Changes at the coal face
Michael Gray, CEO, NewBlack Energy
O
ver the last year, activists, media and southern politicians have been sounding the death knell of the Queensland coal industry. This perception ignores the reality that the Bowen Basin is the world’s richest resource of premium coking coals for the global steel industry.
Source: World Steel Association 2020
Despite global pandemics, political power-games, increasing environmental activism and aspirational promises of new green-steel technology, there remains no economically or technically viable alternative to the use of ongoing coking coal in steel production. As a result, the future looks bright for ongoing coking coal demand and opportunities for production growth from Queensland.
Chinese steel production has exceeded a staggering 3 million tonnes per day since the COVID-19 shutdown. To put this in perspective, it takes Chinese steelmakers just over 40 hours to match Australia’s total annual production of 5.5 million tonnes. Forecast growth rates for production in India, Vietnam, Thailand, Malaysia and Indonesia exceed that of China and each of those countries has limited scope for domestic coking coal production.
The challenge for the Queensland coal industry is how it identifies the priority projects and how it finds and supports the explorers, entrepreneurs and investors that have the courage to seek to maximise those opportunities. The future demand for coking coal Since the Industrial Revolution in Britain in the late 1700’s, steel production has been the catalyst for economic development throughout the world. Steel is the backbone of the modern built environment. It is the world’s second largest commodity value chain after crude oil. It underpins daily life. The growth of global steel production has continued to accelerate as economic development has increased living standards in the world’s most populous nations. It took almost 200 years for global steel production to reach 1 billion tonnes per annum in 2004. It will take less than 20 years for that production to reach 2 billion tonnes per annum, expected in 2021 or 2022. Importantly, almost all that growth is in Asia which now produces more than 70% of the world’s crude steel. 34
BBMC Yearbook 2020
Global Steel Production Since 2000
2,000 1,500 1,000 500 0
2000
2004
2008 Asia
2012
2016
RoW
Despite speculation about new technologies, all commerciallyproduced steel is made in either a blast furnace, using sintered iron ore and coke, or in an electric arc furnace which essentially re-melts scrap steel. Blast furnaces produced more than 65% of global steel in 2010 and, despite increasing recycling in OECD countries, that proportion has increased to 72% today in order to supply the rapid demand for high quality steel in Asia. Blast furnaces are hugely capital intensive (approx USD1B per 1 million tonnes/annum production capacity) and it's estimated that total investment in Asia since 2000 has been USD800B. With an operational life of 40-50 years, there is no prospect of any economically or technically viable alternative to replace that critical installed production capacity. Every tonne of crude steel produced in a blast furnace requires approximately 770kg of coking coal. Ongoing efforts to decarbonise steel production have failed to identify any viable options to reduce this demand for coal as a fundamental feedstock in steel production.
