Federacciai warns of high BF-EAF decarbonisation conversion costs

The Italian steel sector is planning to achieve “green” steel production by 2030, Federacciai president Antonio Gozzi said at the Italian steelmakers association’s annual meeting held at last week’s Made In Steel tradeshow in Milan.

“Over 80% of Italian steel is produced using electric furnaces, in a decarbonised way, while in Europe about 60% of steel is still made with blast furnaces and coal … Italy is the second largest steel producer in the EU, behind Germany and ahead of France, and the leading steel producer using the electric arc furnace route,” Gozzi pointed at the event attended by Kallanish.

In Europe, about 90 million tonnes/year of steel is still produced with blast furnaces. Eurofer estimates that at least half of this amount will be converted to EAF steelmaking in the near future to pursue the decarbonisation process. According to Gozzi, this will lead to three major problems. The first is the high cost of this conversion, a roughly €1 billion ($1.1 billion) investment for each 1mt of converted production. This means around €50 billion will be needed in the near future to decarbonise European steel output, but there is no plan from the European Commission to support this financially.

The second issue is related to the very strong growth in demand expected for scrap and metal charges, which is estimated to reach about 50m t/year, “availability that does not exist today”, Gozzi said. “Europe exports around 20mt of this critical raw material every year and, even if we succeeded in blocking this flow of exports, another 30mt would still be missing,” he added.

The third challenge the industry needs to face is the future additional need for electricity that will replace coal in the EAF steelmaking process. Europe will also have to financially support decarbonisation of that portion of blast furnace steelmaking that cannot be converted to the EAF route and needs help to develop a range of technologies, from carbon capture to biogas, to hydrogen. “So far, the European Commission is signalling no attention to this need,” Gozzi warned.

In the absence of a common European industrial policy, Italy must continue to fight at the community level for equally balanced European aid, for the single market to be safeguarded, for industry to return to the centre of attention, and for the elaboration of common industrial policies, the executive continued.

If EU policymakers do not quickly change their approach, they will be responsible for the continent’s industrial erosion. In recent years, EU policy on industry has been gloomy and marked by a lack of effective and unifying measures. Gozzi urges collaboration, unity and, above all, equal aid to all member states.

Natalia Capra France