BHP partners with HBIS to reduce emissions
BHP’s Memorandum of Understanding (MoU) with China’s HBIS Group Co., Ltd (HBIS), one of the world’s largest steelmakers and a major customer of BHP’s iron ore, has been set up to invest $15mn over the next three years to in a joint study that will examine greenhouse gas emissions reduction technologies and pathways to their success.
The collaboration will focus on three priority areas: hydrogen-based direct reduction technology, the recycling and reuse of steelmaking slag, and the role of iron ore lump utilisation to help reduce emissions from ironmaking and steelmaking.
The partnership will support both company’s climate change goals and support the steel industry’s push towards achieving China’s carbon neutral target for 2060.
BHP’s Chief Commercial Officer, Vandita Pant, commented: “We view decarbonisation of the steel industry as a complex puzzle that requires multiple technological solutions across the value chain over different time horizons.
“By forming this third low-carbon steelmaking partnership with HBIS Group, we are focusing on additional components, such as the role our products play in hydrogen-based steel production, that complement our other partnerships and support for endeavours in emissions reduction and capture from the traditional blast furnace route.”
BHP Chief Executive Officer, Mike Henry, added: “BHP has a long and trusted relationship with HBIS Group, and we are pleased to establish this strategic partnership to explore new ways to reduce emissions from steelmaking.
“Global decarbonisation will require collaboration and collective effort, and our work with partners such as HBIS Group will build on our own actions and help reduce emissions right through the value chain.”
Chairman of the World Steel Association, Party Secretary and Chairman of HBIS Group, Yu Yong, pledged: “The signing of the MOU fully demonstrates the two companies' commitment to creating a green and low-carbon future across the value chain and a shared sense of responsibility to address climate change together, with a common vision to ‘contributing to a community of a shared future for mankind’. This partnership ushers in a new chapter for the two companies to deepen our strategic cooperation and to achieve collaborative development.”
BHP deliberates ditching fossil fuels for greener mining
The world’s biggest miner, Australian-based BHP, is supposedly considering withdrawing from a multi-billion dollar contract, which would see the company generate more than US$2bn due to mounting pressure over aligning its business with ongoing climate concerns and ESG-compliance measures.
Exiting the agreement would mean BHP escalate its distancing from oil and gas and subsequently cut down on the amount of fossil fuels used by the company when mining.
It’s estimated that the petroleum business being debated upon could actually be worth around US$15bn but is still under talks to be put up for sale.
Global Mining Giant Considers Greener Future
BHP has made itself clear that it wants to avoid becoming unable to sell its assets. As competition within the market increases following higher numbers of oil giants wrestling with investors to deal with climate pressure, so too are the number of mining rivals looking to make environmental changes for the future.
However, BHP currently has the upper hand as a stalwart mining company that established itself back in the 1960s, allowing it the time to grow and dominate over other fast-appearing mining competition.
Mike Henry, BHP Chief Executive, has an optimistic outlook for the future of oil and gas despite worries over rising demand to align his business with the Paris Climate Agreement. Henry argues that prices remain promising due to a lack of industry-wide investment.
BHP’s petroleum business won’t be easy to say goodbye to. Forecasted to generate around 6% of profits during the ongoing financial year (US$2bn), and around US$1.6bn revenue produced by BHP petroleum in the six months leading to December 2020, BHP is due to take a hit no matter what agreement they choose.
On the other hand, distancing itself from thermal coal and petroleum would arguably aid the company’s case to possible - and valuable - investors who may be required to fund BHP’s increased output to places such as Australia and Mexico in the near future.
BHP considers cutting billion-dollar contract to aid climate
An exit away from petroleum has the potential to be “a powerful corporate catalyst,” says Dominic Kane, Analyst at JP Morgan.
“We believe an exit would likely ring-fence BHP’s exceptional cash flows for non-fossil fuel organic growth, mergers and acquisitions and generous shareholder distributions since BHP could avoid a major new capital investment phase this decade in petroleum.”
BHP is also set to sanction a giant US$5.7bn Canadian potash mine in August of this year, already seeing potash as a long-term substitute for gas and oil going into the future. The company has also previously announced plans to abandon its 80% share in its joint endeavour with Mitsui, owner of two lower-quality mines in Queensland, Australia.
BHP is scheduled to report its annual results on August 17, after which it may become clearer on whether the company will choose to focus its shift to a low-carbon economy or whether it will stay with its current contract into the coming year.