Last week Zensor attended the Hüttentag in Essen. During this annual event the entire German steel industry meets up to discuss the state of affairs and exchange ideas about upcoming developments and changes. Talk of the town was of course the great transformation wave that is coming up for the industry, together with the challenges this creates and the additional pressure experienced through the geopolitical situation.
As in many other industries, also the steel industry will contribute to lowering carbon emissions. Other than procuring green electricity, a method that can be applied in multiple other industries, the steel production will have to transform the core of its being: the blast furnace, where iron ore and coal are reacting to produce steel, will have to disappear. Why: as the other product produced is… CO2. We do however all need steel for the things we use and rely on in our daily lives, so still need it to be made. Part of the production volume can be covered by recycling steel components, but producing ‘new’ steel from ore will most probably be done using… hydrogen gas (H2)! So next to its potential use in energy storage and combustion, the steel industry will also be consuming massive amounts of hydrogen.
This leads us to the challenges:
- Many existing plants will have to be re-built or modified, not some piping, but entire new operations, requiring lots of capital.
- Hydrogen will be required, but the volumes of green hydrogen available today are by far not sufficient to cover what is needed to cover today’s steel demand.
- Electricity will be required in order to melt this steel, again high amounts of preferably green electricity, exceeding by far what is produced today. The same electricity that will be required for a lot of the hydrogen production, making the demand even higher.
- Leaving blast furnaces behind, and setting up entirely new (DRI) processes is a completely new process and will be of a massive scale. It is not an incremental modification to an existing asset. Therefore a lot of (new) engineering power and expertise will be required. The steel sector however has the image of being old, dusty and dirty. This is of course not ideal in a world competing for engineering talent.
- Due to this growing dependence on both hydrogen and electricity, logistics will have to be re-considered as well. Can we get all required materials and energy to existing sites, or should new sites be considered?
- And finally all of this takes place under a quite unstable geopolitical situation, where war, pandemics and energy crises impact both the supply as well as customer side of the steel producers.
There’s sufficient challenges, that’s for sure. All those present in Essen however did agree that we will be able to tackle them through persistence and engineering wisdom. Moreover: once we’ve battled through, the outcome will be a healthier industry (in multiple ways) and we will have helped guaranteeing a prosperous future for the people living in our continent.T