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It’s time to pick up the pace

August 30, 2022

Steel’s role in the circular economy cannot be underestimated. Infinitely recyclable, steel is a foundational material which underpins modern society.

Steel can be recycled and upcycled into higher steel grades, without the need to be thrown into landfill. Which is a good thing for the planet, and those steelmakers committed to sustainable steel production.

But the truth is we need to do more to decarbonise our industry and realise the benefits of a circular economy and achieving net zero.

As a heavy carbon emitter, and one that contributes to about 8 per cent of the world’s carbon emissions annually, the global steel industry has a responsibility to transition and transform.

McKinsey’s recently released The net-zero transition: What it would cost, what it could bring paints a stark picture of the benefits that achieving net zero would deliver to the world economy (and climate).

While noting it would require “significant changes” to energy and land-use systems responsible for the world’s emissions, net zero transition could result in a net gain of about 15 million direct and indirect jobs globally by 2050, particularly in sectors and technologies linked to enabling low-emissions production and manufacturing.

Economic and employment benefits aside, our very real responsibility to future generations and the planet can’t be ignored.

In the face of a growing body of climate change science and ongoing extreme weather events globally, the question is not should we do this but really, how can we get moving together; industry, government and investors collectively, and what can we do to actually accelerate the pace of change?

Scrap the new gold

With the transition and implementation of new technologies, and greater use of Electric Arc Furnaces (EAFs), scrap metal is entering a new phase of importance to the steel industry and economic value.

China, the world’s biggest producer and user of steel, has committed to carbon neutrality by 2060 with a focus on transitioning to new and replacement scrap-fed EAFs.

At this year’s Eurometal Conference in Barcelona, the Eurometal President Fernando Espada told S & P Global that ferrous scrap is the “new gold” key for the production of green steel, and “vital for the production via the electric arc furnace for steel”.

According to S & P Global, global external steel scrap trade – including internal EU-27 trade – reached 109.6 million mt last year, 9.7% higher than in 2020, statistics from trade departments and German steelmaking association WV Stahl show.

With global demand for recycled steel rising, it’s no surprise to hear experts gesticulating that scrap steel is the “new gold” in the metals game. And the race is on globally to secure supply stock.

Earlier this month, China ordered its steelmakers to achieve annual recycling capacity of 180 million tonnes of scrap iron and steel by 2025.  Elsewhere, steel producing countries have implemented trade restrictions on scrap metal in recognition of its value and keeping recyclable materials onshore for new steel production.

At InfraBuild we’re taking steps to protect our supply and mitigate both increased competition and geopolitical instability.

Our domestic recycling operations, which include 26 scrap metal recycling sites across Australia, have been bolstered by strategic acquisitions of scrap recycling businesses in Gdansk, Poland, and the businesses in the US, in Tampa and La Place.

In addition, we have a recycling centre in Hong Kong, and a team of global scrap metal traders working in India, South Africa, the Netherlands, Spain and the UK.

Decarbonisation must accelerate

The McKinsey report highlights “the need for business to define, execute, and evolve decarbonization and offsetting plans” to address scope 1 and 2 emissions, and potentially the more complex scope 3 emissions.

As an EAF-based steelmaker and manufacturer, recycling, and upcycling scrap steel to make new steel – InfraBuild makes inherently more sustainable steel than those using primary resources and blast furnace technology

But we know that we can do more, which is why we’re looking at our energy mix and the role of renewable energy to lower our carbon emissions even further. An economic renewable energy policy and availability is what currently stands between us and almost decarbonised steelmaking.

Optimisation of processing and manufacturing, increased digitisation and the use of carbon capture technology, can help us to minimise waste, energy and emissions even further, while research, development and innovation contributes to higher-strength, lower-density steels.

Then there are the relationships with vendors and suppliers, who are also committed to carbon emission reduction, and can come into play when looking at scope 3.

The consensus and case for change, particularly for heavy industry, is clear. The time for action is now. We owe it to our children and the generations to follow.

Regards,
Vik

Vik Bansal
CEO and Managing Director InfraBuild

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