A major supplier to Rio Tinto’s (ASX:RIO) Pilbara iron ore empire could become an early adopter of green steel as mining services firms take on the decarbonisation agenda being pursued by big miners.

Specialist fabricator and mining equipment manufacturer Austin Engineering (ASX:ANG) celebrated the completion of its 1000th dump truck body for Rio’s iron ore business on Tuesday in a ceremony attended by Rio iron ore boss Simon Trott and WA Premier Mark McGowan.

Speaking at the event Austin CEO David Singleton said the company has followed the major iron ore miners in looking for ways to reduce their emissions intensity.

Rio, for instance, has pledged to spend US$7.5 billion on slashing its Scope 1 and 2 emissions from its global operations in half by 2030.

“A lot of the leadership for us thinking about decarbonisation in the businesses comes from the big miners,” Singleton said.

“And as you know, they’ve made big statements about their determination to decarbonise across all of their operations. And so we’ve really followed that.

“And, you know, in addition to their drive for efficiency and improved safety on their sites, as well we have to see what we can do to help them in their objectives to decarbonise.”

 

Austin talking to SSAB about green steel

Singleton says much of the steel fabricated into the lightweight dump truck trays manufactured at its Kewdale plant comes from Swedish steel producer SSAB.

It is one of three companies along with iron ore producer LKAB and Vattenfall in the Hybrit Consortium.

Regarded as the most advanced hydrogen-based low emissions steel project in the world, Hybrit has already delivered the world’s first steel produced without the use of fossil fuels to carmaker Volvo this year. It aims to be in commercial production by 2026.

Singleton said Austin had held early discussions with SSAB about the green steel product.

“SSAB, for instance, in Sweden are doing work on green steel and SSAB are a major provider of steel into here,” he said.

“So one of the things we would be able to do is then prefer to use a green steel rather than a carbon reduced steel in the future.

“So we talked to SSAB all the time. And, you know, we’ve talked to them about the possibility of us using some of those steels in the future.”

Singleton noted Rio were also studying the use of hydrogen to replace met coal in the steel production process with their Chinese customers, though some big miners like BHP say the built capacity of relatively young blast furnaces in the world’s largest steelmaking economy suggests it will take several decades for that transition to happen.

Welding operations at Austin’s factory also make it a big electricity user and it is looking at options to get some of its power from renewable energy, but Singleton also pointed to some of its innovation projects as opportunities to support the iron ore miners’ decarbonisation initiatives.

 

Flatpack machinery and recycled steel

Austin is currently studying the potential to recycle steel from used dump track trays by developing an automated crawler to cut the steel safely, something Singleton believes can help develop a circular economy around its relationship with miners like Rio.

“One of the things that we’ve looked at now is how do we create for Rio Tinto, the ability to recycle truck bodies, cut them up safely on site, and then be able to reuse that in the steelmaking process,” he said.

“So that’s something that we’re looking at. We’re doing the design work now for our crawler system.

“It’s quite unsafe cutting these these truck bodies up, because they have a lot of stored energy in them. So if you get somebody inside them, cutting them up with a thermal lance, you can get a lot of spring in the steel and that has caused fatalities in the past.

“So what we’re developing is a remote way of cutting up the truck body into the right sizes that can be used for steel production.”

Austin has also made savings on transport emissions by developing a flatpack delivery system for some of its products, sending its first containerised shipment recently to a customer in Kazakhstan.

“Containerised transport is a much more efficient way of transporting anything around the world,” Singleton said. “So we can get truck bodies broken down and into containers, ship them around the world, that in itself reduces the carbon footprint of these products as well.

“The key thing for us is to put money and effort and time into innovation and technology.

“And whether it’s … innovating on the product, whether it’s the service that we put around the product, or whether it’s bringing environmental, decarbonisation benefits to our product … that’s what we need to do.”

 

Austin Engineering share price today:


 

 

Supply concerns lower as Vale dampens ramp-up expectations

One of the key factors that drove iron ore’s mad charge to records of more than US$230/t earlier this year was falling supply from Brazil, where global major Vale has been struggling to rebound since the Brumadinho dam disaster in early 2019.

It has long declared plans to hit a 400Mtpa production run rate by 2022, though its language around what that means has been unclear.

Vale provided a bit more detail today and it is undoubtedly bad news for the Brazilians and good news for Australian miners.

The company has given up any hope of hitting the 335Mt upper end of its production guidance for 2021, dropping its guidance range to 315-320Mt for 2021.

Its 2022 guidance will be 320-335Mt, with a targeted nameplate rate of 370Mtpa. That means its 400Mtpa is now a “mid-term” goal, likely to be around 2024, meaning the flood of supply expected from Vale could be some way off.

At the same time, expansion efforts from Australian companies appear to be picking up pace.

Gina Rinehart’s Roy Hill and Hancock announced a deal with Mineral Resources (ASX:MIN) this week to cooperate on port and rail facilities for the proposed berth at South West Creek at Port Hedland.

Roy Hill, Hancock’s Atlas Iron and MinRes are all looking to expand production substantially over the coming years, with BHP recently gaining environmental approval to increase its export limit from 290Mt to 330Mt.

Rio Tinto, meanwhile, could make a decision on the development of its portion of Guinea’s Simandou iron ore mine in 2022, according to a note from UBS, while it is also eyeing off the development of a series of mines in the Pilbara to increase production to 345-360Mt by the middle of the decade.

Benchmark 62% iron ore fines prices rose more than 6% according to Fastmarkets MB on Monday, climbing to US$103.27, while Dalian and Singapore futures also spiked on speculation mills were restocking ahead of an expected relaxation of production curbs in December.

It comes after months of sliding steel output caused by emissions-related restrictions imposed on factories by Chinese authorities, who should achieve their aim of keeping steel production from beating 2020’s record 1.065Bt rate.

“Iron ore futures pushed higher alongside a rally across the wider metals sector. However, sentiment was supported by rising optimism in the Chinese
steel sector,” ANZ senior economist Adelaide Timbrell said in a note.

“Chinese research group Mysteel said that pig-iron output would rise in December as idled plants are restarted.

“This could mark the inflection point after months of pressure on output.

“Reports of lower output from Brazil also supported prices. Vale, the Brazilian producer, lowered its top end production guidance for 2021 to 320m tonnes, from 335m tonnes.”

 

ASX iron ore stocks

Scroll or swipe to reveal table. Click headings to sort.

CODE COMPANY PRICE 1 WEEK RETURN % 1 MONTH RETURN % 6 MONTH RETURN % 1 YEAR RETURN % MARKET CAP
HIO Hawsons Iron Ltd 0.1025 28 33 -33 190 $ 68,645,083.20
BCK Brockman Mining Ltd 0.051 28 13 11 70 $ 436,123,910.16
HAW Hawthorn Resources 0.105 19 102 98 0 $ 31,683,983.24
IRD Iron Road Ltd 0.22 16 13 -6 52 $ 154,945,107.33
GRR Grange Resources. 0.625 14 10 24 136 $ 734,910,073.23
FMG Fortescue Metals Grp 17.43 10 25 -21 -6 $ 54,189,782,556.80
RHI Red Hill Iron 2.92 8 -10 320 1698 $ 185,101,632.10
EQN Equinoxresources 0.215 8 -2 $ 9,225,000.21
BHP BHP Group Limited 39.32 7 7 -18 2 $ 113,791,196,266.58
MIN Mineral Resources. 45.12 7 17 -2 41 $ 8,496,370,992.89
CIA Champion Iron Ltd 4.54 7 3 -31 0 $ 2,304,538,035.80
MDX Mindax Limited 0.05 6 0 -22 1567 $ 95,246,788.75
GWR GWR Group Ltd 0.105 5 -13 -55 -41 $ 31,792,576.52
RIO Rio Tinto Limited 95.34 4 6 -23 -7 $ 35,410,314,653.46
FEL Fe Limited 0.031 3 -16 -30 7 $ 25,833,370.95
GEN Genmin 0.165 3 0 -42 $ 46,577,495.25
TI1 Tombador Iron 0.032 0 -20 -68 -20 $ 34,656,460.48
SRN Surefire Rescs NL 0.012 0 -8 -48 -61 $ 13,251,724.91
MGT Magnetite Mines 0.024 0 -4 -63 140 $ 72,352,178.26
JNO Juno 0.125 0 -7 -24 $ 16,957,250.13
FEX Fenix Resources Ltd 0.23 0 0 -21 48 $ 106,248,132.00
EFE Eastern Iron 0.076 0 41 485 805 $ 65,821,914.05
CZR CZR Resources Ltd 0.007 0 0 -50 -46 $ 24,404,262.94
ADY Admiralty Resources. 0.015 0 0 -17 15 $ 19,553,687.30
ACS Accent Resources NL 0.055 0 0 10 450 $ 25,631,500.57
MAG Magmatic Resrce Ltd 0.097 -1 4 -57 -45 $ 25,194,193.00
MGU Magnum Mining & Exp 0.086 -2 25 -48 83 $ 40,765,882.95
VMS Venture Minerals 0.047 -4 4 -57 18 $ 65,106,079.50
DRE Drednought Resources 0.045 -4 18 80 96 $ 124,601,933.37
PLG Pearlgullironlimited 0.088 -4 -35 $ 4,741,961.75
SRK Strike Resources 0.1 -5 -9 -59 -20 $ 27,000,000.00
MIO Macarthur Minerals 0.37 -5 -1 -24 -20 $ 53,438,261.95
MGX Mount Gibson Iron 0.365 -5 -13 -56 -51 $ 466,068,692.71
TLM Talisman Mining 0.175 -5 21 -20 46 $ 31,915,714.49
LCY Legacy Iron Ore 0.022 -6 69 47 267 $ 153,713,724.41
RLC Reedy Lagoon Corp. 0.041 -7 41 105 215 $ 21,601,046.64
FMS Flinders Mines Ltd 0.6 -8 -13 -33 -25 $ 89,489,745.81
HAV Havilah Resources 0.175 -8 -5 -31 3 $ 53,598,514.90
AKO Akora Resources 0.205 -9 0 -21 $ 11,515,560.32
SHH Shree Minerals Ltd 0.009 -10 -10 -40 -25 $ 9,569,132.03
PFE Panteraminerals 0.195 -13 -30 $ 7,507,500.00

 

Claims Aussie coal is back in China rears head again

China has periodically ‘relaxed’ its ban on Australian coal in recent months to clear cargoes sitting in customs in the midst of its energy shortage.

But again analysts are warning against suggestions 2.8Mt of imports from Australia appeared in official data from October that it means the unofficial ban will come to an end.

Diplomatic tensions between Australia and China remain frosty. Commbank analyst Vivek Dhar said it would hard to see the rationale in China unwinding the ban.

“Given the success that China has achieved in containing the power crisis to date, it’s difficult to see the rationale that policymakers take the extra step of relaxing the unofficial ban with Australia to boost coal imports,” Dhar said.

“We think it’s unlikely that China will meaningfully relax the unofficial ban on Australian coal in the foreseeable future.

“It’s probable that China continues to clear Australian coal held at Chinese ports, especially if this winter proves to be colder than normal. We continue to see the ex‑China market as the key drivers of demand for Australian coal for the foreseeable future.

“And Australian coal exports have been quite successful since China’s unofficial ban on Australian coal. In fact, Australian thermal coal exports lifted 1% from Q3 2019 to Q3 2021. Australian coking coal exports though are tracking 10% lower in Q3 2021 relative to Q3 2019.”

It has been a tepid week for Australian coal miners on the bourse.

One of the better performers was Tigers Realm Coal (ASX:TIG).

The Australian-owned Russian coal producer said it sold a record 906,000t of the black stuff in 2021, 131,000t or 17% higher than its previous record in 2020.

That included 12 vessels containing 765,000t of thermal coal, two ships with 120,000t of met coal and 21,000t sold into Russia’s domestic market.

 

ASX coal stocks

Scroll or swipe to reveal table. Click headings to sort.

CODE COMPANY PRICE 1 WEEK RETURN % 1 MONTH RETURN % 6 MONTH RETURN % 1 YEAR RETURN % MARKET CAP
PDZ Prairie Mining Ltd 0.225 5 3 -1 13 $ 49,741,344.14
TIG Tigers Realm Coal 0.024 4 14 200 114 $ 300,534,154.46
NHC New Hope Corporation 2.055 4 2 40 47 $ 1,664,714,164.00
MCM Mc Mining Ltd 0.095 2 -21 -10 -50 $ 14,052,179.51
SMR Stanmore Resources 1.08 1 1 57 53 $ 281,222,594.64
PAK Pacific American Hld 0.018 0 13 -4 -20 $ 8,601,793.24
LNY Laneway Res Ltd 0.006 0 20 20 -14 $ 23,424,395.60
WHC Whitehaven Coal 2.385 -1 -9 49 63 $ 2,488,672,599.12
CRN Coronado Global Res 1.12 -1 -18 61 5 $ 1,877,628,177.60
YAL Yancoal Aust Ltd 2.56 -2 -14 29 19 $ 3,393,529,353.09
BRL Bathurst Res Ltd. 0.66 -2 -16 100 65 $ 107,699,522.49
TER Terracom Ltd 0.18 -3 -8 44 24 $ 135,649,373.40
NCZ New Century Resource 0.145 -3 -6 -22 -37 $ 241,605,525.00
AKM Aspire Mining Ltd 0.074 -4 -22 -8 -3 $ 40,103,321.82
ATU Atrum Coal Ltd 0.0315 -5 -27 -33 -89 $ 21,319,888.42
JAL Jameson Resources 0.08 -7 -6 -11 -36 $ 24,266,551.20
AHQ Allegiance Coal Ltd 0.55 -8 17 5 104 $ 194,349,339.25
BCB Bowen Coal Limited 0.15 -9 -14 136 213 $ 179,330,194.68
CKA Cokal Ltd 0.15 -9 -9 150 111 $ 140,562,346.95
NAE New Age Exploration 0.01 -9 -9 -38 -17 $ 15,794,888.01