China’s first 1 million ton hydrogen-based shaft furnace began production at Baosteel Zhanjiang

The China Baowu Steel Group Corporation (Baowu Steel or Baowu), a prominent player in the steel industry, recently inaugurated its Zhanjiang Iron and Steel Zero-Carbon Demonstration Plant. This plant features China's first 1 million ton hydrogen-based shaft furnace, which commenced production on December 23, 2023. This pioneering facility is not only the first of its kind in China but also a trailblazer in integrating the use of hydrogen and coke oven gas for industrial applications. The company reports that this advanced plant can potentially reduce CO2 emissions by approximately 500,000 tons annually compared to traditional coke-based facilities.

The project's construction kicked off on February 15, 2022, and the installation of the hydrogen shaft was completed by April 2023. Initially, the hydrogen is being sourced from coke oven gas of the existing traditional furnaces within the Zhanjiang steel complex. However, Baowu has a strategic plan for the long-term development of a low carbon hydrogen supply. This plan includes hydrogen production from natural gas or wind power, aiming for ultra-low emission iron and steel production.

Based in Shanghai, China Baowu Steel Group Corporation is a state-owned enterprise operating under the central government's direct administration. It stands as the world's largest steel enterprise, securing the 44th position among the Fortune Global 500. In 2022, Baowu produced an impressive 132 million tons of steel, with a total operating income of RMB 1.16 trillion.

In 2021, Baowu set ambitious carbon reduction targets. The company aims to reach its carbon peak by 2023, reduce carbon emissions by 30% by 2035, and achieve carbon neutrality by 2050. The hydrogen-based shaft technology is viewed as a key and feasible solution for reaching these carbon peak and neutrality goals.

China's steel industry is a significant contributor to national carbon emissions, accounting for about 17%, which is over 2 billion tons per year. If considered separately, China's steel sector would rank as the fifth-largest greenhouse gas emitter globally. Recent years have seen China focus on curbing excess capacity in its steel industry, implementing policies that mandate equivalent or reduced replacement for new steel production capacities. This is coupled with a push towards adopting green and low-carbon technologies. Following the “Opinions on Resolving Excess Capacity and Achieving Development of the Steel Industry” issued by the State Council in 2016, the Ministry of Industry and Information Technology released the “Measures for Production Replacement in the Steel Industry” in mid-2021.

In February 2022, several Chinese ministries jointly issued guiding opinions and guidelines to promote the high-quality development of the iron and steel industry. These policies are designed to aid in the decarbonization of the domestic steel industry while maintaining its global competitiveness.

Moreover, several leading Chinese steel companies are undertaking hydrogen metallurgical projects. These include Bayi Steel Company’s hydrogen-rich carbon cycle blast furnace pilot project, Baowu Zhanjiang Steel’s hydrogen-based shaft furnace system project, and HBIS Group’s hydrogen Direct Reduced Iron (DRI) plant, which has an annual capacity of 1.2 million tons for steelmaking raw materials. Notably, the Zhanjiang project was designated as a key preparatory project during the fifth session of the 13th Guangdong Provincial People’s Congress in January 2022, highlighting its significance in the industry's shift towards sustainable practices.