Steel industry shows its mettle on journey to decarbonisation
It is with some optimism we can now all look forward to the closing months of 2021.
With rising vaccination rates and detailed roadmap to recovery plans being released by Australian state and territory governments, I sense confidence levels among the community and business sector is once again rising, as we look to return to more normal conditions and learn to live and work with the COVID-19 virus.
And there is plenty to be positive about when you consider some of the evident trends and shifts that are occurring, both domestically and globally.
Domestic rebuild and recovery
The Homebuilder and other state-based grants have continued to provide buoyancy in residential construction – despite this year’s Delta-strain outbreaks across NSW and Victoria.
The combined effect of housing price growth coupled with low interest rates should sustain an elevated level of construction and renovation activity over the short term. We can expect this to be supported further by measures outlined in this year’s Australian Budget which provide specific support to first home buyers and single parents with dependents to help them re-enter the housing market.
Public sector infrastructure projects, namely in transport and community infrastructure, will strengthen over the course of FY22, but really ramp up during fiscal year 2023. These stimulus measures will play a key role in Australia’s economic repair and drive jobs growth over the next 10 years.
The 2021 Australian Infrastructure plan, released last month, sets out a vision for 2036 to have infrastructure that builds quality of life for all Australians, and in part, accelerate the transition to a circular economy.
As Australia’s leading vertically integrated Electric Arc Furnace (EAF) manufacturer of lower-carbon steel, we are well positioned to enable this. Use of scrap steel in manufacturing has beenlargely ‘missed’ in the circular economy story to which world isnow awakening to.
The outlook for high-density residential and apartment construction is also long-term and expected to pick up towards the end of 2023. National Institute of Economic and Industry Research data from August showed the pipeline of apartment construction in NSW is extraordinarily strong as there is now a record number of apartments having gained building approval but not yet commencing construction.
As we emerge further from the effects of the pandemic and learn to live with the COVID virus, and international travel resumes and stabilises over the coming years, I would suggest we will see a gradual return to pre-pandemic levels of migration, tourists and international students to Australia over the next decade. With that, we will see a return in demand of higher-density residential and apartment construction.
Industry changing for the better
One positive from the pandemic has been the acceleration ofthe pace of change already underway, as we collectively – as a heavy industry - move towards decarbonisation. It’s at the heart of the World Steel Association’s recent public policy paper on climate change and the production of iron and steel.
The decarbonisation journey is one we have been on for some time at InfraBuild.
In our case – as an EAF-based steelmaker and manufacturer,recycling, and upcycling scrap steel to make new steel – our energy mix plays a huge role in our emissions. It is why we are looking at the role of renewable energy to further reduce our carbon footprint and contribute to lower carbon steel. From where we stand today, an economic renewable energy policy and availability stands between us and an almost decarbonised steel
Process and manufacturing optimisation, coupled with digitisation and carbon capture technology, will aim to minimise waste, energy, and emissions even further (inputs and by-products), while increasing efficiency and production (outputs). Elsewhere across the industry, it is heartening to see the progress being made in areas of hydrogen-based steelmaking, to transform the blast furnace route of steelmaking.
This change is happening in parallel to increased demands and expectations from all stakeholders to see sustainability in action. Employees, customers, the community, governments,and investors want to see businesses take deliberate and meaningful action towards decarbonisation.
In InfraBuild’ s case, our view of sustainability is not only limited to reducing the impact on the planet but delivering long-term benefits to all which includes safe and fulfilling employment for our people, returns to our shareholders and contributing to thriving communities. We believe in and are motivated by true stakeholder primacy at InfraBuild.
Geopolitical shifts and the role of policy
There is no denying the influence China plays in the steel industry. As the world’s greatest producer and user of steel, the country’s commitment to carbon neutrality by 2060 is significant.
Currently, we are seeing the Chinese Government directive to curb domestic steel production contributing to global price increases, with some commentary that this could extend through to March next year, post the Beijing Winter Olympics. China’s shift from coal-based manufacturing and production processes brings into focus increased investment in new and replacement EAFs in the future – and with it, increased competition to source scrap steel.
As countries are adjusting government policy settings and investment to ensure enhanced sovereign domestic manufacturing capability – a lesson sorely learnt during the pandemic – it will be fascinating to see the position taken by governments in areas such as scrap metal export tariffs, carbon tariffs, and incentives for investment in green manufacturing technologies.
With the right policy environment, conducive for investment, the industry can accelerate change to the benefit of all.
CEO and Managing Director | InfraBuild
Article published on Wednesday, 13 October 2021