As the global decarbonisation drive spreads to South East Asia, the risk of new blast furnace (BF) constructions planned by Chinese steel companies in different countries in the region has started to attract attention.
Share of BF steelmaking rises
If a new design plan is realised, the ratio of blast furnaces to electric arc furnaces in the region will increase as well as the share of blast furnaces in crude steel production. According to a SteelDaily’s report this will also raise awareness of the problem of reducing CO2 emissions in blast furnace steelmaking.
“The rise in sea level could submerge Jakarta and Bangkok, and the enormous typhoons and cyclones endanger Vietnam, Myanmar, and the Philippines,” Secretary-General of the Association of Southeast Asian Nations (ASEAN) Yo Wei Jin observed during his address at a sustainability forum recently while highlighting how ASEAN countries will be affected by climate change.
Decarbonisation is a burning issue not only in developed countries such as Japan, Europe, and the USA but also in emerging countries. Governments in Thailand, Indonesia, and Vietnam have announced that they are aiming to achieve carbon neutrality, and Indonesia plans to introduce a $2.1/tonne (t) carbon tax from Apr’22.
Carbon dioxide emitted by the 10 ASEAN countries accounts for 4.35% of total global emissions.
New BF constructions
Chinese companies are building blast furnaces across the region which is expected to fuel the next phase of global growth in steel production. According to the South East Asia Iron and Steel Institute (SEAISI), a blast furnace with a scale of 4 million tonnes (mn t) is under construction in the Philippines and in East Malaysia a 10 mn t project by Bun’an Steel is underway.
In Indonesia, the Hebei Blue Stone Industry Group has started construction of a 2 mn t iron-making facility at Jambi, Sumatra, and another 3 mn t facility in Central Java.
Local companies such as Vietnam’s Hoa Phat Group are also planning to add blast furnaces. It is estimated that carbon neutrality will be jeopardised through the construction of a fleet of blast furnaces in the region.
Turning the carbon clock back?
The growth of steel capacities in the region fuelled by Chinese investments far outstrips the domestic demand of the countries involved. Semi-finished and finished steel products are expected to be exported to China. In that case, however, China will have to contend with the blame of setting up emissions-intensive steelmaking infrastructure in geographies where emissions standards are comparatively lenient.
At the UN General Assembly in Sep’21, Chinese President Xi Jinping had announced that he would not start coal-fired power generation projects overseas. However, nothing was promised as regards construction of emissions-intensive blast furnace steelworks.
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