Cash needed to green Asian steel: conference1857 Views
Asian steel investment is heavily blast furnace-focussed and will lead to higher carbon emissions before any decline is possible, said panellists at the South East Asia Iron and Steel Institute (SEAISI) conference in Manila on Monday.
Government support, regional coordination and a lot more money are needed for the industry to support the region’s climate commitments, they noted.
Southeast Asia is seeing large-scale crude steel capacity investments that will drive capacity higher in the coming years. The new crude steel capacities from integrated mill projects announced to come onstream by 2026 total 76.9 million tonnes/year, with electric arc furnace capacities totalling just 2.2m t/y (see separate article). Because they are blast furnace-basic oxygen furnace producers, however, the carbon intensity of the industry is set to explode, noted SEAISI secretary general Yeoh Wee-jin.
New green steel technologies are meanwhile high cost and not an option for many developing countries in the short term, warned Dilip Oomen, president of the Indian Steel Association and chief executive of ArcelorMittal Nippon Steel India. Sustainability includes two elements: environmental and economic sustainability, he observed.
Benjamin Yao, ceo of SteelAsia, also noted the very high cost of the transition towards hydrogen steelmaking. But he said that investment on the current basis, where projects are deemed economically feasible because exports are competitive, is unsustainable. This leads to a downward cycle of competition where returns on investment are impossible.
Stephan Raes of the OECD noted that Chinese overinvestment led to a spate of anti-dumping investigations, peaking in 2015-2016. Overinvestment in Southeast Asian capacity risks triggering the same cycle, reducing economic efficiency.
Other sources on the sidelines of the conference told Kallanish that the current focus on blast furnace investments in the region is premised on the low cost of production. The assumption is that by having the lowest cost, exports will be competitive and the plant can weather any increased carbon cost. The same sources however warned that this was naïve, and that the cost structure would be changed fundamentally by climate change policies going forward.
The problems of decarbonisation can therefore only be solved by very large amounts of investment. Win Viriyaprapaikit of Thailand’s SSI asked delegates and panellists to give suggestions of how to make it easier to decarbonise the industry, but gave the most pragmatic comment himself. “I would like a lot more money,” he opined.
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