Updating Australia’s Critical Minerals List: issues paper

[OFFICIAL]

STEELMAKING COAL
BRISBANE CORPORATE OFFICE
Level 11
201 Charlotte Street
Brisbane QLD 4000
Australia

Victoria Pullen
Branch Head
Critical Minerals Office
Department of Industry Science and Resources
GPO Box 2013
Canberra ACT 2601

By email: victoria.pullen@industry.gov.au

24 August 2023

Dear Ms Pullen

Anglo American response to Critical Minerals List Issues Paper

Anglo American is pleased to have the opportunity to provide input to the update of Australia’s Critical Minerals List.

Anglo American is a leading global mining company providing many of the essential metals and minerals that are fundamental both to a low carbon future, and to improving living standards for a growing and urbanising global population.
In Australia, Anglo American operates five steelmaking coal mines, all in Central Queensland and each run with the investment and cooperation of valued Japanese joint venture partners. These mines produce high quality hard coking coal for export to steel makers in Europe, South America and Asia, including the key markets of Japan and
India.

Through our global footprint we are engaged in policy consultations related to critical and strategic minerals in multiple jurisdictions. The focus on the material intensity of the transition to a low carbon future, and the needs of that future, has drawn the mining sector centre stage in policy making debates, including in countries without the rich mining heritage and vibrant mining sector from which Australia has long benefitted. Our engagement with international markets gives Anglo American insights into the development priorities and decarbonisation pathways of many of Australia’s strategic partners and we believe these should be taken into consideration in the development of the Critical Minerals List.

This submission relates to the purpose of the Critical Minerals list and, most substantively, to Question Two of the
Issues Paper about additions to the list.

Anglo American welcomes the broad criteria used in defining inclusion on the critical minerals list. In particular: (i) essential to modern technologies, economies and national security; and (ii) whose supply chains are vulnerable to disruption. These provide a foundation for a strategic consideration of the metals and minerals needed globally for a long-term, low carbon future. The criteria do not confine the list only to the energy transition, which some countries’ critical minerals list do. It also allows for consideration of the complexity of inter-related value chains, which will deliver the technologies, raw materials and goods and services that the Australian and global economies will require. The strategic consideration that the inclusion criteria point to should result, in our view, in a broad, inclusive list of minerals considered critical and/or strategic.

In this regard, Anglo American strongly supports the Minerals Council of Australia’s (MCA) recommendation that
Australia’s list be expanded to include both critical minerals and strategic materials. First, we note the MCA’s suggested inclusion of potash. We support the recognition of mineral fertiliser in the list, recognising the role that such products will have in providing Australian and global food security – an increasingly relevant concern.
However, we would advise not drawing the line solely around potash, but also include in the list a broader set of natural mineral fertilisers, particularly those that require minimal chemical processing and can offer a range of environmental benefits alongside their crop yield and quality enhancement properties. Secondly, we agree with the
MCA that Australia’s list should align with that of the European Union (EU) and recognise coking coal (otherwise known as steelmaking coal to help build greater understanding of its use) as a strategic raw material.

A member of Anglo American plc group
Anglo American Steelmaking Coal Pty Ltd
Registered Office: Level 11, 201 Charlotte Street, Brisbane QLD 4000, Australia T +61 (0)7 3834 1333
Incorporated in Australia ABN 93 076 059 679
Anglo American believes the inclusion of coking coal is sound policy for three reasons:

The essential role of steel in clean energy technologies

Steel has a major role to play in providing the backbone of the low carbon economy as a key input to technologies such as electric vehicles, hydrogen, wind and solar power and their supporting infrastructure, as well as new industry processing facilities.

This is acknowledged by the Australian Government. In the most recent Resources Statement to Parliament, the
Minister for Resources, Madeleine King noted that “…steel in particular will play a key role in all renewables”.1

Demand for steelmaking coal and pressure on supply

The International Energy Agency (IEA) projects that global demand for steel will increase by more than a third of current production in the period to 2050 2. In the Resources Statement to Parliament, Minister King explained what demand for steel in the energy transition means for Australia’s steelmaking coal and iron ore industries. “Making
180 tonnes of steel to produce a new megawatt of offshore wind power needs at least 288 tonnes of iron ore and
139 tonnes of metallurgical coal.” 3 As this illustrates, Australia’s long-term customers and strategic partners will be relying on continued access to our steelmaking resources to meet their emissions reduction targets.

Anglo American is in constant communication with our international customers across the steel industry who express concerns about security of supply. They can readily see the constraints on investment in new sources of steelmaking coal and are asking us for assurance of supply from Central Queensland mines for the medium term.

This is consistent with ongoing moves by steel producers to seek to secure additional strategic supplies by investing in steelmaking coal assets, with recent examples reportedly including:
o JSW Steel, India’s leading steel producer, considering a bid for 75% of Teck Resources’
steelmaking coal business, Elk Valley Resources 4; and
o Nippon Steel’s agreement to purchase a 10% stake in Elk Valley Resources5 and indication of
interest in other similar deals.

Timeline for alternatives to steelmaking coal

While there is a technological pathway for steel to be produced at scale using alternatives to steelmaking coal, and
Anglo American is partnering with a number of steel makers around the world in research initiatives aimed at accelerating that transition, it is nonetheless predicted that blast furnaces using steelmaking coal will continue to represent a significant proportion of steel production for several decades to come.

This is the guiding rationale of the United Nations Metcoal Methane Partnership. Recognising the ongoing demand for steel, the United Nations Environment Programme (UNEP), coordinator of the Metcoal Methane Partnership, explains that “low carbon alternatives are insufficiently mature to replace metcoal in steel production at scale”6.

The IEA has produced forecasts for its Stated Polices Scenario and Sustainable Development Scenario to 2050 that reflect UNEP’s view. As shown below, in both cases, steelmaking coal remains a core input to steel production.

1
Madeleine King, 29 March 2023, Resources Statement to Parliament
2
International Energy Agency, October 2020, Iron and Steel Technology Roadmap, Iron and Steel Technology Roadmap - Towards more sustainable steelmaking (windows.net)
3
Madeleine King, 29 March 2023, Resources Statement to Parliament, Resources Statement to Parliament | Ministers for the Department of
Industry, Science and Resources
4
NS Energy, 18 August 2023, JSW Steel eyes majority stake in Tech Resources’ steelmaking coal unit, JSW Steel eyes majority stake in Teck
Resources' steelmaking coal unit (nsenergybusiness.com)
5
Mining.com, 2 March 2023, Nippon Steel could buy more stakes in coking coal and iron ore mines, Nippon Steel could buy more stakes in coking coal and iron ore mines - MINING.COM
6
Roland Kupers, March 2023, Metcoal Methane Partnership, Title (unece.org)

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A possible factor in the IEA’s forecast is the age of blast furnaces in key markets. The IEA has noted that “global steel production capacity is relatively young with blast furnaces only around 13 years old on average relative to a typical lifetime of 40 years” 7.

Anglo American’s customers know that production of “green steel” through the use of hydrogen as a reductant poses significant commercial challenges when considering the many hundreds of billions of dollars invested in young, traditional, blast furnace technology that is designed to use steelmaking coal.

This reality is expected to be a driver for steel producers to consider investing in technologies such as carbon capture, use and storage (CCUS) as a means to reduce emissions while achieving a return on existing assets.
Commercial decisions like these can be expected to maintain demand for steelmaking coal in important markets for
Australia such as South Korea, Japan, Taiwan and the EU. In the IEA’s SDS scenario the emissions reductions attributed to CCUS are double those of hydrogen 8.

In the meantime, utilisation of high-quality coking coal in traditional blast furnaces can have as much as a 14% improvement in net steel mill emissions compared to a lower quality substitute. This supports Australian coking coal production which is among the highest quality in the world. Supporting a continued, and responsible,
Australian coking coal sector not only supports local jobs and communities, but it ensures a lower net steelmill footprint and ensures carbon leakage overseas is not realised.

Anglo American recommends that Australia follow the example of the EU and add coking (steelmaking) coal to a list of Strategic Raw Materials. The EU has responded to concerns about access to coking coal for its domestic steelmakers due to sanctions applied to Russia. In Australia’s case there is a responsibility to understand the interests and concerns of strategic partners in our region and take those into account in policy settings such as the Critical Minerals Strategy. A Strategic Raw Materials list would send a signal about the future of Australia’s role in securing key supply chains.

Yours sincerely

Dan van der Westhuizen
Chief Executive Officer
Anglo American, Australia
T: +61 (7) 3834 1333
E: dan.vanderwesthuizen@angloamerican.com www.angloamerican.com

7
International Energy Agency, October 2020, Iron and Steel Technology Roadmap, Iron and Steel Technology Roadmap - Towards more sustainable steelmaking (windows.net)
8
Ibid, p. 75

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