Latin American steel producers are evaluating decarbonization strategies to embark on a more declaratory sustainable agenda after decades of just making plans, the new executive director for the regional steel association, Alacero, said.
"Greater use of ferrous scrap, biomass and renewable sources are key for the regional steel decarbonization push. But clear and specific regulations and support from governments are just as important," Alejandro Wagner told S&P Global Platts in an interview.
Wagner said that access to renewable energy at competitive prices and public investment to develop disruptive technologies were necessary to continue reducing emissions.
In order to advance towards a more sustainable future, producers cannot neglect any step, he said. "Currently, gases from the production process are reused to produce heat and electricity, which can meet between 60%-100% of a plant's electricity demands. The co-products are used for cement, road construction, fertilizers, hydraulic engineering and marine reforestation. Emulsions and oils serve as reducing agents, while iron and zinc oxides are recovered from the slag."
Latin America-based steelmakers are already committed to the decarbonization agenda for 2030 and 2050 -- companies have publicly declared a CO2 reduction target for 2030, and others have committed to achieving emission neutrality by 2050.
For each metric ton of steel produced in Latin America, 1.6 mt of CO2 is emitted, while the world average is 1.8 mt, and China's around 2.1 mt, Wagner said. "And the region is committed to continue reducing that," he added.
To further push this sustainable agenda in the region, Alacero is committed to promote the connection between startups that are developing low-CO2 emission steel production technologies and local steelmakers. He is also keen to conduct a study on scrap availability in Latin America, and encourage the use of green hydrogen.
"The use of scrap in steelmaking processes is growing globally, but we lack an understanding of the size of this market in the region," Wagner said. "We aim to map and connect information about scrap flows in Latin America."
Several companies in the region have already stepped up on the decarbonization route, while others are still making plans using international advances as a parameter.
ArcelorMittal Brazil and CSN have announced a mid-term goal of achieving a reduction of 10%, and Ternium of 20%, on their CO2 emissions by 2030.
A few steps to be taken by Ternium include expanding carbon capture capabilities in direct reduction facilities in Mexico, and partially replacing mineral coal with charcoal in Brazilian and Argentinian operations.
Among the initiatives to be developed and implemented by ArcelorMittal are raising the use of scrap as a raw material, using natural gas and optimizing the use of charcoal in the units that already use the fuel.
CSN plans to reduce the intensity of greenhouse gas emissions from scopes 1 and 2 at its mining arm CSN Mineração (base year 2019) and at the Presidente Vargas Steel plant (base year 2020).
Scope 1 emissions are direct GHG emissions that occur from sources that are controlled or owned by an organization, like emissions associated with fuel combustion in boilers, furnaces, vehicles. Scope 2 emissions are indirect GHG emissions associated with the purchase of electricity, steam, heat, or cooling.
With 73% of production based on the use of scrap, Gerdau already generates 0.93 mt of CO2 per mt of steel produced -- less than half the world average.
Moreover, Shell Brazil and Gerdau signed a cooperation agreement to develop a photovoltaic park in the Brasilândia de Minas municipality, north of Minas Gerais. With an installed capacity of 190 MWdc, the Aquarii park will supply part of the clean energy to Gerdau's steel production units in the country and another part will be traded on the free market through Shell's energy trading company, as of 2024.
In 2020, Aço Verde do Brasil reached negative 0.04 mt of CO2/mt of steel and has achieved the pioneering milestone of carbon-neutral steel production, certified by Société Générale de Surveillance. AVB is also investing in developing a patented charcoal carbonization furnace, set to enter the testing phase later this year.
Wagner also spoke about some of the current challenges the Latin American economy faced with regard to the coronavirus pandemic. Among them, starting up plants and projects that were suspended and the financial support required to reactivate them.
The region is expected to see steel production and demand grow 10% year on year in 2021 -- recovering to pre-pandemic levels. Total production of crude steel in 2020 was 55.6 million mt, down 8.4% year on year, Alacero data showed.
With the resumption of commercial activities there has been good consumption of rolled products in Latin America, with its output rising 24.8% year on year over January-May, to 23.2 million mt. Just in May, the production of rolled products increased 66.9% year on year, reaching 4.96 million mt.
"Latin American steel companies continue to respond to the challenges of a significant recovery in consumption and supporting regional trade. The Latin American market is evolving positively in its path to normalization, although imports continue to represent a risk for production and the regional market," Wagner said.