Low-emission steelmaking investors prefer greenfield over conversion

Green steelmaking projects by start-up companies could be more attractive for investors than established mills converting to direct reduced iron, finds Benedikt Zeumer of McKinsey. At EUROMETAL’s Steel Trade Day in Düsseldorf last week, Zeumer talked about “potential discontinuities” in global steel supply chains.

He was asked by a representative of Tata Steel Europe what investors think when investing into green steel. “It is a tricky question, but I think that new starters are in a better position … because they do not have the legacy of existing mills,” Zeumer replied.

Another argument is that “investors like to take their money where the energy is available”, Kallanish heard him say at the conference. “Building newly in Sweden is an option, and so is Spain,” he said, referring to ventures announced in those countries. “But it will not be sufficient, and there will be a run on North Africa and Turkey for this,” he added.

He was aware that this sounds like “doomsday news” for Europe, where players need to invest to survive, too. “It is not”, he stated, but cautioned that in sectors outside of green steel, products like “rebar, for example, will be harder to maintain in Europe than sophisticated products”. For this, he gave figures for the working time effort required for long products, which is only 0.8 hours for rebar against more than 2 hours for special bar qualities.

“Europe may become the place more for re-rolling and finishing of steel products, maybe more for trading,” Zeumer concluded.

Christian Koehl Germany