Coal boss says demand from steel sector will continue through to 2050

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Huntly power station.
Photo: RNZ

The boss of New Zealand’s largest mining company said the role coal plays in electricity generation is rightfully declining, but the resource will have a life past 2050 for steelmaking.

2050 is the key deadline for decarbonisation, as emissions need to be net zero by then to keep warming below 1.5 degrees.

Bathurst Resources chief executive Richard Tacon said there is a valid argument that reliance on coal for energy generation needs to decline sharply if international climate goals are going to be within reach.

“In New Zealand the coal-fired Huntly plant is only used as a last resort, and that’s the way it should be.

“I would much rather see our coal going into a process like making structural steel and cladding for New Zealand’s buildings.”

This may seem an unusual position for a lifelong coal miner, but Tacon insisted demand for coal will still be strong past 2050 – just not for electricity purposes.

“At Bathurst the coals that we are targeting and selling now are principally for steelmaking.

“To turn an iron ore into a steel product you need a lot of energy and a lot of heat, because you have to break down a very stable chemical bond.”

Long life predicted for coking coal exports

In the year to June 30 2023, Bathurst Resources sold 2.1 million tons of coal. Around 1.7 million tons of that would be used for steelmaking, with most sold to producers in Japan, India, South Korea, and Australia.

That’s primarily metallurgical, or coking, coal – meaning coal used to create coke, a fuel and reducing agent that smelts iron ore in blast furnaces.

New Zealand Steel, which operates the country’s largest steel mill at Glenbrook, does not use coking coal in its operations. They rely on thermal coal to operate four kilns and two melters. According to Robin Davies, the New Zealand-based head of parent company BlueScope Steel, that makes their transition off coal easier than other steelmakers.

New Zealand Steel already has work under way to electrify half of its kilns and melters and hopes to decarbonise all its Glenbrook mill operations within the next decade.

An electric arc furnace will be used to recycle scrap metal and will replace two of four coal-fuelled kilns under the current project, which was partially funded by the now-disestablished Government Investment in Decarbonising Industry Fund.

“If there was more scrap in NZ today, we would probably transition further. But we have a modular process – so we can halve our coal reliance by turning two kilns and one melter off and blend the iron scrap to make steel,” he said.

The move doesn’t worry Tacon, who said Bathurst is primarily an export business, supplying producers that operate the more traditional blast furnaces in mills overseas.

He acknowledges there is work being done to develop alternative fuels, like hydrogen, but said we are many years from seeing those methods employed at scale.

“As it stands the bulk of the iron ore that we have got in the world needs up to 1600 to 1800 degrees Celsius, and the only way of achieving that heat in bulk is with coal.”

“The World Steel Organisation and others say demand for coal will continue well past 2050.”

With demand increasing for renewable energy technologies, demand for coal is more likely to rise over the next 25 years, he added.

“Anything that we’re building – whether its increased solar panel farms, it’s wind turbines, or most other technologies that are a part of the transition, they require steel,” he said.

“Bathurst is going to export coal to these steel producers for many years to come.”