Japan’s biggest
steelmaker is considering a major investment in a green steel
project powered by hydrogen as a global push to decarbonize one of the world’s
most polluting industries gathers pace.
Nippon
Steel Corp. is exploring a project outside its home market that may cost an estimated
100 billion yen ($733 million) or more, according to Takahiro Mori, executive
vice president who oversees global operations. Australia and Brazil are among
possible sites, where high-grade iron ore is accessible along with cheaper
electricity than in Japan, he said in an interview.
Steel
is one the building blocks of the global economy — needed for infrastructure,
autos and appliances — and while demand is set to go on rising, producers are
exploring ways to cut their carbon footprints. The industry is one of biggest
polluters as it currently relies on coal-fired blast furnaces,
particularly in Asia, which accounts for more than 70% of global output.
“We
can’t avoid pathways toward carbon neutrality,” Mori said. “We are currently
comparing several projects to see if there’s anything that meets the conditions
for green-steel manufacturing or investment.”
Nippon
Steel and peers ArcelorMittal
SA, the world’s biggest steelmaker outside of China, and China Baowu
Steel Group have all pledged to become carbon neutral by the middle of this
century. Elsewhere, South Korean rival Posco recently
announced a plan to invest $40 billion in hydrogen manufacturing as well as
green steel with partners in Australia by 2040.
Replacing Coal
There’s
no real difference between conventional steel and its green counterpart and the
distinction lies in the way it’s manufactured, although there’s no defining
standard or criteria. Traditionally, steel is made by heating iron ore with
coking coal in a blast furnace. One way to decarbonize the process and cut
emissions is to replace the fossil fuel with hydrogen.