Miners and metal producers may be leaping largely into the proverbial unknown vis-à-vis shifting into the green steel era in Europe and other parts of the world. Reassuringly, though, the bulk of the technology and know-how needed for a successful tilt is already in place, according to Schneider Electric’s Alex Richards.
“It’s an exciting time. There’s disruption, there’s change happening, and it’s a story [green iron and steel] of process electrification, essentially,” said Richards, the company’s vice president and mining, minerals and metals regional segment leader in Europe.
“The great thing is that the technology to change those processes exists.”
With the European Union’s Carbon Border Adjustment Mechanism (CBAM) set to come into play in 2026, demand for low-carbon iron, steel, aluminium, cement, fertilisers and, of course, electricity is set to expand massively. Accelerating the transition is contingent, though, on adequate supply and pricing across “green” product value chains, with access to sufficient green energy to use in existing processes critical to capacity builds.
“You’re seeing certain geographies having a strategic advantage because of their availability of plentiful renewable power – the Nordics, for example – and other parts of the world, such as Germany, that are struggling because they can’t get green hydrogen at the price point or the cost point that they need,” Richards said on the sidelines of the 2024 FT Mining Summit in London.
“I think the industry will solve it, but we may see a significant disruption where we start to see the rise of green hydrogen and DRI [direct reduced iron] production in other areas, and then shipping that to the steel mills of the world. Or we might actually find that those organisations in the long term don’t survive and we start to see the steel mills or mini mills moving to the locations where green DRI can be produced effectively.
“So it’s certainly a time of disruption. But what is exciting is what this means in terms of potential decarbonisation.”
Richards said digitisation, automation and process electrification technologies had critical roles to play in green energy transitions at existing and new operations – from mines and other primary production hubs to downstream facilities – over the next decade.
Paris-headquartered Schneider has large energy management and process automation businesses and grew significantly in industrial software through circa-US$16 billion of deals that brought Aveva and OSIsoft under its roof.
“The wraparound to all of that is the consulting capabilities that we have around things like sustainability, digital transformation and process electrification,” Richards said.
“Triple M – mining, minerals and metals – is one of the top industrial segments that we focus on around the world.
“Obviously, the value proposition that we take to a mine site is not the same as a data centre. But fundamentally if we’re helping a mining company to decarbonise we’re looking at all vectors. Can we help them with process efficiency through better automation? Can we help major digital transformation programs through our software and consulting teams? And then can we help them automate and can we help them electrify? And that might include things like microgrids, management of distributed energy resources, etc, to ultimately produce in a more intelligent way.
“Not easy, but there are solutions there to do it.
“Mining generally has a more complex challenge because it depends on individual jurisdictions. Do remote sites have stable grid supply? As it is you can’t solely rely on renewable power but what you can do is look to much more intelligently manage your energy resources … and combine available grid supply with battery storage, with wind, with solar, etc.”
Richards told the conference a lack of digital integration across mine-to-metals value chains meant “existing operations are very generally, very broadly speaking, quite inefficient”.
“We’ve got an opportunity now, with digitisation and the onset of AI, to not just look at steel producers, but also to look upstream from a mining operations perspective … How do we make the whole thing more efficient so the miners can produce and provide high-grade iron ore, potentially at a lower cost?
“And then, how can we help those steel producers, let’s say, in Europe, upgrade their facilities in a more efficient way?
“I will say, though, that I do expect there to be disruption in the industry and potential decoupling, because I don’t think at the current price point in Europe some of the incumbent producers can afford to provide green steel.”
Speaking alongside Richards in London, Luisa Orre, chief procurement officer at boom Swedish start-up Stegra (formerly H2 Green Steel), agreed with him on the technology needed to transform the steel industry. The company raised a staggering €6.5 billion to build a green steel plant and green hydrogen electrolyser facility at Boden in Sweden’s north.
“The equity part was the largest equity financing in 2023. Number two was OpenAI, just to give you the scale of the interest in this industry,” Orre said.
“The reason why we launched this company was because we were looking at the steel industry thinking, why is nothing happening faster? The technology that we’re using is not something that we have patented or something that is a completely new innovation. The concept has been around for decades. So why is nothing happening?
“We wanted to be a part of accelerating that, which so far we’re doing successfully, and we’re set to start operations in 2026 producing 2.5 million tonnes of steel that has a 95% lower carbon dioxide footprint.
“The challenges are then around how you create a level playing field in Europe.
“What happened when we launched our project was that somehow, or for some reason, that accelerated a lot of the incumbents [to] say, now we also want to make green steel. But these are companies that have legacy assets, some of which have been around for 100 years in locations that have pretty much no renewable electricity, and the electricity that is renewable is extremely expensive.
“To give a sense of the scale of electricity that we need, our substation for the first phase is 2000 megawatts, and we’re consuming electricity at a cost of €30 per megawatt hour. And that is a good geography to do electricity intensive reduction of iron ore.
“What happens is that a lot of the incumbents then say, well, okay, we also need to do green steel. So we’re going to announce all of these EAF [electric arc furnace] projects in continental Europe. We just need subsidies to do it.
“You get a new greenfield steel plant for 50% off, but then how do you operate that sustainably over time when you just don’t have the green electrons competitively priced?
“We’re risking walking into a trap, which is an uncompetitive green steel industry in Europe.
“That’s why I completely agree with [the proposition] to break up the value chain. Let’s focus those few valuable, renewable, but still expensive green electrons in continental Europe on the downstream processing. And let’s break up the value chain and reduce the iron ore where it makes sense, which is in locations with abundant, competitively priced green electricity.”
Orre and Richards said while a green premium of 30% or more on the “brown streel equivalent” was largely being borne by the European automotive industry today, broadening supply and demand would change market dynamics and CBAM would certainly play its part.
“What will be quite interesting to look at in the next years as more production comes on stream, however that ends up materialising, is what happens with demand, because once the construction industry starts to wake up to the fact that they also need to source green steel, the demand should skyrocket,” Richards said.
“Look how the commercial real estate industry over the past 10 or 15 years has significantly ramped up in terms of requirements and standards around energy efficiency. To build a new building now it is extremely stringent.
“If you look at what goes into a building – glass, cement, steel, etc – all of these are highly-energy intensive, carbon emitting industries. So all of these industries are under positive pressure to transform.
“And when the construction industry really starts to demand that they need to procure sustainable materials, that’s when we’ll see a wave of increased demand.”
Orre said: “The automotive industry is used as the most common example. But in our customer order book we also have construction companies, as an example, consumer goods … IKEA is one example. It’s more likely to be something with some kind of a consumer connection.
“It’s important to have a variety of verticals and I do see that there’s quite a few others, typically with consumer links, that will drive the demand.”
