Why steelmaking coal is critical for a renewables- focused future

Dan van der Westhuizen, Chief Executive Officer, Anglo American Australia

The global transition towards renewable energy sources like solar, wind and hydroelectric power is creating massive demand for critical minerals like copper, lithium, nickel and cobalt. But one essential material is often overlooked.

While solar, wind and batteries grab headlines, it is steel that underpins these technologies and steelmaking coal is a vital ingredient in that process. Steel is widely used in infrastructure for renewable energy, as well as the facilities necessary to process new critical minerals.

Realistically, a significant portion of global steel manufacturing will continue to rely on blast furnace technologies using high-quality steelmaking coal for many decades to come.

Copper is essential for conducting electricity in all its forms, while lithium and cobalt are crucial for many battery technologies that store energy from renewables or power battery-electric cars. But steel forms the structures that support solar panels and wind turbines. Without steel, these technologies fall over – literally. Upgrading power grids to handle and connect to renewables also requires huge volumes of steel for transmission towers.

The global energy transition is being driven by a need to reduce carbon emissions and mitigate climate change. Australia has made a commitment to be ‘net zero’ by 2050, and just like us, many developed countries have set ambitious targets to increase the share of renewables in their energy mix over the coming decades.

The European Union, for example, aims to source 32% of its energy from renewables by 2030, while the United States is targeting 30% by 2030. At Anglo American, we have committed to carbon neutral operations by 2040.

Steel is a fundamental enabler across the entire renewables supply chain.

For steelmakers, it’s important to note metallurgical or steelmaking coal remains an essential input into the steel manufacturing process, even with the energy transition. Steel cannot currently be produced without carbon from coal at the commercial scale that the world demands. There is no other material that can reliably and economically replace the unique role of metallurgical coal in the steelmaking process today.

While processes using hydrogen are being developed and supported by companies, including Anglo American and large steelmaking customers, they remain many years away from large-scale commercial viability. Realistically, a significant portion of global steel manufacturing will continue to rely on blast furnace technologies using high-quality steelmaking coal for many decades to come.

Even if we ignore the global energy transition, steelmaking coal demand will remain strong. The World Steel Association says 1.95 billion tonnes of steel were produced in 2021, and this number is projected to grow steadily with urbanisation and industrialisation.

As major steel-consuming economies like India and China continue to industrialise, their demand for steelmaking coal will only rise. Let’s remember that two billion more people on our planet by 2050 means a lot more steel-bearing infrastructure, from homes to transport networks.

This broader trend towards major renewable power generation investment in infrastructure around the world continues to drive steel and steelmaking coal consumption. Wind, solar, hydro, high-rise buildings, airports, railways, bridges, ports, and megacities – all require enormous amounts of the Bowen Basin’s finest.

India, for example, plans to invest US$1.7 trillion in infrastructure over the next five years. Its ongoing urbanisation means massive steel usage for construction and machinery.

At the same time, more advanced economies like the United States continue to invest in infrastructure modernisation. The US Infrastructure Act, signed in 2021, will deploy more than US$0.5 trillion to overhaul ageing roads, bridges, and electricity grids. All these ambitious infrastructure programs globally will stimulate steel demand and the need for steelmaking coal.

Despite the talk of many mining companies planning to ‘exit coal’, the need for steelmaking coal continues to endure. At Anglo American, we recognise steelmaking coal’s ongoing role in the global economy.

It’s important that we are increasingly part of the narrative where we responsibly mine and help people understand the end uses of this critical mineral.

As we invest for the long term, we must also act as a trusted partner for our host communities, employees and the suppliers on whom our business relies.

Whether that’s through the significant methane abatement programs underway, housing and food security support services, road action groups or reinforcing our connection to Queensland’s grassroots through our partnership with the Dolphins NRL team, we are committed to fostering sustainable practices that not only meet the demands of the present but also contribute to the wellbeing of future generations.

With a bright future for steel and steelmaking coal, the Bowen Basin is set to be a global hub for mining and innovation. Anglo American looks forward to working with the local community to support a responsible and sustainable minerals industry. As a trusted partner, we will continue to supply steelmaking coal to underpin the energy transition and the global decarbonisation trend. I’m excited to be part of it. 