Steel: the material for a sustainable future
Europe Media Day
Paris, 11th December 2018
David Clarke,
Vice President, Head of Strategy and Chief Technology Officer
What is common about all of these plausible futures?
1
Steel: the material for a sustainable future
• Why is the sustainable future made of steel?
• What is the nature of the carbon challenge for steel?
• What are the possible solutions to this challenge?
• How is ArcelorMittal addressing the challenge?
2
3
…driving…
Demographic shifts
Accelerating urbanisation
Global megatrends…
Climate change, environmental
stress, and pollution
Digitalisation &hyper-connectivity
Global geo-political and economic shifts
Technologicalbreakthroughs
• Shifts in social awareness and lifestyle demands
• Policiesreinforcing sustainable development
• Businesses to improve resource use efficiencies, reuse and recycling
… towards sustainable economic model
supported by the digital economy
Low carboneconomy
Environment Circulareconomy
sustainable economy
Global megatrends are driving the world towards a
sustainable economic model
Source: ArcelorMittal Corporate Strategy
4
Circular, easy to recover and 100% recyclable
sustainablesteel
Preferred material, universally used in very diverse sectors
Nature friendly, “rusts” back
Key material for our future sustainable economy
Source: ArcelorMittal Corporate Strategy
Preferred material, nature friendly and supportive of a circular
economy: steel is at the heart of the sustainable future
Steel
high
230mt
Magnetic; easy to separate from waste streams
$100-150/t
lower risk of downcycling
5
End of lifeFiberglass
-
-
X
-
Only used as energy
Source: ArcelorMittal Corporate Strategy analysis
Recyclability
Recovery value
Cement
-
-
X
-
Only down-cycling
Material-to-material
recycling
Ease to segregate
material to material
Plastics
low
36mt
Closed loop needed to effectively to recycle
$30-500/t
risk of downcycling
Aluminium
med
18mt
Alloying risk of down-cycling
$700-900/t
Closed loop to sustainably recycle
Recycled volumes
With unmatched recyclability and ease to segregate, steel
remains by far the most recycled material globally
removable during melting
Steel has a limited number of hard to remove elements; hence steel can be easily recycled while keeping original quality.
6Sources: Hiraki et al.
not removable during melting
Aluminum has a lot of hard to remove elements during
melting; hence it is very difficult
to be recycledwhile keeping
original quality.
Steel is generally more recyclable than competing materialsRecyclability of complex end of life vehicle’s materials
7Sources: ArcelorMittal
• In June 2018 ArcelorMittal launched in Europe its new philosophy for steel in construction: Steligence®
• Described as ‘the intelligent construction choice’, Steligence®
enables architects, engineers, building owners and urban planners to resolve the competing demands of flexibility, creativity, economics and sustainability
• Key benefits include
– Reduced storey height due to thinner, steel + composite flooring systems, permitting more storeys within a given height
– Less deep foundations due to decreased weight of steel buildings
– Wider column-free spans, permitting total and repeated layout flexibility so that building life is extended
– Extraordinary range of exterior façade treatments; more creative, more durable, and with self-healing characteristics
• Steligence® harnesses the sustainability credentials of steel not just in terms of its unmatched recyclability, but also its potential for re-use of steel components without need for melting down
ArcelorMittal’s new HQ in Luxembourg, currently under development, will be a showcase for the Steligence® philosophy, and a truly circular building
New steel concept for sustainable steel in construction ArcelorMittal headquarters to be the showcase
Steligence®, a new steel construction philosophy
to support sustainable construction
Steel: the material for a sustainable future
• Why is the sustainable future made of steel?
• What is the nature of the carbon challenge for steel?
• What are the possible solutions to this challenge?
• How is ArcelorMittal addressing the challenge?
8
* Defined as end of life material recycled to make same material again
Sources: WSA, World Aluminium, Plastics Europe, ArcelorMittal Corporate Strategy analysis
0%
50%
100%
0
2
4
1990
2000
2010
2018
Fiberglass
Primary
0
1,000
2,000
3,000
4,000
5,000
1990
2000
2010
2018
Cement
Primary
0
1,000
2,000
1990
2000
2010
2018
Steel
Primary
Secondary*
0
20
40
60
80
1990
2000
2010
2018
Aluminium
Primary
Secondary*
0
200
400
1990
2000
2010
2018
Plastics
Primary
Secondary*
9
Sources
Mill
ion
to
nn
es
Global production
Global consumption for most materials has tripled since 1990;
material production today relies heavily on primary sources
As with virtually all materials, producing steel from primary
sources requires significant energy, today’s main source of
CO2 emissions
10
Primary sources
Secondary sources
FeO
OO
Fe
Metallurgicalcoal and gas
FeO
OO
Fe
FeO
OO
Fe
FeFe
Fe
Fe
FeFe
C
FeFe
Fe
Fe
FeFe
CFeFe
Fe
Fe FeFe
C
powerRecycled steel scrap steel
Iron ore steelIron
CC
CC
OO
C
OO
C
e-
CO2OO
C
OO
C
Source: ArcelorMittal Corporate Strategy
18-22 GJ for a tonne of steel
5-7 GJ for a tonne of steel
FeFe
FeFe
FeFeC
MetallicMelting,RefiningPre-metallic
OO
oxygen
OO
oxygen
Smelting
steel glass aluminium plastics fiberglass cement
Competing materials face similar challenges, with comparable
or even higher CO2 emissions in primary source production
11
Primary source
Secondary source
* Underestimation as it does not include end of life emissions if material not recovered (up to 3kg CO2 per kg of plastic)
Source: ArcelorMittal Corporate Strategy analysis
*
CO2 emissions by material, primary and secondary sourceskg CO2 per kg material
12
AutomobileBody in white
Steel900kg
1.8t CO2
Aluminium470kg
5.6t CO2
Steel16.3 tonnes
Fiberglass10.4 tonnes
33t CO227t CO2
Yacht46’ trawler
Bottle0.75l
Glass420g
Steel177g
350g CO21,800g CO2
Building structureone storey 5x8m
Concrete32 tonnes
Steel2.6 tonnes
5t CO25t CO2
Piping system3 metres of 6” schedule 80
Steel130kg
260kg CO2
Plastic (PVC)27kg
60kg CO2
Steel versus other
materials
* Only emissions from production of material from primary sources (virgin); does not take into account lifecycle CO2 emissions of different materials
Source: ArcelorMittal Corporate Strategy analysis
CO2 when produced
from primary sources
As such, for many applications, steel remains the best option
today in terms of overall CO2 emissions and recyclability
2761
124
432
70101
563
384
India Developing(other)
China Developed
The need for primary steel will continue for decades
driven by growth in the developing world
13
Finished steel consumption growthkg steel per capita
Sources: WSA, United Nations, ArcelorMittal Corporate Strategy analysis
2001
2018
Steel: the material for a sustainable future
• Why is the sustainable future made of steel?
• What is the nature of the carbon challenge for steel?
• What are the possible solutions to this challenge?
• How is ArcelorMittal addressing the challenge?
14
There is a global commitment to significant emissions
reductions; Europe has set ambitious goals
15
0
10
20
30
40
50
60
1995 2005 2015 2025 2035 2045
CO
2em
issi
on
s* (g
igat
on
nes
)
0
1
2
3
4
5
6
1990 2000 2010 2020 2030 2040 2050
Power
Other
Industry
Agriculture
Transport
Other fuel
-20%
-40%
-80%
CO
2em
issi
on
s* (
giga
ton
nes
)
EU long term commitment
* Greenhouse gases (CO2, N2O, CH4, HFC, PFC, SF6, NF3) emissions in CO2 equivalent
do nothing scenario
contain temperature rise to only 2°C
contain temperature rise to only 1.5°C
+40%
-40%
-80%
Global greenhouse emissions futures European greenhouse emissions commitment
Low carboneconomy
Paris Accords
Sources: European Environment Agency (EEA) via Eurostat
Effective reductions in power sector CO2 emissions have
only come through significant government investment and
production support in renewables
16
Europe CO2 emissions from power and heating
mill
ion
to
nn
es C
O2
emis
sio
ns • Investment in renewables has
averaged over €80B annually between 2008 and 2015
• Government investment and production support to renewables power increased from €21 to over €44 billion annually between 2008 and 2015
Sources: EEA, Ecofys, NERA, ArcelorMittal Corporate Strategy analysis
0
400
800
1,200
1,600
2,000
1990 1995 2000 2005 2010 2015
Actual power and heating emissionsAvoided emissions from renewables (since 2005)
6 10 24 62 146 279
13% 14% 15% 15% 21% 30%Renewables production
(% of total power)
Renewables capacity(GW)
Policy, energy and technology developments will be the key
determinants of successful lower emissions pathways for
steelmaking
17Source: ArcelorMittal Corporate Strategy
Competitive energy availability
Policy evolution
ENERGYBio materials and bio fuels markets
Lower emissions steelmaking technology developments
CO2Successful
pathways to lower emissions
low CO2low CO2
low CO2
18Sources: WSA, United Nations, Ecology Global Network, ArcelorMittal Corporate Strategy analysis
Today (2017) (2050)Steel: 2.5 - 3.0 billion tonnesPopulation: 9.7 billion
Steel: 1,700 million tonnesPopulation: 7.3 billion
CO2 emissions
low CO2
Fossil fuels
Successful pathways will come through a combination of
renewable energy sources, renewable biomass and waste,
and carbon capture storage and use
O2 O2
Renewable power
Fossil fuels with carbon capture, reuse and storage
CO2
Renewable biomass and waste, carbon reuse
CO2
Sustainable future
19Source: ArcelorMittal Corporate Strategy analysis
low CO2
Lower emissions could be reached using fossil fuels and
carbon capture storage and use
Blast Furnace route
Coke
PCI
•Develop carbon storage in Europe (up to 200mtpa CO2)
•Opportunity to increase bio fuel and bio materials to substitute fossil fuel chemicals and plastics
Fossil fuels with carbon capture,
reuse and storage
CO2
Carbon use
Carbon storage
Cost challenge
Technology challenge
Energy infrastructure
challenge
• Adapt existing steel industrial footprint
PCI & coke PCI & coke with CCU
PCI & coke with CCS
Hydrogen(natural gas & CCS)
Carbon capture and use (CCU) & storage (CCS)
Net energy costs
Other costs
Hydrogen based DRI
Carbon storage
20Source: ArcelorMittal Corporate Strategy analysis
low CO2
Lower emissions could be reached using renewable biomass
and waste, and carbon capture storage and use
Renewable Biomass and waste, carbon reuse and
storage
CO2
Cost challenge
Technology challenge
Energy infrastructure
challenge
•230mtpa sustainable Biomass and waste: (est. 400mtpa available today)
•Develop bio-coal (70mtpa) and bio coke (35mtpa)•Carbon storage infrastructure (up to 200mtpa CO2)
Blast Furnace route
Carbon useBio-coke
Bio-coal
Carbon storage
SteelanolR&D
ToreroR&D
• Adapt existing steel industrial footprint
PCI & coke Bio-PCI & bio-coke
Bio-PCI & bio-coke with CCS
Bio-PCI & bio-coke with CCU
Carbon capture and use (CCU) & storage (CCS)
Net energy costs
Other costs
21Source: ArcelorMittal Corporate Strategy analysis
low CO2
Lower emissions could be reached using renewable power
sources and new technologies
Water electrolysis
•Green Hydrogen: +485TWh of electricity consumption (+15% today’s consumption)
•AEE or MOE: +300-400TWh (+9-12% today’s consumption)
O2O2
Renewable power
Hydrogen based DRI
MOE
AEE
Cost challenge
Technology challenge
Energy infrastructure
challenge
SIDERWINR&D ULCOLYSIS
R&D
• Completely new steel industrial footprint
PCI & coke Green hydrogen(electricity)
Aqueous Alkaline Electrolysis (AAE)
Molten oxide electrolysis (MOE)
Carbon capture & storage (CCS)
Net energy costs
Other costs
Steel: the material for a sustainable future
• Why is the sustainable future made of steel?
• What is the nature of the carbon challenge for steel?
• What are the possible solutions to this challenge?
• How is ArcelorMittal addressing the challenge?
22
23
Advance lower emissions
steelmaking technologies
Advance public policy to support
“sustainable” steel transition
Stakeholder engagement
An evolving CO2 target plan
1
4
2
30ArcelorMittal’s response to the carbon challenge
Source: ArcelorMittal Corporate Strategy
We are developing a CO2 reduction plan leveraging best
practices and technologies as well as cost-effective innovations
24
Source: ArcelorMittal Corporate Strategy
1
• Continuous improvement, leveraging best practices
• Implementing proven technologies, including maximising off gas reuse
• Incorporating cost effective innovations as they become commercially viable
• Adapted to industrial footprint and different geographies
IGARImproving carbon use as reductant in blast furnace
R&D and pilot project (€20M)2MW plasma Dunkerque, FranceStart up 2021-2022
25
ArcelorMittal Lower emissions steelmaking breakthrough projects
Source: ArcelorMittal Corporate Strategy, CTO, Global R&D, FCE
2 2
SteelanolMake ethanol from process gases
ethanol
Pilot plant (€125M)80 million litres ethanolGent, BelgiumStart up 2020
ToreroProcess waste wood to use as PCI substitute
Pilot plant (€45M)250,000 tpa biomassGent, BelgiumStart up 2020
siderwin
Pilot plant (€8M)2MW plasma mESIERE, FranceStart up 2021-2022
Electrolysis of iron oxide
R&D and pilot project (€20M)100 kg iron platesGlobal R&D Maizières, FranceStart up 2021-2022
Innovating on potential technologies to prepare ArcelorMittal
for plausible lower CO2 emissions futures
26Source: ArcelorMittal Government Affairs and ArcelorMittal Corporate Strategy
Policy needs to ensure a level playing field, otherwise erosion
of steel industry in Europe without reducing emissions globally
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ETS phase IV impacts to European steel (from 2020)
• Industry free allowance surpluses expire
• Unrealistic benchmarks could lead to increase of marginal production costs by ~50€/t steel in Europe
• European steel industry could be in significant disadvantage versus global competition
• Risk to viability of European steel industry without making any headway to lower emissions globally
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• Level playing field globally for “sustainably” produced steel
• Priority access to renewable energy at preferential rates (sustainable biomass etc.)
• Financing and incentives for R&D and investment to transition to sustainable steelmaking
Challenges for steel industry Policy support needed
• First movers towards low emissions steel penalised with structurally higher costs than competitors
• Abundant, cost effective energy supply from renewable sources is necessary
• Significant investment required to develop new technologies and transform industrial footprint
Source: ArcelorMittal Strategy and ArcelorMittal Government Affairs
•Border tax / input cost parity / tax credits
•Mandated “green” steel standards
•Preferred renewables consumer status for power, biomass & waste
•Financial loans•Research grants
Instruments
33
Steel industry cannot go at it alone, policy will have to
support the transition towards sustainable steel
What is common about all of these plausible
futures?
28