Sweden-based steel producer SSAB plans to invest around SEK 45 billion ($4.75 billion) to transform all its production in the Nordic region to electric arc furnaces powered by fossil-free energy in the next ten years to accelerate its green transition and largely eliminate its CO2 emissions by 2030, it said Jan. 28 in a statement.
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The company initially planned to go carbon free by 2045 and was already planning to replace the blast furnaces in Oxelosund, Sweden, with an EAF.
Under the new plan it will also transform the Lulea and Raahe operations, located in Sweden and Finland respectively, into cost-effective mini-mills with EAFs and rolling mills, with permitting processes for the transformation starting during 2022.
The Borlange and Hameenlinna operations in Sweden and Finland will be further developed in line with the new production processes, it added.
"An accelerated fast transformation of the industry will allow us to create new fossil-free value chains....We will increase SSAB's earnings, while rapidly reducing carbon dioxide emissions and making a significant contribution to the climate and the transition of society," SSAB CEO Martin Lindqvist said.
The company's board made the policy decision against the background of strongly growing demand for green, fossil-free steel, SSAB said.
"Our customers are demanding fossil-free products from SSAB. We can solve the technical challenges and we have a strong financial position," Lindqvist said.
The company's plans to replace its existing system with new mini-mill technology was expected to result in a broader product program and improved costs, it said.
"However, to achieve this ambition, the necessary infrastructure, access to fossil-free electricity in particular, must be in place in time," the company said.
The company produces green steel using HYBRIT technology, which replaces the traditional coal and coke with fossil-free electricity and hydrogen, which it said virtually eliminated carbon dioxide emissions in steelmaking.
It rolled out its first fossil-free steel in 2021, which was delivered to automaker Volvo, and plans to be able to supply green free steel at a commercial scale in 2026 after the Oxelosund blast furnace is replaced with an EAF.
"The plan means all SSAB's emissions will be largely eliminated at the beginning of the next decade, which will mean an emission reduction of more than 8 million mt of carbon dioxide a year, compared with present levels," SSAB said, adding this would enable a reduction of around 10% in Sweden's total emissions and around 7% in Finland's.
Other advantages of the investment are the ability to offer a broader range of premium products, advanced high-strength steel and quenched and tempered steel, SSAB said, adding that an increased dimensional program with improved tolerances would also broaden the offering to the vehicle industry, among others.
The company will first develop a more detailed transformation plan for each production site, it said, with the order of site transformation depending on the availability of the necessary infrastructure, in particular access to competitive electricity, among other things.
"If we can resolve the question of power supply and environmental permits together with society, then we can make the transition 15 years earlier than the plan communicated previously. We can finance the plan through our own cash flow and resulting in a broader product program and improved cost position," Lindqvist said.
Analysts at Jefferies said in a note that SSAB's decarbonization targets were being accelerated with Lulea and Raahe transforming into EAFs and along with the SEK 45 billion being financed via cash flow, the company would also have "offsets of not needing to invest in existing blast furnace systems."