How green steel is transforming the steel industry

Steel is commonly used. It has been the most frequently used metal for almost 200 years and is an essential component of almost all infrastructures that support our modern industrial society. Its value chain supports tens of millions of employment and nearly $3 trillion in economic activity. Unfortunately, it ranks second only to power generation in terms of its contribution to atmospheric greenhouse gas emissions, at roughly 8%. As with so many other mature organisations today, the steel industry's players are being obliged to prioritise enhancing sustainability through social, environmental, and regulatory changes.

Failure to develop a decarbonization strategy and begin meeting greenhouse gas reduction targets now may have a negative impact on the industry's reputation and future value as businesses consider how to achieve the long-term goal of producing steel with net-zero emissions across the entire value chain.

New technology investments are likely to generate substantial returns.

To produce the finished, refined product, the current typical blast furnace procedures for creating new steel require a significant amount of coking coal. Although the most cost-effective technique of producing virgin steel remains in use, there is significant public, political, and commercial interest in pushing the manufacture of significantly more ecologically friendly steel products. The industry has launched numerous pilot plants to test out novel manufacturing techniques and cutting-edge technology as a result of these difficulties, and has given priority to the creation of decarbonization programmes.

Steel production's entire value chain is being innovated.

Large iron ore mining companies are also interested in green steel; after all, their iron ore exports are the raw material for steelmakers' blast furnaces, and blast furnace emissions would be counted as scope 3 emissions for extractors who have made decarbonization commitments to their shareholders and stakeholder groups. Fortescue Metals aims to begin producing green hydrogen for use in steel production commercially as early as 2023 in order to start achieving its 2030 carbon neutrality objective for Scope 1 and 2 emissions. This would occur ten years earlier than previously predicted.

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The ambition of iron ore miners to process close to their operations and export low-emission, hot briquetted iron is an intriguing new dynamic in the steel value chain. Historically, companies used ore imported from other countries to produce 70% of the steel. Australia and Brazil, for example, refining its iron ore into higher value "Green HBI" and exporting it directly to end-user markets would result in a significant shift in market dynamics and the value chain for steelmaking. This would be the start of a potential decoupling in this value chain.