Three Q’s

August 2020

The greening of steel: 3Q’s with worldsteel’s Andrew Purvis

The World Steel Association (dubbed, worldsteel) is the international trade body for the iron and steel industry.

Headquartered in Brussels, it is one of the largest and most dynamic industry associations in the world, with members in every major steel-producing country.

Its goal is to act as the focal point for the steel industry providing global leadership on all major strategic issues impacting the industry, particularly focusing on economic, environmental and social sustainability.

We spoke to worldsteel’s Director of Safety, Health and Environment, Andrew Purvis, about the world’s most commonly used metal, how “essential” it is, and why it is going green.

1. In March, as the coronavirus was locking down Australia’s manufacturing sector, the Australian Steel Institute (ASI), the peak industry body representing the Australian steel industry, called on the Government to classify the steel industry as “essential.” As the world body representing the entire steel industry, do you consider the industry essential and if so, why?

Andy: I believe that in the context of the current pandemic many steel making operations should be considered ‘essential’ from a process safety and equipment integrity perspective.

The manufacturing of steel involves processes with intrinsic hazards that need careful management. The measures needed to control these hazards are often complex and some types of steelmaking operation cannot be completely shut down, assuming you want them to start up again.

This is particularly true in integrated steel plants found in Port Kembla and Whyalla. Examples of this type of equipment include the blast furnace and coke ovens. There are coke ovens that have been operating for decades, which would be severely if not terminally damaged if shut down and left to go cold.

2. What are the major environmental and climate change challenges being faced by the global steel industry and how is the sector, and worldsteel, addressing these?

Andy: Our ongoing conversations with our members, governments and international bodies have made it very clear that steel is an essential element of the low carbon transition. Without steel, no society will be able to decarbonise; in essence, we will make the green future possible.

This is all true, but in the past this is perhaps where we stopped talking. For a long time, the message from our sector and many others was “you need us”, but this is no longer enough and this is not a credible position to hold in 2020.

We need to, and will, fundamentally transform the way we make steel over the coming decades. This transition will be in three clear phases.

Firstly, efficiency is key to ensuring every tonne of steel produced has the lowest possible environmental and greenhouse gas impact.

We will improve our efficiency, considering raw materials, energy input, yield and maintenance to support improvements in mill operations, so that all steelmakers can operate at efficiency levels commensurate with the steel industry’s top performers.

We will increase scrap use. Steel is already highly recycled, with around 630 million tonnes of steel being recycled every year.

In the decade 1998 – 2008 global steel production increased from around 800 million to 1.3 billion tonnes. In the next few decades much of this steel will reach the end of its life, and that which cannot be reused or remanufactured will be returned for recycling. This injection of increased scrap steel will play a key role in reducing sector emissions.

Finally, virgin steel (steel made from ore) will need to be produced in an entirely new way. A number of worldsteel members and other research groups are developing exciting and promising new technologies.

This is very good news, as a portfolio of technologies will be required that can be applied in different conditions.

For example, in regions with an excess of cheap renewable energy, the best option might be electrolysis-based hydrogen reduction. While in regions with access to ample CO2 storage and infrastructure it may be that natural gas-based hydrogen or carbon capture and storage would make more sense. In other areas, hybrids or entirely different approaches could be taken.

A common theme will be that steel produced using new low carbon technology will cost more to produce, and as new technology is deployed there will be a period when conventionally produced steel and new higher cost net zero steel compete in the same market.

During the transitional period it will be important that policy supports the transformation and enables rather than inhibits the very high levels of investment that will be necessary to create a steel industry fit for the challenges of the 21st century.

3. Taking a helicopter view of the steel industry, how has it been coping with the pandemic and what changes will it have on the sector going forward?

Andy: Steel plants are controlled environments, with strict access control and monitoring, and so are well suited to put in place health checks and, if necessary, track and trace mechanisms.

As the pandemic spread, steelmakers rapidly put in place controls to manage risks to the health of their production staff as the pandemic developed, now we see a much higher proportion of non-frontline staff returning to the workplace as societies open up.

Steelmakers are learning from each other, and those who found themselves on the front line of this battle in places like China and Italy have generously shared their experiences with their peers.

A number of our members have reported that their workers have told them they feel significantly safer at work than they do at home.

The COVID-19 crisis, with its disastrous consequences for public health, also represents an enormous crisis for the world economy.

Our customers have been hit by a general freeze in consumption, by shutdowns and by disrupted supply chains. We therefore expect steel demand to decline significantly in most countries, especially during the second quarter.

With the easing of restrictions that started in May, we expect the situation to gradually improve, but the recovery path will be slow.

In 2020 worldsteel forecasts that steel demand will contract by 6.4%, dropping to 1,654 Mt due to the COVID-19 crisis.

In 2021 steel demand is expected to recover to 1,717 Mt, an increase of 3.8 % over 2020. This year’s reduction in global steel demand will be mitigated by an expected faster recovery in China than in the rest of the world.

As most countries have been gradually reopening from their lockdowns since mid-May, recovery of economic activities is expected in the third quarter.

The performance of key steel using sectors such as the construction, automotive and mechanical machinery sectors will be key. In some sectors recovery to pre-crisis levels will take several years.

However, it is possible that the decline in steel demand in most countries will be less severe than during the global financial crisis as the consumption- and service-related sectors, which have been hit hardest, are less steel-intensive.

In the long term, our industry will survive, transform itself and thrive.