guidelines on strategic emerging sectors in the 13th Five-Year Plan, China is promoting researching and developing fuel cells, building hydrogen stations and mass-producing of fuel cell vehicles by 2020.
