Carbon Capture Will Not Save Metallurgical Coal from Steel Sector Displacement

A landmark report from Agora Industry finds that carbon capture, usage, and storage for coal-consuming blast furnaces will not play a meaningful role in global steel decarbonisation and that a full phase-out of coal in steelmaking is technically feasible by the early 2040s. The finding directly contradicts claims by the CEO of Coronado Global Resources — which operates metallurgical coal mines in Australia and the United States — that metallurgical coal qualifies as a critical material.

The Agora Industry report highlights that CCUS implementation in steel is especially difficult because an integrated blast furnace plant emits CO2 at multiple points in the production process and at varying concentrations, making retrofitting complex and expensive. Even showcase projects reveal the limitations: ArcelorMittal's flagship carbon capture and utilisation demonstration at its Ghent plant in Belgium, costing EUR 200 million, will capture only 125,000 tonnes of carbon per year — approximately 2% to 3% of that plant's total emissions at full capacity. The project nonetheless remains a centrepiece of ArcelorMittal's Smart Carbon decarbonisation strategy.

By contrast, the 2030 project pipeline for direct reduced iron steelmaking — which eliminates coal from the production process — has reached 84 million tonnes of annual capacity globally, while commercial-scale CCUS stands at only 1 million tonnes. Many of the industrial-scale DRI projects under development are being built hydrogen-ready to facilitate a future switch from natural gas to green hydrogen as costs decline. IEA Executive Director Fatih Birol noted in April 2023 that the pipeline for hydrogen-based steel production is expanding rapidly. Both Rio Tinto and Fortescue signed agreements with China Baowu in June 2023 to investigate DRI and hydrogen-based steelmaking.

IEEFA warns that steelmakers and iron ore producers still presenting CCUS as a primary decarbonisation pathway face increasing scrutiny from investors, as the technology falls further behind alternatives. BHP's pilot-scale carbon capture activities and its agreements with Mitsubishi Heavy Industries and ArcelorMittal have not produced commercial-scale results. The trajectory for metallurgical coal mirrors that of thermal coal in the power sector, where carbon capture was progressively sidelined by wind and solar. The coal phase-out in steelmaking will not be immediate, but IEEFA argues the clock has clearly started.

Key figure — 84 million tonnes — global pipeline of direct reduced iron steelmaking capacity targeted for 2030, versus only 1 Mt of commercial-scale CCUS