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05 August 2024

Transforming Port Kembla Steelworks

BlueScope in the Illawarra

BlueScope, one of Australia’s largest manufacturers, is fast approaching its 100-year anniversary of continuous steelmaking operations in the Illawarra – a remarkable milestone. 

BlueScope employs around 3,000 people directly in the Illawarra and supports about 10,000 jobs in the Illawarra, including contractors, suppliers and other service providers who depend on the Port Kembla Steelworks.

Global steel demand is forecast to continue to grow.  In addition to meeting the demands of industries such as the building and construction and infrastructure segments, steel will play a critical role in underpinning sustainable development and the transition to a low-carbon, circular economy. 

Towards lower emissions steelmaking at Port Kembla

The steel industry is a is a hard-to-abate sector due to its capital intensity, long-lived assets, limited commercial alternatives to current greenhouse intensive production technologies, and exposure to international trade.  Decarbonising the steel industry will require sustained and cooperative action by the entire global steel value chain.

BlueScope has set a 2030 target to reduce emissions intensity across steelmaking activities by 12 per cent and, longer term, a 2050 goal to pursue net zero emissions across all operations.  

Port Kembla Steelworks is an integrated iron and steelmaking operation, known as primary steelmaking via a Blast Furnace-Basic Oxygen Furnace. It is placed in the ‘top 15% performers’[1] worldwide for the emissions intensity of Blast Furnace-based [link to definition in steelmaking case study] operations for iron and steelmaking in 2022, based on the operations that report emissions data to worldsteel. This recognises many years of operating discipline and pursuit of operational and process efficiencies. 

While the team at Port Kembla Steelworks has made good progress in reducing emissions, longer term, to meet our 2050 net zero goal, large-scale decarbonisation will rely on technology evolution, supported by action across the other critical enablers BlueScope has identified:  raw materials supply, firmed, renewable energy, hydrogen and natural gas availability, and public policy.

The technology required may not be proven until at least the 2030s.  Accordingly, and as the No. 5 Blast Furnace is approaching the end of its life, the reline of the No.6 Blast Furnace underway provides an important bridge to BlueScope’s low emissions future. It means Australia will maintain critical iron and steelmaking skills and generate strong returns to fund investment in lower-emissions technologies, when commercially feasible.  The reline comprises a comprehensive refurbishment of the blast furnace, including environmental improvements. It also allows time to develop, test and pilot alternative ironmaking technology, and allows the broader economy time to develop and build the enablers that underpin lower emissions steel production. 

In working towards the 2050 net zero goal, our Australian Options Study comprises a comprehensive analysis of the options available to decarbonise iron and steelmaking processes at Port Kembla Steelworks.  This shows that DRI is currently the most favourable technology option for lower GHG emissions ironmaking in Australia [link to definition in steelmaking case study].  This DRI-ESF technology route is the focus of collaborations entered into with steelmaking partners thyssenkrupp Steel Europe, Tata Steel Europe and POSCO, and value chain partners BHP and Rio Tinto [link to ASX release].

BlueScope is working to unlock the enablers that underpin the DRI-ESF technology, which include effective partnerships and policy.  In particular: 

  • DRI-EAF and DRI-ESF-BOF iron and steelmaking will require up to 40 petajoules (PJ) per annum of natural gas, equivalent to seven per cent of natural gas demand on the Australian east coast in 2024[1], and a 40-fold increase on gas consumption at Port Kembla today. There are significant barriers to obtain the gas volumes required at a competitive price due to strong export demand and lack of domestic supply.  
  • Port Kembla uses 1TWh per annum of electricity. However, the electricity required to transition to a natural gas or hydrogen DRI pathway is two to 16 times higher respectively[2].
  • There is not enough transmission and electricity capacity in the Illawarra to support the transition to lower emissions steelmaking.  Accordingly, investments to upgrade transmission networks and the availability of competitively priced firmed electricity are policy priorities for lower emissions steelmaking. 
  • Effective policies are essential to support appropriate cost-competitive firmed renewable electricity, sufficient quantities of cost competitive gas, and the development of a green hydrogen supply chain.

 

Port Kembla Master Plan

As part of our planning for the next 100 years in the Illawarra, we are nearing the completion of a Master Plan for approximately 200 hectares of landholdings adjacent to the Port Kembla Steelworks.

The project will create a vision for the reimagination and transformation of land surplus to steelmaking needs, with the potential to unlock a wide range of new uses and enable significant long-term economic and social value for the region.  

More information

Read more about our sustainability targets in BlueScope’s Climate Action report 2024