Ukraine needs scrap metal to switch to environmentally friendly metallurgy

Europe, having adopted the European Green Deal plan to reduce CO2 emissions, should become an environmentally neutral region by 2050. In this regard, European metallurgists urgently need to move to more environmentally friendly steel production.

However, this is not easy to do, since there are now only two technologies in the world that make it possible to meet the European Green Deal standards – hydrogen steelmaking technology and electric steelmaking.

At present, the use of hydrogen is of a single nature and pilot projects are presented.

Electrometallurgy is considered the only industrial steelmaking technology that can significantly reduce CO2 emissions.

Scrap metal

Thus, steelmaking using electricity is the only method so far that allows metallurgists to comply with CO2 emissions according to the Green Deal.

And this implies the following: very soon global demand for scrap metal will begin to grow sharply with simultaneous protectionism in relation to its own raw materials.

This is due to the fact that only in the USA the share of electrometallurgy in the total volume of steel production significantly exceeds 50%. At the same time, in the EU, this figure is about 40%, in South Korea – 35%, in Japan – 20%, and in China – less than 10% (according to the Worldsteel association for 2019).

Indeed, these tendencies can already be observed. For example, late last year, the European steel lobby Eurofer called on the European Commission to impose restrictions on the export of scrap metal.

And in Great Britain they made a more radical statement: the owner of local metallurgical plants Sanjay Hupta called on the government of the country to ban the export of scrap altogether so that metallurgists could decarbonize.

And on a fresh note, Japanese steel giant Nippon Steel has said it intends to invest in large electric steel furnaces to remelt scrap metal with a goal of achieving carbon neutrality by 2050. These initiatives have already been reflected in the company’s business plan.

Why Ukraine needs scrap

Despite the progressive de-industrialization, Ukraine still remains a country with a developed metallurgy, which is a fundamental branch of the Ukrainian economy.

MMC enterprises form a fifth of Ukrainian merchandise exports, provide more than UAH 30 billion in deductions to the budgets of all levels and provide employment for about 280 thousand Ukrainian ones.

At the same time, scrap metal is a critically necessary raw material for steel mills, since neither converter technology, nor open-hearth, nor electrometallurgical (that is, none of the existing ones) can produce steel without scrap.

However, the procurement of this raw material in Ukraine has been declining for two decades in a row. So, if in 2000 the collection of scrap reached a maximum level of 11 million tons, then by the end of 2019-20, the scrap collection industry decreased to 3,100,000 tons and 2,900,000 tons, respectively.

Ukrainian metallurgists were constantly experiencing a shortage of scrap, which is why many steelmaking capacities were running out of stock. An additional negative was the export of raw materials, which in 2015 reached an incredible 1,200,000 tons.

To prevent the crisis in the domestic mining and metallurgical complex, the Verkhovna Rada introduced a duty on the export of scrap 4.5 years ago.

This had a positive effect, but not immediately: the scrap deficit decreased from 20% to 11% in the first year of the duty, and at the end of last year it was actually overcome.

It is important to note that it is much more profitable for Ukraine to recycle scrap at metallurgical enterprises to obtain value-added products than to export raw materials.

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