Rio Tinto, China's Shougang in low-carbon steel tie-up

UK-Australian iron ore producer Rio Tinto and Chinese steelmaker Shougang will jointly explore researching, designing and implementing low-carbon solutions for the steel value chain.

The companies will focus on low-carbon sintering technology, blast furnace (BF) and basic oxygen furnace (BOF) optimisation, and carbon capture and utilisation.

Around 70pc of steel globally is produced using the BF-BOF route, according to the World Steel Association. China, which accounts for 50pc of global steel output, uses the BF-BOF route to produce around 90pc of its steel. The country expects to grow its share of electric arc furnace-based steel production, which used ferrous scrap as the main raw material, to 15pc by 2025.

The energy needed to re-melt carbon steel from scrap is about a quarter of that required to make steel from iron ore. Rio Tinto, one of the world's largest iron ore miners, aims to produce 320mn-325mn t of iron ore this year. Shougang produced 35.4mn t of steel last year, compared with 34mn t in 2020.

Production of metallurgical coke from coking coal accounts for a significant proportion of emissions in the steelmaking process.

Rio Tinto sold all its coal assets, including the Hail Creek coal mine, the Valeria coal development project and its interest in the Kestrel underground coal mine in Australia, in 2018.

Metallurgical coal prices hit a record high in March as supply disruptions on account of wet weather and Covid-19-related absenteeism weighed on exports from top producer Australia. Prices receded by early August because of weak demand as underlined by steelmakers turning sellers in the spot market leading to August. Prices bounced back by the middle of last month as Chinese and Indian demand picked up in response to rising steel output and limited spot offers.

China's steel production rose by 0.5pc on the year to 83.9mn t in August, World Steel Association data show. India's steel output was up by 7.1pc on the year to 10.2mn t.

By Deepali Sharma