In Europe, the old steel industry shaken up by climate and war

The Ilva steel factory in Taranto in Italy, at the time run by ArcelorMittal which has just withdrawn, photographed on July 23, 2019 (AFP/Archives/Tiziana FABI)

Project to build five new “green” steel factories in Scandinavia, France and Spain, closure of two blast furnaces in the United Kingdom and threats to the sustainability of the Italian steel industry: the energy transition and the war in Ukraine are shaking up the old European steel industry.

In the United Kingdom, cradle of the industrial revolution in the 19th century, the steel industry is a shadow of itself with the recent announcement of the closure of the last two Tata Steel blast furnaces at Port Talbot in the country. of Wales, and the uncertainty which reigns over the future of those of British Steel belonging to the Chinese Jingye, in Scunthorpe (northern England).

In Italy, the government has just regained control of the old Ilva blast furnaces in Taranto (south) from Arcelor Mittal, in a state of near bankruptcy, in the hope of finding buyers.

“In Great Britain as in Italy, these are factories which have been very poorly maintained in the past and very costly to renovate,” analyzes Marcel Genet, steel expert and founder of the company Laplace Conseil.

According to him, it would take “between 1.5 and 2 billion euros” to modernize Port Talbot by renovating the downstream rolling mills “in poor condition”, and almost as much for upgrading the Italian blast furnaces to acceptable climatic standards.

– “Take the risks” –

In total, the European Union has already announced 9 billion euros in public aid to finance the decarbonization and modernization of its steel industry.

Along with cement, aluminum, fertilizers and petrochemicals, steel is one of the industries that contributes most significantly to global warming.

This metal is responsible for almost 8% of global CO2 emissions due to the use of coal: each ton of steel produced in a traditional blast furnace emits almost 2 tons of CO2.

Massive aid has been allocated to ArcelorMittal in France, Belgium and Spain in particular, to the Germans ThyssenKrupp, Saltzgitter and Dilligen and to the Austrian Voestalpine to develop their processes.

These steelmakers have engaged in vast greening plans with the objective of abandoning coal, while continuing to produce in Europe.

First, they are betting on electric arc furnaces that melt and recycle scrap metal. Then, on so-called direct reduction furnaces (DRI) which deoxidize and melt the iron ore with gas, then with hydrogen when electrolysis capacities allow.

But the gigantic amounts to invest are difficult to raise against the backdrop of rising energy costs, record high interest rates and the sharp drop in the prices of certain materials. Thyssenkrupp has just announced a new significant loss in the first quarter, weighed down by the difficulties of its steel branch.

The Hybrit green steel pilot plant in Lulea in northern Sweden, photographed on August 27, 2021

The Hybrit green steel pilot plant in Lulea in northern Sweden, photographed on August 27, 2021 (AFP/Archives/Jonathan NACKSTRAND)

Alongside the restructuring of the old steel industry, at least five completely new greener steel factories are announced in the coming years: three in Scandinavia, one in France and one in Spain.

“Hybrit, H2 Green Steel, and Blastr in Sweden and Norway, Gravithy in Fos-sur-Mer in France, and Hydnum in Castille in Spain are new units which will renew the entire steel manufacturing process with furnaces electrics, continuous casting and hot rolling”, underlines Mr. Genet.

– “Probably forced to close” –

“Their financing is assured, the technologies are proven, which means that the oldest and most fragile steel plants in Europe will probably be forced to close,” he says.

But the climate is not the only disruptive element in the European steel industry.

The ruins of the Azovstal steel factory in Mariupol, Ukraine, September 15, 2022

The ruins of the Azovstal steel factory in Mariupol, Ukraine, September 15, 2022 (AFP/Archives/STRINGER)

The war in Ukraine, which started two years ago, also plays an unforeseen role in the restructuring of the sector.

The country invaded by Russia lost operational control of two steel plants, “the Azovstal and Ilych factories, which had produced a total of around 8.6 million tonnes of crude steel in 2021”, indicated the CEO of the Ukrainian steel group Metinvest, Yuriy Ryzhenkov, in an interview with the French daily Les Echos in December.

However, it needs steel to replace damaged railway rails and to manufacture weapons or shells.

Metinvest, headquartered in Donetsk, signed a memorandum of understanding in mid-January in Italy to relaunch the Piombino steelworks (center).

Its CEO also told Corriere della Sera that he could study an “opportunity in Taranto”, where the government is looking for investors after the exit of ArcelorMittal.


© 2024 AFP

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