Green steel production in Europe and in Ukraine

21/ 11/ 2019

Stanislav Zinchenko

GMK Center CEO

The steel industry will go green — in Ukraine too

On 28–30 November, the World Steel Dynamics and GMK Center held the largest European Steel Conference in 2019, attended by over 180 people.

The main idea of the event was to share opinions on what is in store for the steel industry in 2020 and subsequent years: whether steel prices reached the bottom or they will continue falling; what will happen to shipments and prices for iron ore; whether global protectionism will weaken; what trends will prevail in the global steel industry; what materials will be used in the future; and how producers plan to transfer to carbon-free production.

We heard different opinions, unexpected insights, and fundamental forecasts. Among the ideas that clicked most was the assumption of the U.S. experts that Section 232 that launched a wave of protectionist measures around the globe could be lifted soon. It will be substituted with classic anti-dumping measures, which will actually ‘compensate’ for the current 25% duty.

The most discussed and memorable issue, both during panel addresses and on the sidelines of the conference, was decarbonization of steel production. That is what ‘steel’ Europe aspires today, and that is what we all are moving towards.

The steel industry will become green and environmentally friendly. And this is likely to take place in the near, not distant future.

ArcelorMittal, the world’s largest steelmaker, promises to switch to carbon-free production until 2050, Liberty Steel until — 2030.

Sanjeev Gupta, Head of Liberty Group, noted that the industrial and digital revolutions are now giving place to the environmental revolution. Through he characterized the processes going on in the global industry as ‘evolution,’ not revolution. The future of the steel industry is green steel production.

What is more — no one will ask steelmakers whether they want to go green or not. If BMW wants to sell ‘green’ vehicles, it means that the entire supply chain for the production of these vehicles, including steel, is supposed to become ‘green’ too. Investors will invest in what’s important to the client.

On the sidelines of the conference, CEOs of the largest world steel companies said, “We have been watching the environmental evolution for a decade. Steelmaking must run fast to catch up with the progress in other sectors. It must speed up. There is no choice. Perhaps, “we will earn less, but become green.”

The circular economy and industrial production without СО2 emissions is already a reality. Generally speaking, any solution or investment will be made with the aim of cutting СО2 emissions in the production sector. Earlier, social factors were taken into account — now it’s turn of environmental ones.

“This standard will become a reality in Europe in a few years. Those who want to sell steel on the EU market will have to produce the same ‘green’ steel as the EU steel companies. European authorities will find a method for applying the so-called carbon tax,” said a representative of a European consulting firm.

In terms of engineering and technologies, Europe is ready for this novelty. Presentations of Tenova and Danielli showed that technologies for energy efficiency, reduction of СО2 emissions, using biomass and natural gas in pig iron production and the like are already being actively implemented. Companies are ready for this. Liberty Steel, ArcelorMittal, Metinvest and Voestalpine presented their activities and approaches towards green steel production. They have developed relevant strategies. And to me, this is probably the most important and interesting conclusion.

Fortunately, Ukraine’s leading steel producers, ArcelorMittal Kryvyi Rih and Metinvest, have also embarked on this path. This is evidenced by their investment and programs — greening is in the first place. Many experts doubt whether these programs and investment are realistic, but it became clear at the conference that skepticism is irrelevant. It is perhaps because there is no Ukraine’s own game, there is a common world one: either you play by the general rules, or you don’t play at all. Either you switch to green steel production, or you don’t produce steel at all.

Yes, Ukrainian producers face many difficulties — a lack of easy access to cheap investment, a lack of government industrial policy, and a lack of a proper legal environmental framework. We lag behind Europe in labor productivity, we still fail to automate and robotize production, and we already need to evolve to green production and green life. Yet, investment plans of Ukrainian steel companies make me optimistic.

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