Japan’s Mitsubishi Heavy Industries will soon complete the world’s largest steel plant in Austria capable of achieving net zero carbon dioxide emissions.
Mitsubishi Heavy, through a British unit, is building the pilot plant in a complex of the Austrian steelmaker Voestalpine. Trial operation is scheduled to begin in 2021.
The plant will use hydrogen instead of coal in the iron ore reduction process. The next generation equipment will produce 250,000 tonnes of steel product per year.
The global steel industry generated around 2 billion tonnes of CO2 in 2018, according to the International Energy Agency, double the volume in 2000. The share of the steel sector among all industries grew 5 percentage points to 25% .
The reduction of iron ore accounts for a large part of CO2 emissions in steelmaking. Japanese steel mills, including Nippon Steel, are developing hydrogen reduction processes based on conventional blast furnace design.
The Mitsubishi Heavy plant adopts a process called direct reduced iron, or DRI. New blast furnaces require trillions of yen (1 trillion yen equals $ 9.6 billion) in investment. Although the DRI equipment produces less steel, the investment is estimated in less than half of the blast furnaces.
For DRI to achieve the same level of cost competitiveness as blast furnaces, low-cost hydrogen will be key. Market costs for hydrogen are now around 100 yen per normal cubic meter. meter, estimates the Ministry of Economy, Trade and Industry.
The government aims to reduce hydrogen costs to 30 yen per normal cu. meter by 2030, mainly through mass production.
But for DRI to be feasible in the steel industry, “the level must be below 10 yen,” said an executive at a large steel mill.
Germany’s SMS, the world’s leading supplier of steelmaking equipment, is following the hydrogen steelmaking process, alongside runner-up Danieli from Italy. Among the steel producers, Luxembourg-based ArcelorMittal plans to build a hydrogen steel pilot plant in Germany in 2021. Competitors such as Thyssenkrupp and Germany’s Salzgitter are investing in DRI.
Mitsubishi Heavy, the world’s third-largest steelmaking equipment supplier, is also securing a hydrogen supply chain. In October, the company bought a stake in a Norwegian company that makes hydrogen production equipment.
Elsewhere, Mitsubishi Heavy has decided to acquire stakes in hydrogen producers in places like Australia. The group will oversee hydrogen supply, along with equipment construction and engineering.
The European Union announced in July an initiative to invest 470 billion euros ($ 572 billion) in hydrogen by 2050. Hydrogen steel plants are anticipated to receive support. Europe is home to a growing number of hydrogen companies. Mitsubishi Heavy will capture the hydrogen demand from the steel industry to offset the softer growth prospects for thermal plant equipment.