A new report by the Institute for Energy Economics and Financial Analysis (IEEFA) has argued that the appointment of Brandon Craig as BHP’s new CEO provides an opportunity for the company to reassess its strategy on steelmaking technologies and metallurgical coal.
According to the report, BHP has fallen behind other major iron ore producers in supporting steel decarbonization despite reporting 378 million mt of Scope 3 emissions in fiscal year 2025. While the company acknowledges its role in supporting lower-emission steel production, IEEFA said BHP continues to prioritize technologies that extend the use of its blast furnace-grade iron ore and metallurgical coal.
BHP’s focus on CCUS questioned
IEEFA identified BHP’s continued support for carbon capture, utilization and storage (CCUS) in blast furnace steelmaking as evidence of its current strategy. The report contrasted this approach with those of Rio Tinto, Vale and Fortescue, which have focused more heavily on direct reduced iron (DRI) technologies and higher-grade iron ore suitable for DRI production.
According to the report, no commercial-scale CCUS facilities are currently operating in metallurgical coal-based steelmaking. IEEFA attributed the technology’s limited deployment to high costs, relatively low carbon capture rates, transport challenges and uncertainty surrounding long-term carbon storage. The organization also noted that the International Energy Agency expects CCUS to contribute less than five percent of global emissions reductions by 2050.
The report cited ArcelorMittal’s Steelanol project in Belgium, noting that although it received significant public funding, it captures about 125,000 mt of carbon annually compared with the steel plant’s annual emissions of approximately 9 million mt. It also pointed to methane emissions from coal mining, arguing that CCUS does not address this source of emissions.
DRI seen as the leading near-term pathway
IEEFA described DRI as the most advanced near-term solution for reducing emissions from primary steelmaking. While technologies such as molten oxide electrolysis continue to be developed, the report said they remain at an earlier stage of commercialization.
The report noted that BHP is already involved in several DRI-related initiatives, including the NeoSmelt project, which combines DRI with electric smelting furnace technology to enable the use of Pilbara-grade iron ore. A final investment decision is expected in the second half of 2026, with commercial operations targeted for 2029. IEEFA also highlighted successful hydrogen-based DRI trials with China Baowu and BHP’s collaboration with POSCO on HyREX hydrogen-based fluidized bed DRI technology, concluding that BHP has made greater progress in DRI development than in CCUS.
India’s steel transition may reshape coal demand
The report argued that although India is expected to remain one of the world’s fastest-growing steel producers, this will not necessarily translate into stronger long-term demand for Australian metallurgical coal.
According to IEEFA, India is diversifying coal imports, increasing domestic coking coal production and adopting steelmaking technologies that require less or no metallurgical coal. It also noted the wider adoption of stamp-charging technology, growing investment in green hydrogen and steel recycling, hydrogen-based DRI projects by JSW Steel and new scrap-based electric arc furnace investments by Tata Steel.
IEEFA cited S&P Global forecasts indicating that Australia’s metallurgical coal exports are expected to gradually decline through 2035, while much of India’s future import growth is projected to be supplied by Russia and Canada rather than Australia.
IEEFA calls for greater focus on steel decarbonization
The report concluded that BHP’s current approach to metallurgical coal lacks consistency. While the company has stated that it does not intend to significantly expand its metallurgical coal business, it continues to pursue mine life extensions at several operations.
IEEFA recommended that BHP provide greater transparency regarding the future of its metallurgical coal portfolio, place greater emphasis on DRI-compatible technologies instead of CCUS and increase investment in steel decarbonization. According to the organization, the appointment of a new CEO presents an opportunity to align the company’s strategy with evolving steelmaking technologies, changing market conditions and long-term energy security priorities.