Aluminum Forecast
Tuesday | 22 August, 2023 | 12:00 am

First Wave

Written by By Corinna Petry

August, 2023- The investment case—riding on a tide of consumer clamor for clean materials- persuades producers to launch numerous projects toward low or zero emissions.

A viable investment case for near-zero emissions primary steel projects is within reach in Europe and North America. Major policy developments in the U.S. (low-carbon hydrogen production tax credit under the Inflation Reduction Act) and the European Union (the phase-in of the carbon border adjustment mechanism) are making it possible to put the steel sector on a Paris Agreement-aligned emissions pathway by 2030, according to a report from the Energy Transitions Commission (ETC).

The global pipeline of near-zero emissions primary (ore-based) steel projects must triple within the next three years to enable 190 million metric tonnes a year of green production by 2030 and keep emission reduction targets within sight. Released in April, the report, “Unlocking the First Wave of Breakthrough Steel Investments,” indicates that practical policy and industry actions can create opportunities to grow the pipeline of projects and accelerate existing proposals to final investment decisions in the United States, United Kingdom, France and Spain.

Approving projects by 2026 is the critical challenge, given the lead times involved. But the ETC report demonstrates that the financial gap is smaller than previously thought. All four countries can offer a viable investment case, particularly in light of recent policy developments, if action is taken promptly to close the last-mile gap. ETC found that the price of low-carbon electricity, for green hydrogen production and direct process power, is a crucial market factor in determining the international competitiveness of breakthrough iron or steel.


[ A ] This past March, the International Aluminum Institute launched Aluminum Forward 2030, a coalition of IAI’s 25 production members and 20 downstream and customer companies that have committed to achieving net-zero emissions while working together on a roadmap that is inclusive of all the other United Nations’ Sustainable Development Goals.

Endorsements have come from major aluminum consumers, including Jaguar Land Rover; beverage and can producers Ball, Crown Holdings and Ardagh Metal Packaging; cable producers Nexans; and aluminum technology company Gränges, among others.

“Gränges is committed to creating circular and sustainable aluminum solutions and decarbonizing our industry. Collaboration will be essential for reaching net-zero emissions and a sustainable future,” says Sofia Hedevåg, senior vice president for sustainability at Gränges.

     ArcelorMittal’s Dofasco is working on a $1.8 billion decarbonization program in Canada

[B] In mid-June, aluminum producer Novelis Inc. broke ground on a solar park in Pieve Emanuele, Italy. Covering more than 28,000 square meters, the facility should begin generating electricity by year’s end.

      Novelis’ Sierre plant in Switzerland is planning energy projects aimed at carbon neutral production.

By decarbonizing its production in Pieve Emanuele, Novelis is developing low-carbon, sustainable aluminum solutions for the European market. The solar park’s annual production of 4,000 megawatt hours will enable the plant to switch a large portion of its energy sources from carbon-intensive to renewable ones while lowering its reliance on external energy sources. The park will be connected to Italy’s national grid, allowing for energy produced outside the plant’s operating hours to be used by surrounding communities.

[C] Separately, Novelis partnered with Net Zero Lab Valais to launch energy projects aimed at enabling Scope 1 and 2 carbon neutral production at its factory in Switzerland.

In the first year of the Sierre plant’s decarbonization path, Novelis decided to build a new electrical pusher furnace, which will allow the preheating of ingots with renewable electricity instead of natural gas, saving 4,500 metric tons of CO2 equivalent output per year and up to 180,000 CO2 equivalent tons over the furnace’s lifetime.

A second project transfers waste heat from the casting process in the plant to a nearby building complex. This energy supply, corresponding to 200 kilowatts, covers about one-third of the complex’s total energy demand. Novelis and a local utility intend to supply a substantial part of the Sierre region’s energy demand before 2030.

Modeling an optimized system for the plant’s energy sourcing, conversion and reuse is the goal of an ongoing systemic study that began with the launch of Net Zero Lab Valais in 2022. The focus is to replace fossil- based energy sources with carbon-neutral ones rather than offsetting carbon emissions through credits.

“This lighthouse project brings to life our holistic decarbonization approach toward a net-zero production,” says Emilio Braghi, president of Novelis Europe. “We are positioned as a sustainability front runner.”

[ D ] Paris-based aluminum producer Constellium SE signed an agreement with Renault Group this past spring to establish a closed-loop recycling process for the Megane E-Tech electric vehicle.

Renault developed a closed-loop recycling process to bring manufacturing scrap from the stamping process directly back to Constellium’s facilities, which results in a lower carbon dioxide footprint.

Constellium’s process will recycle 5000- and 6000-series alloys to be reused in Renault’s production without any loss of properties and without down cycling. Together with Renault, Constellium will “contribute to the circular economy within the automotive industry, while also helping both companies to meet their individual sustainability targets,” says Hervé Ribes, director for automotive technology at Constellium.


In spring, the Global Steel Climate Council released a draft of a Steel Climate Standard to measure and report steel carbon emissions. The global standard focuses on a science-based glide path to reduce GHG emissions in line with the Paris Climate Agreement goal of no more than a 1.5-degree Celsius increase in global temperatures. The standard offers a single, technology-agnostic protocol that would apply to all producers equally and would enable steel users to know and compare the actual carbon emissions associated with steel products.

Steelmakers and trade associations came together to develop this standard “to enable the industry to reduce carbon emissions and encourage investments in lower emission technology as part of the global effort to decarbonize,” says Council Chair Greg Murphy, executive vice president at Nucor Corp

     SMS Group will build a direct reduced iron plant for ThyssenKrupp (pictured: an SMS DRI plant in Algeria)


In March, Thyssenkrupp Steel placed an order with SMS Group GmbH for the engineering, delivery and construction of the first hydrogen- powered direct reduction plant at the steelmaker’s Duisburg location. When fully operational, the company will remove more than 3.5 million metric tons of CO2 per year. The plant will have a capacity of 2.5 million metric tons of DRI. The plant is scheduled for completion before the end of 2026.

Up to this point, coal-based hot iron production in the blast furnace always involved emitting CO2, amounting to about 20 million metric tons per year just at Duisburg. Hydrogen-based processes in DRI plants offer a significant basis for manufacturing carbon- neutral steel in the future.

Thyssenkrupp Steel’s transformation to carbon-neutral production should be completed by 2045, the company estimates. “We are creating the basis for tomorrow’s green steel markets,” CEO Bernhard Osburg says.

Cleveland-Cliffs Inc. completed a successful hydrogen injection trial at its Middletown Works blast furnace in March. The introduction of hydrogen gas as an iron reducing agent in the blast furnace was the first use of this technology in the Americas, according to the company. It represents “a significant step toward the future decarbonization of blast furnaces, which are necessary for the continued service of the most quality-intensive steel applications, particularly for the automotive industry,” Cliffs noted.

During the trial, steelworkers injected hydrogen gas into all 20 tuyeres at the Middletown No. 3 blast furnace, facilitating the production of clean pig iron. Hydrogen was used as a partial substitute for the coke necessary for iron reduction, ultimately replacing the release of CO2 with the release of water vapor, with no impact to product quality or operating efficiency. The hydrogen was delivered to the Middletown facility via the existing pipeline and transportation infrastructure in place for the facility’s other hydrogen uses, such as for annealing.

During a conference call with investors, Cliffs Chairman, President and CEO Lourenco Goncalves said, “We are ready to use hydrogen. We can go up to 60 percent hydrogen [mixed with 40 percent natural gas] in our Toledo DRI plant. We are working with several groups to create hydrogen hubs that can bring a cheap and plentiful hydrogen to Toledo and Cleveland because we actually have the technology of injecting natural gas into blast furnaces. “As soon as we enrich natural gas with hydrogen, we’re going to be really green,” which is what the automakers are demanding, Goncalves says.


Steelmaker Nucor Corp. signed an agreement June 1 with ExxonMobil to capture, transport and store carbon from the company’s DRI production operation in Convent, Louisiana.

ExxonMobil will capture up to 800,000 metric tons per year of CO2 from the DRI plant and store it at an ExxonMobil facility in Louisiana. “This project is part of our decarbonization strategy and will result in some of the lowest embodied carbon DRI or HBI in North America,” claims Leon Topalian, Nucor’s chair, president and CEO.

The company is building on previous investments it has made in a carbon-free iron startup company, renewable energy generation and the development of small modular nuclear reactor technology, he says. The carbon capture project is to start up in 2026.

U.S. Steel Corp. and CarbonFree Chemicals Holdings LLC signed a nonbinding memorandum of understanding during March to jointly pursue the capture of CO2 emissions generated from U.S. Steel’s Gary Works, using CarbonFree’s SkyCycle technology.

If a definitive agreement is reached, the project is expected to capture and mineralize up to 50,000 metric tons of CO2 per year, the equivalent to emissions from nearly 11,000 passenger vehicles.

CarbonFree’s patented SkyCycle technology captures carbon emissions from hard-to-abate industrial sources before entering the atmosphere, converts the CO2 into precipitated calcium carbonate, and produces hydrochloric acid as a byproduct. If a final agreement is executed, the parties are targeting 2025 to start up operations.

Richard L. Fruehauf, chief strategy and sustainability officer at U.S. Steel, discussed the funding picture for such projects during an earnings call with shareholders.

“We are very pleased with this administration’s commitment to assist with the country’s green transformation. Under the Inflation Reduction Act, there are programs where the federal government can partner on green projects on a 50-50 basis, including grant funding. There is about $5.8 billion available for industrial decarbonization [projects]. The legislative language, which we’ve looked at, specifically mentioned steel and iron as the kind of industrial projects that Congress was thinking about when they passed that law,” Fruehauf noted.

     ArcelorMittal Nippon Steel India Ltd. will install 46 wind turbines, and the clean electricity produced will be used by one of its steel plants.

We continue to evaluate potential partnerships, projects with third parties, including pursuing government funding for things like decarbonization, hydrogen [and] electrification,” he said.


In April, Siemens Gamesa and ArcelorMittal Nippon Steel India Ltd. signed a supply agreement under which ArcelorMittal’s subsidiary in India will supply 46 wind turbines for a project totaling 166 megawatts in the state of Andhra Pradesh. The clean electricity produced will be used by one of its steel plants, boosting the industry’s decarbonization efforts in India. The wind project will form part of a 989-megawatt wind/solar hybrid renewable energy project by AM Green Energy.

     Constellium and Renault Group established a closed-loop recycling process for the Megane E-Tech model.

 The total power generated from the wind farm will be used by AM/ NS India’s plant at Hazira, Gujarat, and will enable the company to meet 20 percent of its electricity needs from renewable resources while helping to reduce its carbon emissions by 1.5 million tons per year.

“This partnership opens up a huge opportunity for the wind industry in India, especially for the power-intensive steel industry, which is fast-tracking efforts to meet carbon emissions goals,” said Navin Dewaji, CEO, Asia-Pacific region, for Siemens Gamesa’s onshore business.


Klöckner & Co. last year introduced CO2 categorizations for carbon and stainless steels and aluminum products and launched sales for CO2- reduced products under the umbrella brand Nexigen. This year, the metals distributor introduced a new service: customers can have an individualized Product Carbon Footprint (PCF) calculated for almost every one of 200,000 Klöckner’s inventoried products. The PCF records all emissions of the product down to the kilogram from raw material extraction to delivery to the customer’s factory gate, making them transparent and visible. These are determined with the help of the independently certified Nexigen PCF algorithm, which was developed by Klöckner & Co. in cooperation with Boston Consulting Group.

Klöckner CEO Guido Kerkhoff explains that with the Nexigen PCF algorithm, “we are enabling our customers to make purchasing decisions on the basis of scientifically sound emissions data that is comparable across manufacturers, and support them in achieving their own decarbonization goals.” Customers will be able to use the PCF when selecting products. After delivery of the goods, they will receive the kilogram value of the GHG emissions incurred, including all important details such as batch or delivery number, by means of a digital Product Carbon Footprint Declaration. Even the emissions generated during transport from Klöckner branches to customer locations are counted. Through the Nexigen PCF algorithm, customers can readily comply with regulatory requirements at an early stage, measure their own sustainability targets and disclose the footprint of their products to customers.


ArcelorMittal North America will soon supply General Motors Co. with its XCarb brand of recycled and renewably produced (RRP) steel, offering CO2 emissions lower than much of the carbon steel available in North America. Material will be shipped from ArcelorMittal’s Dofasco steelworks in Hamilton, Ontario. XCarb RRP steel is made in electric arc furnaces and contains between 70 and 90 percent scrap; it does not use carbon offsets to achieve the reduced carbon intensity. XCarb’s lower CO2 intensity has been independently verified with an accompanying life cycle analysis (LCA) that includes Scope 1, 2 and 3 emissions. A confirmation letter verifies the electricity used in the steelmaking process is from renewable sources. “We are innovating with our suppliers to reduce emissions throughout the supply chain,” says Jeff Morrison, vice president of global purchasing and supply chain for General Motors. “Strong supplier relationships can help build a better, more sustainable future,” he adds.


According to a recent study by the International Energy Agency, more still needs to be accomplished. IEA cited low temperature electrolysis (LTE) and molten oxide electrolysis (MOE) production methods for iron and steel as research and development tracks that are moving forward. Both technologies may provide an opportunity to “decarbonize steel production from the end of this decade onward.” The study briefly cites a project called SIDERWIN, in which ArcelorMittal S.A. is involved; and Electra, a company that’s building commercial iron making units at a facility in Boulder, Colorado. “High-value metals were produced commercially using MOE for the first time in 2023, while steel is expected to be available from 2026,” the IEA study authors predict. These “production routes present a potential opportunity to increase scale and reduce costs.” Project feasibility, scale, consumer demand and cost/profit ratios will continue to play roles in nearand long-term decision-making by aluminum and steel producers. -MM


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