Anglo American (LSE:AAL) and Thyssenkrupp Steel (ETR:TKA) have signed a research agreement on how to decarbonise the production of steel.
- Anglo American and Thyssenkrupp Steel have signed a memorandum of understanding.
- The pair will research and develop new technologies to lower the carbon footprint of steel production.
- The partnership shows how different stakeholders across the value chain can come together to decarbonise hard to abate sectors such as steel.
The search for high-quality feedstock
Anglo American and Thyssenkrupp Steel will jointly research high-quality feedstock for lower carbon steel production. They plan on using both the conventional blast furnace and direct reduction iron (DRI) steelmaking, which is a less carbon intensive method but requires iron ore of a particularly high quality.
Thyssenkrupp Steel is a major manufacturer of carbon flat steel for a wide range of industries and a long-standing customer of Anglo American, a mining corporation. In 2021, Anglo American produced 63.8 million tons of iron ore.
Anglo American has already clinched similar deals with steelmakers in Europe and Asia to research efficient feed materials suited for use in DRI methods, such as iron ore pellets and lump iron ore.
Peter Whitcutt, chief executive of Anglo American’s marketing business, said: “We are combining the premium physical and chemical qualities of our minerals with Thyssenkrupp Steel’s innovative technology to drive more sustainable operations, all the while responding to society’s growing expectations for climate-responsible production practices.”
The direct reduction iron method could replace the blast furnace
ThyssenKrupp previously set out the goal to reach carbon neutral steel production by 2045. It plans to do so by using hydrogen to power operations and carbon capture technologies to prevent the release of CO2 in the atmosphere.
It is also developing DRI plants, which will be part of the research conducted with Anglo American, as an alternative to the blast furnace. DRI is not hot metal, but solid sponge iron which is melted down into a hot metal-like product, so that it can be processed into steel. The use of green hydrogen to power the process can limit its environmental impact.
Dr Arnd Köfler, chief technology officer of ThyssenKrupp Steel, said: “We want to decarbonise the steel value chain inside and outside our plant boundaries. We are making our own production low-carbon through a combination of direct reduction plants with innovative melters.”
He added: “In addition, we are working with many partners to make steel low-carbon from A to Z. We are therefore very pleased to be working with Anglo American to explore ways in which we can use high-grade iron ore in the production process in the most emission-reducing way possible.”
Decarbonising the value chain
Anglo American previously pledged to halve its Scope 3 emissions by 2040 and reach net zero across Scope 1 and 2 emissions in the same year. The majority of its Scope 3 emissions are generated from materials sold to the steelmaking industry, which is why the FTSE 100 miner is focusing on the steel value chain.
The steel sector is considered hard to abate, due to the huge challenges in making it more sustainable. It is estimated to contribute 8% of global greenhouse gas emissions.
There are many companies working towards the decarbonisation of the industry, for example by powering steel production without fossil fuels – the so-called ‘green steel’. In October 2022, start up H2 Green Steel raised an additional €70 million, expanding its series B funding round to €260 million, while Salzgitter (FRA:SZG) received a €1 billion grant from the German state to decarbonise steel production using hydrogen.
The partnership between Anglo American and ThyssenKrupp Steel is an example of how different stakeholders across the value chain can collaborate to come up with new technologies.
