BHP’s pledge to reduce greenhouse gas emissions from across its supply chain took a big, tangible step forward this week with the mining giant taking delivery of the first of five LNG-powered carriers to transport iron ore from Australia to Asia, reports Financial Times.
About the deal
Over the last 12 months, BHP has signed on with some of the world’s largest steel mills to co-operate on low carbon technologies. The company believes these partnerships have helped add ballast to commercial relationships not immune to geopolitical tensions.
The Mount Tourmaline arrived in Singapore from a shipyard in Shanghai for bunkering before heading for West Australia’s Port Hedland where it will take on a load of iron ore bound for Japan.
In the past year, BHP has signed agreements with Japan’s JFE Steel, South Korea’s Posco, and Baowu and HBIS in China to investigate ways of reducing emissions in steel making.
“This is not small. Together these four steel mills account for 12 per cent of global steel-making. Whatever the future landscape will be in steelmaking, we will be part of that,” Ms Pant said.
The wait for inevitable
Brazil is expected to become more competitive in the supply of iron ore in the coming years. After taking action on a range of other Australian exports, Beijing has made it clear that in the future it would like to reduce China’s reliance on Australian iron ore.
BHP has long expected China’s steel production will plateau by the middle of this decade, Ms Pant said. “And as supply normalises for Brazil, which it hasn’t for the last three to four years, the balance of supply and demand will start to shift,” Ms Pant said.
“But there will still be good demand for good iron ore. That’s why it’s critical we remain the lowest cost producer.”
LNG Vs fuel oil
Using LNG rather than fuel oil will reduce shipping emissions by about 30 per cent, BHP said. Shipping currently accounts for three per cent of global emissions.
LNG is the cleanest fuel available today, BHP believes. Importantly, the Mount Tourmaline and the other four LNG-powered vessels the company will add to its fleet this year will also be able to run on ammonia if that becomes a viable marine fuel.
Did you subscribe to our daily Newsletter?
It’s Free! Click here to Subscribe
Source: Financial Review
