Swedish steelmaker SSAB announced last week that it would do the same, bringing forward plans for almost 3mn t/y of EAF capacity at Lulea, Sweden, and Raahe, Finland, to 2030 from 2030-45.
ETS phase-out incentivises decarbonisation
The timing of steelmakers’ decarbonisation plans suggests that EU policy on carbon costs is having the desired push effect towards greener steelmaking. While so far only pilot-scale hydrogen-based steel projects are operational, several industrial-scale projects are planned to come on line around 2026, when the ETS-CBAM transition begins, and over 30mn t is planned by 2033, after the phase-out is to be completed in 2030.
The phase-out of free allowances under the EU emissions trading system (ETS) and the introduction of a carbon border adjustment mechanism (CBAM) over 2026-30 in theory provides protection for low-carbon steelmaking in the EU, while removing the incentive for steelmakers to cut costs by continuing to use coal or gas as an energy source. And the threat of paying over €80/t in carbon costs is an important incentive for EU steelmakers to decarbonise. But European steel association Eurofer argues that the EU should continue to grant free emissions throughout the whole ETS-CBAM transition phase to mitigate the carbon costs that steelmakers will bear, alongside the considerable investment costs of reducing emissions by 30pc by 2030, estimated by Eurofer to be around €25bn. “The combined effect of the huge investment needed to decarbonise — and also [of] simply cutting emissions by cutting production, which is inevitable given the existing technology, plus skyrocketing energy prices and rising production costs will put enormous and unsustainable pressure on our members,” Eurofer director of market analysis Alessandro Sciamarelli said. Eurofer estimates the cost to the industry in 2030 will be €14bn at today’s emissions levels or €8.4bn presuming a 30pc emissions reduction.
Cross-sectoral relationships pivotal
The EU plans to have 6GW of renewable hydrogen electrolyser capacity by 2024, and 40GW by 2030, as well as 40GW of production available for import from outside the EU by 2030. But partnership with companies in upstream and downstream sectors have been determining factors for steelmakers assessing the viability of hydrogen-based DRI-EAF steelmaking.
Salzgitter and Danish energy provider Orsted aim to establish a circular supply chain, within which Salzgitter will supply renewably-produced steel, largely for use in the construction of wind farms, and Orsted will supply renewable (wind-generated) energy, as well as returning windmill parts to Salzgitter as low-CO2 scrap at the end of their life span. The company aims to increase the amount of scrap it uses by 50pc to 3mn t/yr by 2033. Salzgitter will also supply low-CO2 steel to all of carmaker BMW’s European plants from 2026 onwards.
ArcelorMittal recently added to its investments in the renewable energy sector, committing $100mn to sustainable energy-focused investment fund Breakthrough Energy, and $5mn to Israel’s H2Pro, a company that has developed E-TAC (Electrochemical — Thermally Activated Chemical) technology that splits water into hydrogen and oxygen in a process similar to electrolysis.
For SSAB, the abundance of hydroelectric and wind power in northern Sweden has played an important part in allowing the steelmaker to fully commit renewable-powered EAF production within the next eight years, as has its partnership with iron ore mining firm LKAB and energy provider Vattenfall.
Further progress by steelmakers in forming supply or offtake partnerships might encourage further decarbonisation commitments in the near future. German steelmaker Dillinger-SHS has an initial agreementwith engineering company Paul Wurth and steelmaker Liberty to develop a 2mn t/yr DRI plant including 1GW of hydrogen electrolysis capacity at Dunkirk. The steelmaker is also working with seven energy and engineering companies to develop a “hydrogen economy” in the German Saar region, the French Lorraine region, and the state of Luxembourg by producing 61,000 t/yr of hydrogen and investing €600mn in production facilities and transport infrastructure.
Visiting the ArcelorMittal site in Dunkirk, France, today, French Prime Minister Jean Castex, Minister of Ecological Transition Barbara Pompili, and Minister of Industry Agnès Pannier-Runacher were welcomed by Eric Niedziela, Chairman of ArcelorMittal France and Vice President Climate Action ArcelorMittal Europe, Matthieu Jehl, CEO of ArcelorMittal France, Bruno Ribo, CEO of ArcelorMittal Méditerranée, and Yves Koeberlé, CEO of ArcelorMittal Europe – Flat Products.
The Prime Minister announced support from the French Government for ArcelorMittal’s decarbonisation programme in France, which involves a €1.7 billion investment in its Fos-sur-Mer and Dunkirk sites in France. This investment will enable a profound transformation of steelmaking in France and a total reduction of close to 40% or 7.8 million tonnes per year in ArcelorMittal’s CO2 emissions in France by 2030. This transformation will represent a 10% reduction in greenhouse gas emissions from the manufacturing industry in France and put France’s steelmaking industry on the path of the Paris Agreement.
The transformation of steelmaking operations will generate positive and sustainable dynamics for employment and industrial activity in France, especially in the Dunkirk and Fos-sur-Mer areas.
ArcelorMittal will implement €1.7 billion of investments by 2030 to accelerate the decarbonisation of its steelmaking sites in Fos-sur-Mer and Dunkirk while maintaining equivalent production capacities:
- In Fos-sur-Mer, ArcelorMittal will build an Electric Arc Furnace (EAF). This new unit will complement the ladle furnace announced last March and supported by France’s recovery plan, ‘France Relance’. Together these investments will turn Fos-sur-Mer into a reference site for the production of low carbon, circular steel, made from recycled steel;
- In Dunkirk, ArcelorMittal will build a 2.5 million tonne Direct Reduction of Iron (DRI) unit to transform iron ore using hydrogen instead of coal. This DRI will be coupled with an innovative technology electric furnace and completed by an additional Electric Arc Furnace (EAF). Other investments are already under way to continue to increase the proportion of scrap steel used.
The new industrial facilities will be operational starting in 2027 and will gradually replace 3 out of 5 of ArcelorMittal’s blast furnaces in France by 2030 (2 out of 3 in Dunkirk, 1 out of 2 in Fos).
Decarbonising the Fos-sur-Mer and Dunkirk sites will contribute to maintaining and developing the French steelmaking industry. It will also support the strengthening and development of local ecosystems, generating positive and sustainable dynamics for employment and industrial activity in France, especially in the Dunkirk and Fos-sur-Mer areas.
Commenting, Eric Niedziela, Chairman of ArcelorMittal France and Vice President Climate Action ArcelorMittal Europe, said:
“ArcelorMittal is honored that the French State supports our projects. We are proud to have this unique opportunity to contribute to the objectives of the France 2030 plan and to maintaining a strong manufacturing industry in France, serving European markets. ArcelorMittal’s management team and its 15,500 employees in France are mobilised to succeed in this new industrial revolution and we will be happy to welcome new talents willing to participate in this extraordinary adventure.”
Yves Koeberlé, CEO of ArcelorMittal Europe – Flat Products, added:
“As a leader in steelmaking, ArcelorMittal is committed to decarbonising its plants in Europe to serve our industrial customers – automotive, packaging, construction, transport but also solar and wind energy and future networks for hydrogen and CO2 capture. We are grateful for this support from the French State which will enable the major transformation of our sites in Fos-sur-Mer and Dunkirk which together account for over one-third of ArcelorMittal’s flat steel production in Europe.”
Matthieu Jehl, CEO of ArcelorMittal France, said:
“This support makes possible the extremely high investments we need to make to decarbonise steelmaking on our Dunkirk site, Europe’s largest steel producing site. We will therefore continue transforming our sites in France to deliver our customers with low carbon steel.”
Bruno Ribo, CEO of ArcelorMittal Méditerranée, said:
“Our Fos-sur-Mer site will undergo a first-of-a-kind transformation to decarbonize. Our teams are already implementing a first investment – our ladle furnace – which will increase our production of low carbon steel. We are ready to continue.”
ArcelorMittal’s French operations have already started working on a second step in their decarbonisation programme, which will use the technologies implemented during the first step, along with carbon capture and storage or utilisation (CCU/S) technologies, assuming the technology sufficiently matures and regulation ensures it economic viability. This second step will enable ArcelorMittal’s French operations to reach carbon neutrality by 2050.
The partnership between ArcelorMittal and the French government for the projects is subject to EU approval, which is anticipated by the second quarter of this year, as well as the availability of economically viable energy infrastructure and supply.
Decarbonising ArcelorMittal’s operations in France: three ways to carbon neutrality
ArcelorMittal plays its part in the fight against climate change and has set ambitious objectives: a 35% reduction in CO2 emissions in Europe and a -25% reduction globally by 2030; and carbon neutrality by 2050.
To do this, ArcelorMittal will change completely the way it produces steel, by:
✅ Increasing the recycling of steel: one kilo of steel produced by ArcelorMittal in France will soon contain up to 25% recycled steel
✅ Developing innovative DRI, to make steel without coal, with hydrogen
✅ Capturing residual CO2 for storage or usage (CCU/S).
ArcelorMittal is the world’s leading steel and mining company, with a presence in 60 countries and primary steelmaking facilities in 17 countries. In 2020, ArcelorMittal had revenues of $53.3 billion and crude steel production of 71.5 million metric tonnes, while iron ore production reached 58.0 million metric tonnes. Our goal is to help build a better world with smarter steels. Steels made using innovative processes which use less energy, emit significantly less carbon and reduce costs. Steels that are cleaner, stronger and reusable. Steels for electric vehicles and renewable energy infrastructure that will support societies as they transform through this century. With steel at our core, our inventive people and an entrepreneurial culture at heart, we will support the world in making that change. This is what we believe it takes to be the steel company of the future. ArcelorMittal is listed on the stock exchanges of New York (MT), Amsterdam (MT), Paris (MT), Luxembourg (MT) and on the Spanish stock exchanges of Barcelona, Bilbao, Madrid and Valencia (MTS). For more information about ArcelorMittal please visit: http://corporate.arcelormittal.com/
Salzgitter presents new “Salzgitter AG 2030” strategy
02.02.2022 | Press release of Salzgitter AG
- Objective: to establish Salzgitter AG as a leading company in the circular economy
- Journey: shaping the transformation profitably and successfully together with customers and suppliers
- SALCOS® – “SAlzgitter Low CO2-Steelmaking”: full implementation targeted by 2033
- New corporate design reflects transformation
Salzgitter AG is presenting its new “Salzgitter AG 2030” strategy. The objective is to establish the Group as an independent market leader for circular economy solutions with innovative products and processes. Achieving this goal can only be successful together with strong partners and networks. To this end, closed-loop value flows and supply chains are to be established in cooperation with customers and suppliers. Salzgitter AG is committed to binding, science-based CO2 reduction goals and is joining the Science Based Targets Initiative (SBTi).
Gunnar Groebler, Chief Executive Officer of Salzgitter AG: “The market conditions in our core markets are changing very dynamically in the course of the sustainability debate and the goals set for CO2 reduction. We are actively addressing this change and realigning our company proactively to a circular economy. For the Salzgitter Group, circularity means keeping resources once sourced from nature for as long as possible in economic use, thereby minimizing the additional introduction of finite resources into the economic cycle. We have adopted this principle as the core of our business activities. We are rising to the societal challenge and securing greater and more stable growth in the future in sustainably oriented markets. Our customers are in the process of switching their supply chains to green resources. We will support this trend with our new strategy, which will secure the Group’s future viability, sustainability and its jobs.”
In a first step, we have defined the following goals that we intend to achieve by 2030:
- Reduction of Scope 1 and 2 CO2 emissions by more than 50% compared with 2018
- Power generated exclusively from renewable energies and, where expedient, also from our own production in order to make the still energy-intensive manufacturing of products as climate neutral as possible
- Expansion of the scrap recycling activities by over 50% to more than three million tons a year
“Climate protection is a task for the whole of society. We view this challenge as an opportunity and are making it the focal point of our activities,” as Chief Financial Officer Burkhard Becker stated. “We plan to grow in existing and new areas of business and increase annual revenues to more than € 11 billion over the period up until 2025. Our Group companies are called upon to set new benchmarks in a peer comparison with regard to profitability and stability. To this end, we also intend to proceed with our efficiency program and, as from 2026, plan to leverage more than € 150 million p.a. in additional profit improvement potential.”
A core element of the new strategy consists of significantly accelerated decarbonization within the context of SALCOS®– SAlzgitter Low CO2–Steelmaking. In charting this course, the Salzgitter Group is reinforcing its role as a front runner in low-CO2 steel production. As early as 2025, the first blast furnace is to be replaced by direct reduction plants and electric arc furnaces. More than one million tons of green steel produced via this route is planned for 2026. By 2033, which is 12 years earlier than originally scheduled, the integrated steelworks are to have been fully aligned to the new world. Gunnar Groebler: “This is one of the biggest changes in the 150-year history of the Salzgitter Group. CO2 savings of 8 million tons a year are achievable, which corresponds to around one percent of Germany’s emissions. The key precondition is that policymakers now set the right economic and political framework conditions in place. This particularly applies to the topics of creating green leading markets, clarity in terms of funds to promote the transformation, and accelerating approval procedures.”
Strategic realignment will be accompanied and made visual by a groupwide brand relaunch. As part of this process, the corporate design has undergone a makeover, and Salzgitter AG is to be given an evolved logo as the most visual component of this extensive process. “Likewise, we have extended our company claim accordingly: “Salzgitter AG – Steel and Technology” is now “Salzgitter AG – People, Steel and Technology”. People will play a critical role in the aforementioned entrepreneurial transformation. People are the dynamic driver, ensuring implementation, and are therefore the key factor for success. This is why we place our employees, customers and partners center stage in everything we do. This aspiration now figures prominently in the group name,” as Chief Personnel Officer Michael Kieckbusch explained.