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.
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