EU scrap supply, economic independence critical
The EU’s failure to classify scrap as a Critical Raw Material (CRM) is baffling, given the EU’s scrap surplus will likely soon turn to a deficit amid steelmakers’ EAF transformation. However, the list is subject to revision and could soon see scrap added, concluded a panel at this week’s European Economic Congress in Katowice attended by Kallanish.
Scrap was not made a CRM solely because the EU is a net scrap exporter, but steelmakers are already looking ahead. “It’s absolutely the last chance to understand what is going to happen,” warned chief executive of Polish steelmaker Cognor, Przemyslaw Sztuczkowski. The circa 60% of EU steelmaking that is blast furnace based will, due to decarbonisation, soon need to source scrap feedstock.
When it comes to hydrogen, “our belief in it, as steelmakers, is limited because the technology is futuristic and very expensive,” Sztuczkowski commented. The EU’s 30 million tonne scrap surplus will likely turn into a 30mt deficit, he added. There will be a “mad rush” for steel scrap in Europe and globally, he continued. Scrap should therefore be added to the CRM list at some point. For now, it should be monitored and licensed, while its export from the EU should be levied with a duty.
Ryszard Pawlik, parliamentary advisor to European Parliament Member Jerzy Buzek, pointed out that EU officials fought to include scrap on the CRM list, and this was the case initially. However, it was removed again following consultation with individual EU Member States. Nevertheless, “there is still hope” as the list is periodically reviewed, he added.
As for coking coal, this will likely remain an EU CRM for as long as steel remains a strategic material amid Europe’s need to strengthen its defence industry and decarbonise, said Weglokoks chief executive Tomasz Slezak. Global iron ore supply is plentiful, but coking coal sources are more limited. Europe is unlikely to move quickly away from BFs because decarbonising steel is complex, costly, and needs infrastructure to be built using steel, he added.
The panel also saw discussion on other CRMs. Herbert Wirth from the Faculty of Geoengineering, Mining and Geology at the Wroclaw University of Science and Technology, said significant volumes of cobalt and vanadium are found in Polish copper waste. However, these are not systemically documented and they are not recovered. There needs to be impetus from the state to change this. Sodium is also available in abundance in Poland.
Opening the panel, Jerzy Buzek noted: “If we don’t want to … slow our fair green transformation, or weaken the economic resilience of the EU, wise management to secure critical raw materials, including the diversification of their import and, where possible, domestic production and recycling, are key. If we don’t do this, we will be unable to fulfil the most important expectation of our citizens, but also the business world – to continue to have a competitive, prosperous and secure European economy.”
This is far more important today than resisting environmental measures, as is the case in some EU circles. Russia’s aggression in Ukraine has shown the EU must act to ensure it has a strong defence industry but also that its economy is independent, he added.
Adam Smith Poland
ArcelorMittal Spain begins hybrid EAF construction
ArcelorMittal began construction of its new hybrid electric arc furnace at the Gijón mill in Spain during an official ceremony held on Thursday. The project is a priority for the steelmaker’s CO2 emissions reduction goals in Europe.
The execution of the project is moving forward after it received the construction licence from the Gijón City Council on 8 May. This was the last step required before starting work, the company tells Kallanish.
The investment will allow ArcelorMittal to produce high-value-added wire rod, placing the plant in a highly competitive position, particularly in long products-consuming sectors with strict carbon footprint criteria for public administration contracts.
“Maintaining our position as the lead supplier of low-carbon steels is a clear priority and the planned ramp-up at Sestao, along with the new EAF in Gijon which will break ground imminently, will both have an important role to play,” ArcelorMittal chief executive Aditya Mittal commented during the company’s first-quarter earnings call last week.
Last November, the steelmaker contracted Spanish technology supplier Sarralle Group to execute the project. The furnace will have an annual capacity to produce 1.1 million tonnes of low-emission steel. As part of the project, Sarralle will also install a dust collection system and waste heat recovery system to maximise the EAF’s energy efficiency.
The facility is expected to be operational in Q1 2026, ArcelorMittal estimates.
The firm’s decarbonisation programme in Spain includes the construction of a 2.3m t/year green hydrogen-based DRI plant, which is still awaiting the final consent of the company’s board.
Todor Kirkov Bulgaria
Security considerations justify state’s steel industry involvement
A key theme discussed across the three conference days was security of critical materials supply, at a Polish and EU level. The steel panel saw the discussion explode into life when the moderator suggested Polish state-owned Weglokoks could consider acquiring plate producer Huta Czestochowa, currently owned by Liberty Steel and facing serious financial problems.
Marek Serafin, chief executive of Polish coke producer Koksownia Czestochowa Nowa, said he is firmly against any state involvement in operating the steel industry. “The government is for regulation and the environment and not for investing – it should leave that to the professionals,” he noted.
Marto Jarno, director of analysis at Poland’s industry ministry, agreed but added that national defence is an important consideration in the current geopolitical climate.
Polish Steel Association president ceo Mirosław Motyka added that the state is also responsible for delivering energy and other utilities, developing a hydrogen transmission pipeline and renewable energy transmission network from new Polish offshore wind farms. This will be built using low-emission steel, the production of which requires state-private sector cooperation.
Steelmakers therefore hope for the conclusion of a European Industrial Deal, as called for in the Antwerp Declaration, Motyka pointed out.
Weglokoks chief executive Tomasz Slezak said that while steelmakers should be run by private companies, “I don’t agree with the theory that the state should not care [about the steel industry]. The state should care”. It needs to ensure steelmakers are competitive both in Europe and abroad, he added. Huta Czestochowa is worth saving and if a deal appeared to acquire it, “it would be worth going for”, he added.
Henryk Orczykowski, ceo of distributor Stalprofil, noted that while he is also a supporter of private business, the state must have an influence in industry. “We can’t talk about national security if you have no influence on the production of steel products required to ensure this security. What will we build tanks from? What will we build critical infrastructure from?” he asked.
In 2004, Poland’s steel industry was in state hands and 60% of demand was met by local output, while in 2023 the state owned zero and imports met 88% of demand, Orczykowski pointed out, adding: “This must be changed immediately.” The state must act, whether it is to acquire Czestochowa, or Celsa’s Polish plant, which is also up for sale, or form a public-private partnership, to ensure steel security, he observed. The EU could go in the same direction, he warned.
The government will support Poland’s steel industry, without getting involved in running it, and will ensure production capacity to support defence, Jarno observed.
Przemyslaw Sztuczkowski, ceo of Poland’s only indigenously-owned steelmaker, Cognor, said that while he believes all business should be in private hands, there may be a temporary need, for defence purposes, for the state to acquire Czestochowa. But it should ultimately be privatised again, he concluded.
Adam Smith Poland
Europe needs hydrogen diversification, imports
European green hydrogen producers need to diversify their business to ensure profitability and independence from state aid, while insufficient renewable energy capacity may necessitate hydrogen imports from outside the continent. This was the conclusion of the hydrogen panel at the European Economic Congress in Katowice attended by Kallanish on Wednesday.
Standalone green hydrogen producers will find it difficult to turn a profit or secure bank lending and therefore need to also serve other markets such as renewables-based heating and electricity, said Tomoho Umeda, chief executive of green hydrogen infrastructure firm Hynfra. It is not possible to build a standalone green hydrogen plant today without some form of public grant, he added.
“There is no subsidy, there is no public money in not just in the EU but in the world that can finance this [decarbonisation] universally … so we need to, starting already today, adopt the outlook that renewable energy has today – this sector was initially supported with the help of grants, then auction mechanisms,” Umeda noted. Now, it stands on its own feet.
A larger system that caters to renewable energy, hydrogen, heating and transport can already secure project finance today, where the lending is not based on the company’s balance sheet, but on the project’s offtake agreements, Umeda argued.
Sourcing private financing will not be a problem, as private equity funds are prioritising green projects. The money available is vast, but these funds cannot find enough suitable projects, he continued.
Poland does not have sufficient surface area to build hydrogen electrolyser projects exceeding 100MW capacity in one location. European hydrogen/ammonia producers are looking at projects in countries such as Oman, Mauritania or Colombia, where conditions are more favourable. Poland may be the EU’s third-largest non-green hydrogen producer, but it will lose out on green hydrogen if it does not act fast on securing global renewables supply.
Grzegorz Jozwiak, hydrogen technology and synthetic fuel director at Polish oil refiner Orlen, countered by saying: “When it comes to industry … only large-scale production of hydrogen matters, measured in tonnes per hour, not kilograms per hour, to ensure industry survives in Poland and meets the targets industry is burdened with.” He however conceded: “But we have to realise there will not be enough renewable energy here [in Poland].”
Alongside rolling out new renewables capacities, therefore, alternatives need to be employed to ensure sufficient electrolyser capacity and low-emission hydrogen production, such as nuclear power. Carbon capture storage and utilisation should also be considered, with the CO2 used to produce synthetic fuels, Jozwiak added.
Industry will be unable to meet the EU’s requirement for renewable fuels of non-biological origin (RFNBO) by 2030. This states that 42% of hydrogen used by industry must be renewable hydrogen. It makes more sense, therefore, to source the hydrogen from a competitive global market, to keep down costs, according to Umeda.
Emilia Makarewicz, board member on Polenergia’s H2Silesia hydrogen project, agreed that local hydrogen production will be insufficient to cover demand. “On the other hand, we can’t repeat what we’ve already done many times with other technologies or fuel sources … that we will only rely on [imports] and ultimately worry about who will apply the pricing pressure on us,” she warned.
Alex Carr, Europe policy manager, zero-carbon fuels at Clean Air Task Force, emphasised the cost challenge to replacing grey hydrogen with green. Hydrogen will be produced in certain locations, such as the Iberian Peninsula, and consumed in others such as Poland, meaning vast distribution infrastructure will be required. Due to limited resources, the EU needs to prioritise hydrogen in the sectors that need it most. The full rollout across the economy will take time.
Participants agreed the EU must not overregulate the market as this will stifle hydrogen capacity rollout. Umeda concluded that rather than government grants, the focus should be on government-backed bank loans, which enable investments at the scale required.
Adam Smith Poland