This article is part of our special report Raw materials in the EU economy.
When in the aftermath of the Second World War European leaders sought to build a common European future, the first thing they did was to pool the control over two of the most crucial building blocks of the European economy, by founding the European Coal and Steel Community in 1951.
This was the first step of the European integration that led to fundamental political changes and to the emergence of the European Union as we know it today: a community of shared goals and values, but also an organization with ambitions to be internationally competitive and to secure the prosperity of its member states.
Steel for Europe is an initiative on fostering steel security within the European Union.
Today, while economic prosperity remains at the forefront of EU priorities, the ambitious Green Deal launched by the incoming European Commission also makes it clear that sustainability has become a prerequisite for any economic model for the future. And just like in 1951, steel and coal are crucial components of this sustainable future. However not the thermal coal as it used to be.
In the coming years, the transformation toward a low-emission industry is expected to drive up the demand for environmentally-friendly products and low-carbon technologies such as electric vehicles and wind turbines, of which steel is a key component. Manufacturing of one wind turbine of 1MW capacity requires around 200 tonnes of coking coal and as the offshore wind technology is getting more popular also the demand for high-quality steel will rise.
Therefore, while the role of traditional coal is currently decreasing in favour of renewable energy sources, domestic coking coal production – a metallurgical coal – will gain more and more importance, as it is an indispensable material for steelmaking.
The steel industry is the main consumer of coking coal as over 70 percent of steel is produced with the use of coke. Steel produced with coking coal is used in key sectors of the EU economy, such as the automotive, railway, defence, construction or household appliances industries. It is thus indispensable for the development of an innovative European economy.
Due to the rising demand for steel, it becomes crucial to secure a reliable domestic supply of coking coal because our European economy is too dependent on external sources of supply, making it vulnerable. Indeed, 780kg of coking coal is needed to produce 1 ton of steel and there are currently no technologically feasible or economically viable alternatives to replace coking coal in the production of steel.
But coking coal is not only important for the steel industry. Highly advanced materials and innovative technologies are also being developed with the help of coking coal. Amongst by-products of the coking process, carbon nanostructures, for example, are widely used in various sectors of the economy – such as defence, aviation and electronics – due to their small weight combined with exceptional durability.
Industry leaders are also conducting intensive researches to implement a technology to separate hydrogen from coke oven gas. Indeed, coke oven gas contains 55% of hydrogen, a very valuable element to achieve climate-neutrality due to its role in zero-emission power generation or clean urban transport. In this field, demand for carbon fibres (which are made with a use of coal tar, another by-product of coking process), which are used in the production of hydrogen tanks, is also expected to rise significantly from 77.000 tonnes in 2018 to 117.000 tonnes in 2022 according to the Fraunhofer Institute.
Not only hydrogen tanks are made from coal tar – it is also a crucial material for electrodes production. The rapid growth of electric and hybrid vehicles industry directly has led to an increase in demand for needle coke, a direct product of coal tar used in anodes production. This key raw material for electrodes needs to be on a consistent quality level to provide the highest battery life span.
More broadly, as the EU continues its transition to a more circular economy, the demand for critical raw materials will increase due to their unique properties and essential use in green technologies and high-tech applications.
Recent years have already seen a growth in the number of raw materials used across product ranges leading the EU to recognize their fundamental importance by launching the “critical raw material list” in 2010.
The European Commission has recognized the fundamental role of coking coal for the EU economy by placing it on its list of critical raw materials. This list defines materials that need to be protected in the EU due to their high economic importance and high supply risk.
Coking coal holds a special place amongst these strategic materials. It has been on the list since 2014 due to, both its crucial use in the metallurgy sector, and the fact that a high concentration of supply lies outside Europe. In fact, the EU’s import reliance for coking coal is at 62 percent, with a demand of around 53 million tonnes and imports of around 40 million tonnes mainly coming from distant countries such as Australia, USA, Canada, Russia or Mozambique. Not only the CO2 emissions from coking coal imported from Australia to the EU are from 1,5 up to 3 times bigger than in the local production, but also the risk of unpredictable weather or political events is higher. The EU’s domestic supply should, therefore, be properly secured and incentivised.
This is not just theory. In November last year, the European Commission launched a WTO challenge against Indonesia for imposing far-reaching restrictions on the export of nickel and coking coal, with potentially very negative effects for the European steel industry.
This is why a specific policy underlining the importance of critical raw materials for the economy and ensuring their continued supply is needed to preserve the EU’s competitiveness and its sustainable future.
The availability of coking coal within the EU may change rapidly due to the reduction of supply and rising demand for steel, making it indispensable to keep it on the critical raw materials list, as this will enable additional investments in new mining techniques and access to research funds to address the EU’s strong dependence on external sources.