25/03/2021 - 15:53

Green steel 30 years away: Kerr

25/03/2021 - 15:53

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The voices of those opposed to the use of metallurgical coal may be getting louder, but South32 chief executive Graham Kerr is still comfortable talking about the need for coal.

Green steel 30 years away: Kerr
South32 chief executive Graham Kerr. Photo: Matt Jelonek

The voices of those opposed to the use of metallurgical coal may be getting louder and project approvals more challenging, but South32 chief executive Graham Kerr believes greener alternatives could still be three decades away.

“I think hydrogen is going to be an important part of the fuel mix going forward, but the reality is that green steel is probably 25 to 30 years away,” he said.

“Until that happens, you are going to need coal.”

The comments appear to put him at odds with Fortescue Metals Group chair Andrew Forrest, who called for an “urgent” global move to green hydrogen back in January.

While Mr Kerr said he appreciated the concept, the technology might still be decades away.

“I think his [Andrew Forrest’s] concept of bringing hydrogen into the country as another fuel source is great, and we’re really interested in how that might develop, but I think the technology to get the steel works to actually use it in a meaningful way is probably at least a couple of decades away from being practically used,” he said.

“I would say that in about 80 per cent of our meetings, people are asking questions about metallurgical coal... it’s becoming a more challenging environment and it’s harder for projects to get approval.

“But green steel - you’re talking about 25 to 30 years away.

“And even in that context, metallurgical coal is still going to be needed in places like South East Asia and India.

“I think it’s important that we continue to talk about it, we continue to explain why we're doing it.

“From an ESG perspective, I’m comfortable talking about why the world needs metallurgical coal.”

He said that the company, which operates Collie’s Worsley Alumina Refinery, recognised that it would need to facilitate a transition away from coal, but would work with the state government to determine what that should look like and which alternative energy sources it should pursue.

In recent weeks, the company’s Illawarra operations have made headlines following the rejection of its $1 billion expansion plan, an operation Mr Kerr said provides employment for about 2,200 people.

The coal operation in New South Wales has been running there for more than 50 years, but the Independent Planning Commission doesn’t believe the company should be able to expand its operations - citing concerns an expansion could have irreversible environmental impacts.

The company plans to appeal the decision, but has not yet been able to secure a meeting with the New South Wales government. Mr Kerr said the company hoped to discuss the matter with the government by next week.

The seasoned mining executive discussed everything from leading the company’s demerger from BHP to his career highlights and major industry shifts as the main guest at this morning’s Business News breakfast.

Mr Kerr spoke frankly about his humble beginnings growing up in Coolbellup, working in remote parts of the country and overseas and his career challenges and regrets before the event's 500 guests, including balancing his career with family life.

When reflecting on the greatest changes he’d witnessed in the industry, he highlighted the enhanced emphasis on safety, which he said had undergone huge improvements over the last two decades.

“It’s no longer a priority; it’s a core part of business,” he said.

“You have to make sure that you do it well and you have to make sure that your employees make it home safely.”

Alongside significant advancements in technology, Mr Kerr said there had been an increased focus on community and cultural heritage.

Referencing Rio Tinto’s controversial blasting in the 46,000-year-old Juukan Gorge, Mr Kerr said South32 had invested a great deal of resources into looking at its operations to ascertain where gaps may exist and how best to rectify them.

That work coincides with the release of the state government's new Draft Aboriginal Cultural Heritage Bill 2020, which modernises the state’s approach to protecting Aboriginal cultural heritage and is set to reset how Aboriginal cultural heritage is identified, managed and conserved.

Mr Kerr said while supportive of the need to engage with traditional land owners, he believed there was an opportunity for the legislation to strike a better balance.

“We’re a strong believer that the world has shifted, expectations have shifted and so, too, has the benchmark around the need to be clearer and more transparent,” he said.

“We’re always pushing hard to engage with our traditional land owners and have them be part of the process because, at the end of the day, we’re mining their resources and they need to be able to see the benefits.

“The draft is a moving piece of legislation and we still believe there is an opportunity for it to be balanced.”

Despite being one of the most isolated cities on the globe, Mr Kerr told Business News’ Mark Pownall that Perth was still the ideal place to base a resources company, with connections to the east coast, direct flights to South Africa and great resources.

Reflecting on his proudest moments, Mr Kerr said he admired the way in which his employees had responded to and looked after each other during the COVID-19 pandemic; which claimed the lives of 29 of its employees.

Mr Kerr joined BHP Billiton Group as a graduate in 1994, holding several roles including president of the Diamonds and Specialty Products before his appointment as chief financial officer of BHP Billiton in 2011.

In 2014, Mr Kerr was appointed chief executive of South32, successfully leading its demerger from BHP.

The mining and metals company now has an operating revenue of $1 billion, with aluminium, coal, manganese, nickel and silver assets across Australia, North America, South America, and Africa.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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