SSF 2021: Automotive producers likely to lead the drive to ‘green steel’

Automotive producers are likely to be the first downstream sector to shift toward using “green steel,” Saudi Arabian steel producer Sulb Co's chief executive Ravi Singh told delegates at the Singapore Steel Forum 2021 on Wednesday July 14.

He said car producers have consistently been the main innovators among the main manufacturers using steel products. 

“Major automotive producers such as Mercedes have vowed to be carbon-neutral by… 2037-2050, Singh said during an international panel discussion focusing on the opportunities and challenges for the global steel industry. You will not be able to find any automotive producers that do not use green steel,” he added.

Mercedes, for instance, announced in late May that is was re-tooling its supply chain to focus on the prevention and reduction of carbon dioxide emissions by taking an equity stake in Swedish start-up H2 Green Steel (H2GS).

H2GS will use hydrogen and electricity from 100% renewable energy sources instead of coking coal, with the hydrogen binding the oxygen from the iron ore during the steelmaking process to produce water as a by-product, rather than carbon dioxide.

But Singh also made the point that steel makes up a relatively small proportion of the total cost of producing a vehicle, especially in electric vehicles where the drive components are typically more costly than in traditional internal-combustion engine (ICE) vehicles.

“This is why the ability of automotive producers to absorb the increase in steel prices is not difficult,” he said.

In contrast, he said the construction sector will lag behind slightly in taking up green steel, especially for cement-based construction, so governments should also look at decarbonization in sand mining and cement production.
Key role for scrap
And Singh said that ferrous scrap will have a major role to play because there was an increasing awareness among steelmakers globally about decarbonization.

This was especially true in China and India, he said, where the primary production route is still based on blast furnaces – unlike in the United States and Europe, which are more scrap-based.

“There is a major shift happening globally [and] the future of the steel industry will be driven by decarbonization, especially as the steel industry has increased its share of the production of greenhouse gases to 9% from 7.5%,” Singh said.

“About 750 million tonnes of scrap is generated globally every year. This is expected to reach 1 billion tonnes by 2030 and 1.3 billion tonnes by 2050, which will [feed] a substantial amount of [steel] production,” he added.

Singh also said that legislation will be a key factor when it comes to curtailing the production of greenhouse gases.

And he highlighted the fact that difficulties in decarbonizing steel production via the blast furnace or direct-reduced iron (DRI) routes would see scrap become the “go-to” material for decarbonization

“There will be a huge appetite for scrap,” he said.

But he acknowledged that a shift toward hydrogen-based DRI production for steelmaking will also result in a huge increase in costs.

“The cost of producing the DRI will probably jump to $300-400 per tonne, which will have an impact on overall steelmaking. So unless there is a conscious decision by governments to increase overall carbon taxation, so that there is headroom to absorb the cost increases, we will all be playing a bit of a waiting game,” Singh added.

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