Ukrainian mining and steel company Metinvest aims to make all its steel in direct-reduced iron-fed furnaces by 2050 as part of a $20-plus billion transition away from sinter and coke-based production that will slash greenhouse gas emissions by 90%, CEO Yyriy Ryzhenkov told S&P Global Platts.
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Metinvest -- which accounted for 45% (9.5 million mt) of Ukraine's crude steel output in 2021 -- is putting the finishing touches on its decarbonization roadmap, with a view to make it public this spring. It will also finalize its technology strategy by the end of 2022.
In basic terms, Metinvest intends to replace the majority of its blast furnaces (BFs) and basic oxygen furnaces (BOFs) with electric arc furnaces (EAFs) by 2040, Ryzhenkov said in an interview.
That said, the company's coking coal assets -- they made 5.5 million mt of coking coal concentrate in 2021 -- will remain part of its decarbonization plan as Metinvest will remain in need of coal for its sintering operations as long as it continues using BF-BOF technology.
All its sintering and BF operations will be phased out by 2050 with steelmaking fully switched over to DRI-fed EAF capacities.
The first EAF(s) and at least one DRI module will be launched by 2030.
"Since we are not sure that hydrogen will be economically available around that time, the new complex will run on natural gas initially, but CO2 emissions will still drop significantly," Ryzhenkov said, adding the company was still deciding where to set up the first facilities -- at Azovsteel or Ilyich, both in Mariupol.
Metinvest, which has already invited major equipment manufacturers to submit proposals, will carry out a feasibility study over January-June and then select a site for the first complex by the year-end.
The company has been developing the production of DR-grade pellets at its Central iron ore mining and beneficiation complex (GOK) -- in Dnipropetrovsk region, eastern Ukraine, since 2020, with 2021 output reaching 2.2 million mt -- or almost the current capacity of 2.3 million mt/year.
In the next few years, Metinvest will set up a 5 million mt/year capacity for DR-grade pellets at Severny GOK, also in Dnipropetrovsk. The two GOKs volumes combined should suffice to feed the first DRI module by the time it is launched.
It takes 1.32 mt of pellets to make 1 mt of DRI and 0.96 mt of DRI to make 1 mt of steel, according to Sergey Nedelin of Moscow-based Metals and Mining Intelligence.
Hence, 7.3 million mt/year of DR-grade pellets will provide Metinvest with 5.5 million mt/year of DRI convertible to 5.7 million mt/year of steel. The figure corresponds to just over 60% of the company's saleable steel output in 2021.
Cost of transition
To achieve the above, Metinvest expects annual capex of $1.3 billion-$1.5 billion over the next 3-4 years, with further investments dependent on its progress toward green metallurgy.
The total cost of its transition to DRI-EAF technology -- to be spread over 20 years -- was estimates in a range of $20 billion-$30 billion.
CIS steelmakers' decarbonization efforts have a positive correlation with the share of exports in their sales: the higher their dependence on external markets, the more incentivized they are to take a more radical/speedy approach to the transition to low-carbon steelmaking, according to Boris Sinitsyn, a metals and mining analyst at Moscow investment bank Renaissance Capital.
Metinvest does not disclose the amount of steel it sells outside Ukraine but says exports account for the majority of its revenue, and Ukraine, as a whole, generally exports 80% of its steel.
The transition is meant to help Metinvest meet its strategic goal to reduce GHG emissions by over 90% by 2050. At this stage, the company is not specifying the baseline for that reduction. But should it be 2020, the level of emissions might fall below 2.5 million mt/year, Platts estimates.
In 2020, the company's direct GHG emissions (Scope 1) amounted to 23.2 million mt of CO2 equivalent with indirect emissions (Scope 2) being 2.7 million mt. The carbon intensity of the production of a ton of steel -- measured at flagship Mariupol-based operations -- came to 2.4 mt of CO2.