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BHP and HBIS Group exploring alternate electrified pathways of steel production

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BHP has signed an agreement with China’s HBIS Group Co Ltd (HBIS), one of the world’s largest steelmakers, to trial direct reduced iron (DRI) production and use of BHP iron ores in blends and progress a separate enhanced lump stage 2 trial aimed at lowering blast furnace (BF) carbon emissions.

To support the development of alternate electrified pathways of steel production for a wider range of iron ores, under this new agreement, the parties aim to trial commercial-scale DRI production using BHP iron ores in blends at HBIS’s newly commissioned DRI plant and then evaluate the performance of the DRI in downstream steelmaking steps. The DRI plant uses hydrogen-rich gas by-products in the steel works to convert ore into a metallic iron product that is further refined for steel.

Additionally, the enhanced lump stage 2 trial will focus on the existing BF steelmaking route, with the aim of reducing carbon emissions by increasing the use of direct charge lump and reducing the need for agglomerated feed which requires fossil fuel energy.

BHP’s latest collaboration agreement with HBIS will tap into the investment of up to $15 million over three years proposed by BHP and HBIS in an earlier Memorandum of Understanding (MoU) signed in 2021.

BHP’s Chief Executive Officer, Mike Henry, said: “HBIS Group is a key partner to BHP and an industry leader in assessing and demonstrating a range of potential pathways to reduce GHG in steelmaking. Our work with customers like HBIS Group, together with our own actions, aims to accelerate progress in reducing greenhouse gas emissions right along the value chain.”

BHP’s Chief Commercial Officer, Vandita Pant, said: “I am delighted to build on our existing partnership with HBIS Group, one of the world’s largest steelmakers and an important customer for BHP’s high quality Pilbara iron ores. DRI is an important element of our pathways to near-zero-emission steel production and in the decarbonisation journey of the steel industry.

“We are working with HBIS Group to demonstrate the use of BHP iron ores in DRI production trials. Together with other collaborations we have underway, including electric smelting furnace (ESF) development, the outcomes are expected to provide pathways to reduce carbon emissions from steel production using BHP’s products.”

This new agreement expands on the work streams laid out in the 2021 MoU between the parties and proceeding announced since; phase 1 research and development work announced in 2022 – in conjunction with HBIS and University of Science and Technology Beijing, a recently completed enhanced lump stage 1 trials at one of HBIS’s plants in Hebei province, and the most recent CCUS pilot trials announced in March this year.

HBIS Chairman, Yu Yong, said: “HBIS and BHP are aligned in their aims to help develop greener, low-carbon solutions that can reduce emissions in steelmaking, leveraging on our long-standing and trusted relationship that we have forged over several years. The agreement signed today is another landmark following our substantive cooperation in areas such as CCUS, and highlights HBIS’s efforts to build a low-carbon raw material supply chain.

“HBIS looks forward to strengthening our comprehensive strategic synergy with BHP in the sustainable development of steel in the years ahead.”

BHP looks to double production capacity at Jansen potash project

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BHP has agreed to invest another $4.9 billion in the Jansen potash project in Saskatchewan, Canada, an investment that will bring on stage two of the project, expected to double production capacity to some 8.5 Mt/y.

This follows BHP’s approval of $5.7 billion for stage one of the Jansen potash project in August 2021 and a pre-Jansen Stage 1 investment of $4.5 billion.

BHP Chief Executive Officer, Mike Henry, said: “The stage two investment advances BHP’s strategy to increase its exposure to commodities positively leveraged to the global megatrends of population growth, urbanisation, rising living standards and decarbonisation. Potash, used in fertilisers, will be essential for food security and more sustainable farming.

“Today’s additional investment will transform Jansen into one of the world’s largest potash mines, doubling production capacity to approximately 8.5 Mt per annum.

“We are advancing our sustainability and economic development priorities for Jansen and we are pleased with the progress of our ongoing work with the Governments of Canada and Saskatchewan, as well as local and Indigenous communities on shared solutions.”

Jansen Stage 1 is 32% complete and progressing in line with its schedule. First production from Jansen Stage 1 is expected to be delivered in late 2026. Construction of Jansen Stage 2 is anticipated to take approximately six years, and is expected to deliver first production in the 2029 financial year, followed by a ramp up period of three years.

Jansen Stage 2 is expected to deliver approximately 4.36 Mt/y of production at a capital intensity of approximately $1,050/t, lower than Jansen Stage 1, due to the leveraging of existing and planned infrastructure2. In October 2022, BHP approved an initial funding commitment of $188 million to procure long-lead equipment and commence process plant foundation works. The additional $4.9 billion investment for Jansen Stage 2 will be used for the development of additional mining districts, completion of the second shaft hoist infrastructure to handle higher mining volumes, expansion of processing facilities and the addition of more rail cars.

Westshore Terminals, in Delta, British Columbia, remains BHP’s main port facility to ship potash from Jansen to customers. The Jansen Stage 2 investment includes funding to increase storage facilities at the port. BHP will not be initiating a formal capacity extension for the Westshore port terminal at this time and will evaluate closer to Jansen Stage 2 reaching first production.

Jansen has been designed with a focus on social value and sustainability and is expected to have approximately 50% less operational (Scopes 1 and 2) greenhouse gas emissions per tonne of product and use up to 60% less fresh water when compared with the average potash mine in Saskatchewan, the company says. Indigenous employee representation at Jansen has increased to approximately 9% with a target to increase Indigenous employee representation at Jansen to 20%. Jansen aspires to maintain a gender balanced workforce.

Jansen Stage 2 was evaluated utilising BHP’s Capital Allocation Framework and at consensus prices has an internal rate of return of 15-18% and an expected payback period of approximately six years from first production.

Transitioning to Jansen Stage 2 during the construction period of Jansen Stage 1 is expected to bring a number of operational benefits. These include leveraging the experience of the integrated Jansen project team, continued use of existing contractors, reduced overheads and savings on mobilisation and demobilisation costs. Potential synergies of $300 million have been embedded into Jansen Stage 2’s economics.

Longer term, Jansen has the potential for two additional expansions to reach an ultimate production capacity of 16-17 Mt/y (subject to studies and approvals).

BHP and China’s HBIS Group Co Ltd expand partnership to CCUS tech trial

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BHP has signed an agreement for piloting of carbon capture and utilisation technology with China’s HBIS Group Co Ltd (HBIS), one of the world’s largest steelmakers and a major iron ore customer of BHP.

As part of this new project, HBIS and BHP will trial pilot-scale demonstrations of carbon capture and utilisation technologies at HBIS’ steel operations in China. The trial will develop and test technologies that can be integrated into steel production processes to reduce the CO2 emissions. These include Vacuum Pressure Swing Adsorption, VPSA, an alternative technology to capture the CO2, and two utilisation technologies (slag mineralisation and biological conversion to protein) to sequester the CO2.

In addition, BHP will support HBIS in developing and deploying absorptive desulphurisation at HBIS ZXHT Hydrogen Metallurgy Demonstration Project in Xuanhua, Hebei, intended to enable the utilisation of circa-60,000 t/y of captured CO2 from the direct reduced iron (DRI) process in the food or industrial sectors.

BHP’s Chief Commercial Officer, Vandita Pant, said: “Our multi-faceted partnership with HBIS will now include pilot testing of novel carbon capture technology at their operating sites in Hebei, and builds on the separate carbon capture trial with ArcelorMittal, Mitsubishi Heavy Industry and Mitsubishi Development, announced in October 2022. Hebei province accounts for around 20% of China’s reported steel production and represents one of the locations in which we aim to support future carbon capture, utilisation and storage initiatives. With our support, HBIS will also be pilot testing options for the utilisation of captured carbon dioxide for the production of saleable products and sequestration in waste slag.”

This new agreement expands on the work streams envisaged in the Memorandum of Understanding (MoU) signed by BHP and HBIS in 2021, together with the Phase 1 research and development work announced in 2022 with HBIS and University of Science and Technology Beijing. In separate work under the MoU, BHP has also supported HBIS in Enhanced Lump trials, aimed at developing processes for improving direct feed iron ore lump use to achieve incremental reductions in carbon dioxide emissions intensity of steel production, at one of the steelmaker’s plants in Hebei province.

BHP’s latest collaboration agreement with HBIS will tap into the investment of up to $15 million over three years proposed by BHP and HBIS in the MoU signed in 2021.

HBIS Chairman, Yu Yong, said: “BHP is a globally renowned resource company and a long-term partner with HBIS with shared goals in relation to the development of technologies to abate carbon emissions in the steel-making sector. The signing of these projects is another milestone since the two parties’ ‘Memorandum of Understanding for Strategic Collaboration in Climate Change’ signed in 2021, it starts a new journey in jointly exploring CCUS technology developments in the steel sector.”

Chairman Yu also stated: “HBIS is committed to being a leader, explorer, and practitioner in the industry’s transition to lower carbon emissions. CCUS has been identified as a breakthrough technology for reducing carbon emissions from steel and this has anchored CCUS technology as a key component in HBIS Group’s low-carbon technology roadmap. In the future, HBIS will continue to focus on the goal of jointly addressing climate change, deepening cooperation with industry value chain partners, adhering to the concept of sustainable development, and consistently cultivating and investing in the green and low-carbon field.”

BHP eyes South Australian copper basin consolidation with latest OZ Minerals offer

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BHP has submitted a revised non-binding indicative proposal to the Board of OZ Minerals Limited (OZL) that, subject to a successful four-week due dilligence period, could see the major miner acquire the mid-tier base metal-focused miner.

The offer to acquire 100% of OZ Minerals by way of a scheme of arrangement for a cash price of A$28.25/share ($18.9/share) is a 13% increase on the offer BHP previously put forwad and was rejected by the OZ Minerals Board. It, according to BHP, represents the best and final price the mining major is willing to offer under, in the absence of a competing proposal.

The OZ Minerals Board has confirmed to BHP that it intends to unanimously recommend the revised proposal to OZ Minerals shareholders as being in their best interests in the absence of a superior proposal, subject to the parties entering into a binding scheme implementation agreement (SIA) following completion of BHP’s confirmatory due diligence and an independent expert concluding that the revised proposal is in the best interests of OZ Minerals shareholders, it said.

The proposed transaction, valuing OZ Minerals at an enterprise value of A$9.6 billion, is expected to deliver significant value creation for both BHP and OZ Minerals shareholders, BHP says, explaining that OZ Minerals shareholders would receive an offer price significantly above trading levels and average broker price targets, prior to BHP’s initial proposal on August 5, 2022. At the same time, BHP shareholders would gain increased exposure to future-facing commodities, adding copper and nickel resources that are essential to support the global megatrends of decarbonisation and electrification.

The deal would also create a South Australian copper basin, which, according to BHP, could unlock potential operational synergies due to the proximity of OZ Minerals’ Carrapateena and Prominent Hill operations with BHP’s existing Olympic Dam asset (pictured) and Oak Dam development resource.

The West Musgrave project, meanwhile, will add a large greenfield nickel option to BHP’s Nickel West premier nickel sulphide resource position in Western Australia.

BHP has now entered into a Confidentiality and Exclusivity Deed with OZ Minerals in relation to the revised proposal. This has seen OZ Minerals grant BHP four weeks to undertake exclusive confirmatory due diligence and negotiate a binding SIA reflecting the key terms of the revised proposal. The four-week period is expected to commence on or around November 21, 2022.

BHP CEO, Mike Henry, said: “BHP’s proposal represents a highly compelling offer for OZ Minerals shareholders, providing certainty at a time of macroeconomic uncertainty and market volatility, and increasing risks for the industry.

“The combination of BHP and OZ Minerals’ assets, skills and technical expertise provides a unique opportunity not available under separate ownership, with complementary resources including the Oak Dam exploration prospect and existing facilities within close proximity, backed by BHP’s strong balance sheet, capital discipline and commitment to sustainable development.”

OZ Minerals Managing Director and Chief Executive Officer, Andrew Cole, said: “BHP’s revised proposal is a clear reflection of OZ Minerals’ unique set of highly strategic, quality assets in quality jurisdictions and an enviable multi-generational growth pipeline of copper and nickel
assets in strong demand due to global electrification. We look forward to working with BHP in a collaborative way to progress the revised proposal in the best interests of OZ Minerals’ and its stakeholders.”

OZ Minerals turns down BHP’s A$25/share cash offer

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OZ Minerals says it has rejected an unsolicited, conditional and non-binding indicative proposal from BHP to acquire all shares in the company for A$25/share ($17.3/share) in cash, valuing the company at an reported A$8.34 billion.

Having assessed this proposal, which represents a 13.1% premium to the volume weighted average price (VWAP) of OZ’s share price for the six months prior, the Board has unanimously determined that the offer significantly undervalues OZ Minerals and, as such, is not in the best interests of shareholders.

For its part, BHP points out in a separate press release that the consideration represents an “attractive premium” of 32.1% to OZ Minerals’ closing price of A$18.92/share on August 5 and 41.4% to OZ Minerals’ 30-day VWAP of A$17.67/share up to and including August 5.

OZ Minerals says the proposal is subject to a number of conditions including:

  • The completion of extensive financial, legal, technical and operational due diligence over a proposed six-week timeframe;
  • Various financial assumptions;
  • A unanimous recommendation of the OZ Minerals Board; and
  • Entry into a scheme implementation agreement subject to a range of conditions including no material adverse change, regulatory, shareholder and court approvals and conduct of business restrictions.

OZ Minerals says the Board has been advised by BHP that it has accumulated an interest in OZ Minerals shares via derivative instruments amounting to an interest of less than 5%.

OZ Minerals Managing Director and Chief Executive Officer, Andrew Cole, said: “We have a unique set of copper and nickel assets, all with strong long-term growth potential in quality locations. We are mining minerals that are in strong demand particularly for the global electrification and decarbonisation thematic and we have a long-life resource and reserve base. We do not consider the proposal from BHP sufficiently recognises these attributes.”

In coming to its decision, OZ Minerals says the Board considered that the proposal does not adequately compensate shareholders for:

  • The unique nature of OZ Minerals’ core business which represents a high-quality portfolio of copper and nickel assets, located in a Tier-1 mining jurisdiction with long mine lives, first quartile cost positioning and extensive strategic optionality;
  • The unique investment proposition which OZ Minerals provides as the only primary copper company in the ASX 100;
  • The low carbon intensity of OZ Minerals’ assets relative to its peers with a defined and market- leading plan for further decarbonisation to meet our target of net zero Scope 1 and 2 operational emissions by 2030;
  • The high-quality nature of OZ Minerals’ growth projects which include the West Musgrave project (final investment decision scheduled for H2 2022), the Carrapateena Block Cave and the Prominent Hill Extension which together are expected to generate significant production growth over the next five years;
  • The strong long-term outlook for both the copper and nickel markets underpinned by increasing geological scarcity, global electrification and accelerating decarbonisation, to which OZ Minerals is highly leveraged; and
  • The strong and consistent returns that the OZ Minerals management team has delivered with a total shareholder return of circa-145% over the past five years.

In addition to the above, OZ Minerals would deliver significant synergies and other benefits to BHP which the Board considers are not reflected in the value of BHP’s indicative proposal.

Among there are the operational synergies in both South Australia (between Olympic Dam, Carrapateena and Prominent Hill) and in Western Australia (between Nickel West and West Musgrave).

BHP says the cash offer it has made would deliver immediate value to OZ Minerals shareholders and de-risk any value which may (or may not) eventually be reflected in the company’s share price.

BHP CEO, Mike Henry, said: “Our proposal represents compelling value and certainty for OZ Minerals shareholders in the face of a deteriorating external environment and increased OZ Minerals operational- and growth-related funding challenges.

“We are disappointed that the Board of OZ Minerals has indicated that it is not willing to entertain our compelling offer or provide us with access to due diligence in relation to our proposal.”

BHP greenlights Jansen Stage 1 potash project

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BHP has approved $5.7 billion in capital expenditure for the Jansen Stage 1 (Jansen S1) potash project in the province of Saskatchewan, Canada.

Jansen S1 is expected to produce approximately 4.35 Mt/y of potash, and has a basin position with the potential for further expansions (subject to studies and approvals), according to BHP. First ore is targeted in 2027, with construction expected to take approximately six years, followed by a ramp-up period of two years.

Jansen S1 includes the design, engineering and construction of an underground potash mine and surface infrastructure including a processing facility, a product storage building and a continuous automated rail loading system. Jansen S1 product will be shipped to export markets through Westshore, in Delta, British Columbia, and the project includes funding for the required port infrastructure. This infrastructure will be constructed by Westshore Terminals Investment Corporation as part of an agreement with BHP.

BHP Chief Executive Officer, Mike Henry, said Jansen is aligned with BHP’s strategy of growing the company’s exposure to future-facing commodities in world-class assets, which are large, low cost and expandable.

“This is an important milestone for BHP and an investment in a new commodity that we believe will create value for shareholders for generations,” Henry said.

“In addition to its merits as a stand-alone project, Jansen also brings with it a series of high returning growth options in an attractive investment jurisdiction. In developing the Jansen project, BHP has had ongoing positive engagement and collaboration with First Nations and local communities, and with the provincial and federal governments. Jansen is designed with a focus on sustainability, including being designed for low greenhouse gas emissions and low water consumption.

“We anticipate that demand growth will progressively absorb the excess capacity currently present in the industry, with opportunity for new supply expected by the late 2020s or early 2030s. That is broadly aligned with the expected timing of first production from Jansen.”

BHP said: “Beyond the 2020s, the industry’s long run trend prices are expected to be determined by Canadian greenfield solution mines. In addition to consuming more energy and water than conventional mines like Jansen, solution mines tend to have higher operating costs and higher sustaining capital requirements.”

At consensus prices, the go-forward investment on Jansen is expected to generate an internal rate of return of 12-14%, an expected payback period of seven years from first production and an underlying EBITDA margin of around 70% given its expected first quartile cost position, according to BHP.

BHP says the $4.5 billion (pre-tax) of capital invested to date has resulted in a significant initial outlay. The investment to date includes construction of the shafts and associated infrastructure ($2.97 billion scope of work), as well as engineering and procurement activities and preparation works related to Jansen S1 underground infrastructure. Approximately $220 million of the $2.97 billion approved for the current scope of work, expected to be completed in 2022, is not yet spent.

The construction of two shafts and associated infrastructure at the site is 93% complete and expected to be completed in 2022, with Cementation Canada set to carry out the post liner excavation, steel and equipping of the shafts.

The sinking of the shafts was carried out by DMC Mining Services using Herrenknecht’s Shaft Boring Roadheader.

To date about 50% of all engineering required for Jansen S1 has been completed, significantly de-risking the project, BHP says.

BHP signs third low-carbon steelmaking partnership

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BHP has signed a memorandum of understanding (MoU) with China’s HBIS Group Co Ltd, one of the world’s largest steelmakers and a major customer of BHP’s iron ore, with the intention of investing up to $15 million over three years to jointly study and explore greenhouse gas emission reduction technologies and pathways.

Under the partnership, BHP and HBIS Group intend to collaborate on three priority areas: hydrogen-based direct reduction technology, the recycling and reuse of steelmaking slag, and the role of iron ore lump use to help reduce emissions from ironmaking and steelmaking.

The partnership aims to help both companies progress toward their climate change goals and support the steel industry’s role in helping to achieve China’s ambitions to be carbon neutral by 2060.

BHP’s Chief Commercial Officer, Vandita Pant, said: “We view decarbonisation of the steel industry as a complex puzzle that requires multiple technological solutions across the value chain over different time horizons. By forming this third low-carbon steelmaking partnership with HBIS Group, we are focusing on additional components, such as the role our products play in hydrogen-based steel production, that complement our other partnerships and support for endeavours in emissions reduction and capture from the traditional blast furnace route.”

In February, the mining major signed a similar MoU with leading Japanese steel producer, JFE Steel, while, in November 2020, BHP and China Baowu signed a pact that could see up to $35 million invested in tackling greenhouse gas emission reductions in the global steel industry.

BHP’s investment would be drawn from its $400 million Climate Investment Program, established in 2019 to support projects, partnerships, research and development to help reduce Scope 1, 2 and 3 emissions.

BHP Chief Executive Officer, Mike Henry, said: “BHP has a long and trusted relationship with HBIS Group, and we are pleased to establish this strategic partnership to explore new ways to reduce emissions from steelmaking. Global decarbonisation will require collaboration and collective effort, and our work with partners such as HBIS Group will build on our own actions and help reduce emissions right through the value chain.”

Chairman of the World Steel Association, Party Secretary and Chairman of HBIS Group, Yu Yong, said: “The signing of the MoU fully demonstrates the two companies’ commitment to creating a green and low-carbon future across the value chain and a shared sense of responsibility to address climate change together, with a common vision to ‘contributing to a community of a shared future for mankind’. This partnership ushers in a new chapter for the two companies to deepen our strategic cooperation and to achieve collaborative development.”

BHP has also been active in other areas to reduce emissions, including awarding the world’s first LNG-fuelled Newcastlemax bulk carrier tender and the first LNG supply agreement for those vessels, and renewable energy supply contracts for BHP’s Queensland coal mines and Nickel West operations.

More OEMs join the ICMM’s Innovation for Cleaner, Safer Vehicles initiative

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The Innovation for Cleaner, Safer Vehicles (ICSV) initiative – a supply chain collaboration between the International Council on Mining and Metals (ICMM) and original equipment manufacturers (OEMs) – has made significant progress towards understanding what is needed to transform today’s fleet of mining vehicles into tomorrow’s new generation of cleaner, safer vehicles, members of its CEO Advisory Group announced today at IMARC Online.

The ambitions of the ICSV initiative are to introduce greenhouse gas emission-free surface mining vehicles by 2040, minimise the operational impact of diesel exhaust by 2025 and make vehicle collision avoidance technology available to mining companies by 2025.

Two years on from announcing these ambitions, eight new OEMs have joined the initiative, taking the number of participating OEMs to 19, the ICMM said. This includes 3MTech, Behault, Future Digital communications, MTU, Miller Technologies, Miller Technologies, Nerospec, Newtrax and Torsa, the ICMM confirmed to IM.

ICMM members, representing around 30% of the global metals market with over 650 assets, have undertaken assessments to establish a clearer view of the progress made at site level towards each ICSV ambition. These assessments indicate ICMM members are generally at early stages of maturity in the journey, and show what progress will look like for each ambition, the ICMM said.

“This significant representation of industry can speak with an aligned voice, on aligned objectives with OEMs and third-party technology providers,” it added. “In its first two years, the ICSV initiative has achieved the critical step of sending strong signals to OEMs and third-party technology providers on their requirements, and on what is needed to accelerate development and adoption of technology across the industry.”

The initiative is led by a CEO Advisory Group comprising each leader of BHP, Anglo American, Gold Fields, Caterpillar, Komatsu and Sandvik, several members of which spoke today at IMARC Online about the collaborative model.

Nick Holland, Chief Executive, Gold Fields (and Chair of the CEO Advisory Group), said there was a critical need to advance work on cleaner, safer vehicles in mining, which will have important health and safety benefits and contribute towards the pressing need of decarbonising the mining industry.

“It is recognised that there are measures we can implement now, but other, more impactful, interventions are reliant on technology pathways that are still evolving,” he said. “This will undoubtedly take time, but the industry’s collaboration with OEMs, through the ICMM, is critical as we look for these long-term, sustainable and integrated solutions.”

Mike Henry, Chief Executive, BHP, added: “Safer, cleaner mining equipment is important for our people and the world. No one party can tackle this on their own though. The ICSV initiative brings together equipment manufacturers and ICMM members to accelerate the innovations required to improve equipment safety and reduce emissions. This is a great example of the collaborative industry-level effort that can help bring about the scale and pace of change that is needed.”

Denise Johnson, Group President, Caterpillar, said the OEM was committed to helping customers operate safely and sustainably, with the ICSV initiative helping it collaborate even more closely with the mining industry in these important areas.

“Its progress to date has helped to form a shared understanding of where the industry is on its journey and demonstrates that by working together we can more quickly accelerate the pace of change,” she said of the initiative.

Tom Butler, CEO, ICMM, added: “Partnership and collaboration fuels long-term sustainable development, and is crucial to addressing some of the mining industry’s biggest sustainability challenges. Progress made on the ICSV initiative has been building the widespread confidence needed to accelerate the level of innovation investment required to scale up commercial solutions. The initiative will benefit the entire industry and is open to all OEMs who would like to join.”

ICMM has developed tools to support the industry, OEMs and third-party technology providers to meet the initiative’s ambitions, it said. These tools include an ICSV Knowledge Hub that, the ICMM says, facilitates knowledge sharing of industry innovations, provides technical and practical resources including case studies, standards, regulations and a technology and solutions database.

Additionally, a set of “maturity frameworks” that help to “map, motivate and measure” progress against the ambitions have been published, with the intention to stimulate conversations within companies that drive thinking, decision making and action, it added.

In 2021, ICMM’s company members will focus on integrating the initiative’s goals into their corporate planning processes, allocating internal resources and effectively leveraging external resources such as synergies with other industry initiatives and collaboration between member companies, the ICMM said.

BHP and China Baowu take on steel industry GHG emission reduction challenge

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BHP has signed a memorandum of understanding (MoU) with leading steel producer, China Baowu, with the intention, it says, to invest up to $35 million and share technical knowledge to help address the challenge of reducing greenhouse gas emissions facing the global steel industry.

The five-year partnership will focus on the development of low carbon technologies and pathways capable of emission intensity reduction in integrated steelmaking, according to BHP. Under the MoU, the deployment of carbon capture, utilisation and storage in the steel sector will also be investigated at one of China Baowu’s production bases.

BHP’s investment will be funded under the $400 million Climate Investment Program, set up last year to coordinate and prioritise projects, partnerships, R&D and venture investments to reduce Scope 1, 2 and 3 emissions, offsets and support development of technologies with the highest potential to impact change.

BHP Chief Executive Officer, Mike Henry (pictured left), said the companies would collaborate on technical solutions to use low carbon fuel sources such as hydrogen injection in the blast furnace, and explore other low emission options in support of China Baowu and the steel industry’s low carbon transformation and green development goals.

“This MoU further strengthens our longstanding relationship with China Baowu and reflects our joint determination and commitment to help reduce emissions in line with the Paris Agreement goals,” Henry said.

“BHP will invest in supporting the development of low emissions technologies, promote product stewardship and partner with others to enhance the global policy and market response to climate change. Our investments are focused on actions that can create real change in emissions.”

In September, BHP awarded a tender for world’s first LNG-fuelled Newcastlemax bulk carrier to carry iron ore between Western Australia and China, which will reduce emissions by more than 30% per voyage.

In October 2019, China Baowu, meanwhile, announced the establishment of a Low Carbon Metallurgy Innovation Centre and plans to establish a Global Low Carbon Metallurgy Innovation Alliance.

China Baowu Chairman, Chen Derong, said the MoU with BHP will further enhance and broaden the existing strategic partnership between the companies, and establish a model of joint industrial efforts to promote technological innovation and a sustainable transition to a lower carbon world.

“At the UN General Assembly, President Xi Jinping delivered an important speech that outlined China’s low carbon transformation and development,” Chen Derong said. “Low carbon transition and green development represent a major disruption to the traditional steelmaking value chain.

“As a leading company in the sector, China Baowu will take an active role in implementing low carbon technologies, working together with upstream and downstream partners.

“The global steel industry needs an open platform to jointly explore low carbon technology and roadmaps, as well as showcase to the world the efforts to reshape the steelmaking value chain.”

Consistent with the ambitions of China Baowu and BHP to drive efficiency and address emissions across the global steel industry, both companies will work together to establish a China Baowu-BHP Low Carbon Metallurgy Knowledge Sharing Center, to link complementary research and share low carbon and green development knowledge with domestic and international steel industry stakeholders, the two companies said.

BHP weighs trolley assist and IPCC as part of decarbonisation efforts

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BHP has provided an update on its progress on climate action, new climate commitments and how it integrates climate change into corporate strategy and portfolio decisions in a new report.

The company’s climate change approach focuses on reducing operational greenhouse gas emissions, investing in low emissions technologies, promoting product stewardship, managing climate-related risk and opportunity, and partnering with others to enhance the global policy and market response, it says.

“BHP supports the aim of the Paris Agreement to limit global warming to well below 2°C above pre-industrial levels, and pursue efforts to limit warming to 1.5°C,” the company clarified.

It explained: “BHP has been active in addressing climate risks for more than two decades, and has already established its long-term goal of achieving net zero operational (Scope 1 and 2) emissions by 2050 and its short-term target of maintaining operational emissions at or below financial year (FY) 2017 levels by FY2022, using carbon offsets as required.”

In the past year, BHP has made progress on this aim, announcing that the Escondida and Spence copper mines in Chile will move to 100% renewable energy by the mid-2020s, and, last week, awarding new renewable energy contracts for its Queensland coal assets, and the world’s first LNG-fuelled Newcastlemax bulk carrier tender.

BHP’s climate change briefing and 2020 climate change report outline how the company will accelerate its own actions and help others to do the same, it said. Today’s update sets out:

  • A medium-term target to reduce operational greenhouse gas emissions by at least 30% from adjusted FY2020 levels by FY2030;
  • Scope 3 actions to contribute to decarbonisation in its value chain. This includes supporting the steelmaking industry to develop technologies and pathways capable of 30% emissions intensity reduction with widespread adoption expected post-2030 and, in terms of transportation, supporting emissions intensity reduction of 40% in BHP-chartered shipping of products;
  • Strengthened linking of executive remuneration to delivery of BHP’s climate plan; and
  • Insight into the performance of BHP’s portfolio in a transition to a 1.5°C scenario.

The report also outlined some examples of emission reduction projects the miner is considering, which will be weighed as part of the maintenance capital category of its capital allocation framework. This includes solar power installations; alternative material movement technologies such as overland conveyors and in-pit crush and convey solutions; and trolley assist to displace diesel for haul trucks.

The company expanded on this in its report: “The path to electrification of mining equipment will likely include solutions such as trolley assist, in-pit crush and convey, overland conveyors and battery solutions.

“Diesel displacement represents a higher risk, higher capital step towards decarbonisation, so a phased approach to execution is proposed with particular emphasis on Minerals Americas-operated assets that are further advanced on the decarbonisation journey. Taking a transitional approach to electrification provides flexibility to allow for the potential for rapid development of emerging technologies and to resolve the complexities of integrating these technologies into existing operations.

“During FY2021, we will seek to collaborate further with International Council on Mining and Metals members, industry and original equipment manufacturers to progress research and development to reduce costs and assess any potential impacts from electrified mining equipment solutions to replace current diesel options.”

BHP Chief Executive Officer, Mike Henry, said of the report: “I’m pleased today to show how we are accelerating our own actions and helping others to do the same in addressing climate change. We see ourselves as accountable to take action. We recognise that our investors, our people and the communities and nations who host our operations or buy our products have increasing expectations of us – and are responsive to these.

“Our approach to climate change is defined by a number of key requirements. Our actions must be of substance. They must be real, tangible actions to drive emissions down. We must focus on what we can control inside our business, and work with others to help them reduce emissions from the things that they control. To create long-term value and returns over generations, we must continue to generate value and returns within the strong portfolio we have today, while shaping our portfolio over time to benefit from the megatrends playing out in the world including decarbonisation and electrification.

“Our portfolio is well positioned to support the transition to a lower carbon world aligned with the Paris Agreement. Our commodities are essential for global economic growth and the world’s ability to transition to and thrive in a low carbon future. Climate change action makes good economic sense for BHP and enables us to create further value.”