Iron & Steel Producers

Iron & Steel Producers

The Iron & Steel Producers industry consists of steel producers with iron and steel mills and companies with iron and steel foundries. The steel producers segment consists of companies that produce iron and steel products from their own mills. These products include flat-rolled sheets, tin plates, pipes, tubes, and products made of stainless steel, titanium, and high alloy steels. Iron and steel foundries, which cast various products, typically purchase iron and steel from other firms. The industry also includes metal service centers and other metal merchant wholesalers, which distribute, import, or export ferrous products. Steel production occurs via two primary methods: the Basic Oxygen Furnace (BOF), which uses iron ore as an input, and the Electric Arc Furnace (EAF), which uses scrap steel. Many companies in the industry operate on an international scale. Note: With a few exceptions, most companies do not mine their own ore to manufacture steel and iron products. There are separate SASB standards for the (EM-MM) industry.

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Source: SASB

The steel industry is a significant contributor to global emissions, with coal being the primary source of fuel for the furnaces used in the production process. However, the industry also presents significant opportunities for reducing emissions through innovation and new technologies. For example, carbon capture, hydrogen generated by renewables, and alternative smelting reduction processes can all help to reduce emissions. Furthermore, new steel plants that emit minimal or zero CO2 can also contribute to a more sustainable industry. With the global demand for iron and steel set to grow significantly in the coming years, reducing emissions in this industry is critical for achieving global climate goals.

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Industry Characteristics

• Overall, global demand for steel in 2050  is 12% higher than today. Source: IEA
• The contribution from raw materials comes primarily from energy-intensive cement production and through metals (about 50 percent of global steel production is used for construction), which contributes almost 7 percent of global GHG emissions. The contribution from commercial and residential building operations is mainly driven by space and water heating within buildings, heat leakage due to poor insulation, and other energy usage such as lighting, air conditioning, and appliances. Source: McKinsey
• 10% increase in global demand for steel by 2050, compared with today. Source: McKinsey
• Production is highly concentrated in  emerging markets and developing economies,  which account for 70‐90% of the combined output of these commodities. Source: IEA

Sustainability Impact

• Three heavy industries  –  chemicals,  steel  and cement  –  account for nearly  60%  of all industrial energy consumption and around 70% of CO2 emissions from the industry sector. Source: IEA
• 65 percent of steel from plants with electric arc furnaces in 2050. Source: McKinsey
• Steel production is an energy-intensive process as it requires high temperatures to transform iron ore into steel. The energy and heat from the processes come from fossil fuels, which is primarily coal. The use of fossil fuels means that the average CO2 emissions from steel production is about 1.85 tonnes CO2 per tonne of steel produced. In fact, between 7-9% of all fossil fuel-based CO2 emissions are derived from the steel industry. The amount of steel produced in 2018 was 1.8 billion tonnes, which equates to about 3.3 billion tonnes of CO2 emissions. If we counted the emissions of the steel industry as if it were a nation, it would rank as the 5th largest in the world. Source: Carbon Clean

Sustainability Investments to watch

• CCUS and hydrogen play an increasingly important role in reducing CO2 emissions, especially in heavy industries such as steel, cement and chemicals. Source: IEA
• Steelmakers may consider adopting some of these emerging technologies to reduce emissions: (1) Carbon capture - Top gas recycling can recycle up to 90% of the exhaust gas from BFs, reusing it for combustion with the remaining highly CO2-concentrated 10% able to be stored or used.2 Determining whether carbon capture is suitable may depend on overall operating costs, with technology costs still high at this stage of maturity. Source: E&Y
• Steelmakers may consider adopting some of these emerging technologies to reduce emissions: (2) Innovations in product mix - Moving to scrap-based EAF production will reduce emissions, but each steelmaker will need to decide whether and how to transition based on the affordability and availability of scrap and the desired quality of the end product. Source: E&Y
• Steelmakers may consider adopting some of these emerging technologies to reduce emissions: (3) Hydrogen - Use of green hydrogen (generated by renewables) with direct reduced iron (DRI) and EAF is likely to be the cleanest alternative for steelmakers in the future,3 although it will be some time before hydrogen is economically feasible and scalable. Source: E&Y
• Steelmakers may consider adopting some of these emerging technologies to reduce emissions: (4) Alternative smelting reduction processes - Some newer commercialized smelting reduction processes can offer better emission control compared with integrated plants, but their economic viability depends on overall power consumption and use of export gases. Source: E&Y
• While the next decade will likely see carbon-capture process modifications and efficiencies introduced, getting all the way to net zero would require more investment, and potentially an overhaul of the steelmaking process. Source: McKinsey
• Efficiency - Most of crude steel today comes from plants that use the integrated blast furnace–basic oxygen furnace (BF-BOF) process. It’s possible to reduce the emissions from this process by making certain adjustments, such as maximizing the iron content of raw materials. Most of the technologies needed to boost efficiency are available now, at a competitive cost. Source: McKinsey
• Investment - One option for decarbonizing steelmaking is to install carbon-capture equipment at existing steel plants. This would let steel companies continue running their plants without affecting the climate. Carbon-capture projects at steel plants are still at the pilot stage. It will probably take much more investment to lower the cost of carbon capture enough to make it viable as a large-scale solution. Source: McKinsey
• Innovation - Another approach is to build new steel plants that emit minimal or zero CO₂. These would use a different production route than today’s typical steel plant: utilizing green hydrogen (made with renewable electricity) to power the direct reduction of iron ore, which would then be fed into electric arc furnaces (also running on renewable power). Source: McKinsey

• Manufacture of aluminium
• Manufacture of iron and steel

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