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  • Writer's pictureWorld Climate Foundation

Opportunities in the Steel Transition

By LIBERTY Steel Group


As we gather for COP28 there is an almost universal recognition that hard-to-abate sectors, including steel, must move urgently to decarbonise both for their own survival and the good of the planet.

We can not do without steel. It is the economic bedrock of almost everything that surrounds us today - infrastructure and energy, housing and transportation. And it will be at the heart of everything that enriches tomorrow – wind turbines and solar farms, electric cars and green cities.


Today, revenues from iron and steel are about $1.7 trillion. By 2050, as countries like India further urbanise and industrialise, that is projected to pass $2.5 trillion – close to a 50% increase.

But we must do without its dark side: CO2. Steel already accounts for some 8% of global CO2 emissions. Allowing for the increased demand between now and 2050, there is no practical answer to achieving net zero, without sustainable steel production.


Our industry must make radical change to combine steel recycling, renewable energy and breakthrough technologies such as hydrogen, to produce green iron and steel. And at the same time, work to develop and attract the skills we will need to transition our workforce towards low carbon production techniques.

There is a huge opportunity here but it requires collaboration across the value chain to bring it to fruition.


Building an Investible Industry

The Boston Consulting Group says eliminating emissions from the global steel industry could require investment of up to $3 trillion by 2050, including the energy infrastructure required to support the transition.


So there is a real opportunity here for asset owners looking to deploy capital in areas which will significantly accelerate decarbonisation.

The most exciting opportunity, we believe, is hydrogen. It can take the steel industry from one of the highest polluters to among the cleanest and greenest. In return, steel can enable hydrogen to scale up and nurture whole new industries.


But there are two big blockers. First, producing hydrogen is extremely energy intensive. Second, hydrogen cannot yet be economically and environmentally shipped. That’s why the coming hydrogen economy must prioritise locations with major renewable energy production potential. Hydrogen works better where it is produced.


Case Study – A Local Solution to a Global Goal

The Right Conditions

For the new hydrogen economy to work, the ingredients must be right. LIBERTY has found that full set of very special ingredients in Whyalla, South Australia - a place where we can see the future of sustainable steel.

Whyalla’s first advantage is that the whole region at the head of the Spencer Gulf is a sun and wind trap. A natural battery, endlessly recharged by natural resources. A perfect source for production of green hydrogen.

A second major advantage is just as important: Whyalla is next to some of the highest-grade magnetite iron ore deposits anywhere on Earth. At present LIBERTY has easy access to four billion tonnes of it, with billions more still beneath the surface.


The Right Conditions

For the new hydrogen economy to work, the ingredients must be right. LIBERTY has found that full set of very special ingredients in Whyalla, South Australia - a place where we can see the future of sustainable steel.

Whyalla’s first advantage is that the whole region at the head of the Spencer Gulf is a sun and wind trap. A natural battery, endlessly recharged by natural resources. A perfect source for production of green hydrogen.

A second major advantage is just as important: Whyalla is next to some of the highest-grade magnetite iron ore deposits anywhere on Earth. At present LIBERTY has easy access to four billion tonnes of it, with billions more still beneath the surface.


High-grade magnetite is key to green steel production since it requires so much less energy to turn it into Direct Reduced Iron (DRI) that can be easily stored and shipped. And then easily and safely transported to wherever it’s needed, to be turned into green steel – again with lower energy inputs.


And Whyalla has the rail and port infrastructure needed to move and ship large quantities of green iron.

The Importance of the Workforce

On top of these natural gifts, Whyalla has a workforce that literally grew up around iron and steel production. We have established a local workforce planning team and a Training Academy & Transition Centre within the community. These facilities are closely linked with the GREENSTEEL Academy and state and federal training institutions like the University of South Australia and the University of Adelaide. These initiatives meant we were able to redeploy every colleague affected by the closure of Whyalla’s coke ovens into other parts of our business.


Government Partnership

In Whyalla we benefit from the forward-thinking, forward-acting Government. Australia’s Prime Minister Anthony Albanese and South Australia’s Premier Peter Malinauskas recently showed their support by attending the closure of Whyalla’s last coke-fired ovens after 55 years of service to make way for green technology. South Australia has just named the preferred contractors to build a hydrogen production facility, hydrogen power plant and a hydrogen storage facility there.


Partnership across government and the supply chain can develop solutions that lower investment risk, enhance returns and play to natural regional strengths.


Green Iron Hubs

Many advanced economies and forward-looking companies are looking for similar solutions, and we are starting to see other embryonic magnetite/hydrogen hubs in Brazil, the United Arab Emirates and Africa. To embrace these green hydrogen opportunities and make production competitive, we will need evolving technologies and economies of scale.

Steel plants were traditionally situated near primary energy resources such as coal. As we move away from coal, the key lies in integrating renewable energy sources into the entire supply chain - sourcing, manufacturing, and logistics.

The essence of our model is to bring our magnetite resources to our sites and partner countries with abundant renewable power – such as Romania with its plentiful sun to power our solar farms, strong Black Sea winds and abundant natural gas. This will enable us and them to develop downstream hydrogen operations and supply chains – green iron production hubs, or ‘green valleys’ as the European Union is calling them.

Our partners, whether government or corporate will then be able to transform the green iron they offtake into steel production assets. These new hydrogen hubs will be able to exploit their natural advantages to develop a diversified, sustainable economy for future generations. Our COP28hosts the United Arab Emirates – with their rich energy resources and trading relationships with Asia, Europe and the United States – undoubtedly have the potential to become such a hub.


Driving Demand

We are increasingly seeing Governments across the world shape policy to support demand for sustainably produced steel - Europe’s Carbon Border Adjustment Mechanism, Contracts for Difference in Australia and Romania, and US hydrogen hubs for example.

The private sector in industries that rely on steel is adapting too. In construction, the drive for building stock certifications is raising demand for sustainable building materials from companies like Australia’s Lendlease and Sweden’s Skanska. In the automotive sector, companies such Volvo are driving green steel initiatives in the US market.

Workforce Transition

Just as important as getting the financial model right is meeting the challenge of workforce transition. GFG employs almost 30,000 people globally and our steel plants have been at the heart of their communities for decades.

We must help existing colleagues reskill and retrain so they can deliver as much to our industry’s future as they have to its past. Failing to manage their transition properly will jeopardise the industry’s ability to move into the clean steel era.

We are committed to sustained engagement with employees, unions and communities on the challenges of transition. As we transition to clean steel we must explain decarbonisation as a value driver and an opportunity set rather than a threat.

Delivering Change

It is important for all stakeholders that we move past pledges and towards action. As well as closing coke ovens, we’ve already announced the first projects in Europe to transition away from blast furnace technology to electric arc furnaces in Czechia, Hungary and Romania.


There is concrete evidence that by being ready to adapt to change, embracing new partnerships and supply chain models, we can win market confidence and cut to a bright future for our industry and all who rely on it.

 

About LIBERTY Steel Group

LIBERTY Steel Group is a global steel business operating across the steel supply chain, from production of liquid steel from raw and recycled materials through to high value precision engineered steels. With a total rolling capacity of 18 million tonnes, 200+ manufacturing locations globally across 10 countries and employing around 30,000 people, LIBERTY Steel’s furnaces, mills, services centres and distribution sites across the UK, continental Europe, Australia, the United States and China serve demanding sectors such as construction, energy, aerospace, automotive, and infrastructure. LIBERTY Steel is a leader in sustainable industry with a mission to become Carbon Neutral by 2030 (CN30).


Learn more LIBERTY Steel Group: Home - LIBERTY Steel Group












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