Arcelor will focus on Dofasco and Mexico to access North American steel market

Arcelor Mittal, owners of the Hamilton Dofasco steelmaking operation has sold most of its US steel operation to Cleveland Cliffs  for $1.4 Billion. A statement released by ArcelorMittal, Chairman and CEO Lakshmi Mittal reads: “This transaction is a unique opportunity for ArcelorMittal to unlock significant value for shareholders while retaining exposure to the North American economy through our high-quality NAFTA (Hamilton, Mexico)  assets alongside a participation in what will be a stronger, better integrated, US business.” Arcelor Mittal will retain its Calvert facility in Alabama.

With so much of its operations in EU countries, all of which are signatories to the Paris Climate Accord, Arcelor Mittal has developed a green steel strategy that would see traditional carbon burning blast furnaces replaced by Electric Arc Furnaces, which would increasingly be powered by green energy sources. Richard Allison, a US based steel observer recently posted to social media “Lakshmi Mittal made a pitch to the EU that his plants in Europe were going to reduce carbon by 30% by 2030 and 100% by 2050. Mittal estimated that he needed $37 billion dollars to make this happen and the government would have to subsidize this scheme.  This cannot happen by natural gas but by hydrogen and feeding Electric Arc furnaces.  Because the USA did not sign the Paris Agreement, pressure will be on our mills to voluntarily comply or risk having carbon taxes slapped on our exports to Paris Agreement countries. “

“It is interesting that Mittal kept the Dofasco mill in Canada and the Lazardo Cardenas mill in Mexico which both are signatories of the Paris Agreement and will be competing with his former AM USA Units in the USA. “

The Arcelor Mitttal website confirms its commitment to cleaner energy. “As the world’s leading steel company, ArcelorMittal recognises it has a leading role to play in developing breakthrough technologies that will support and enable a global transition to a low-carbon economy. The Company has identified three distinct pathways that have the potential to deliver a significant reduction in carbon emissions. These are:

  • Clean power steelmaking, using clean power as the energy source for hydrogen-based steelmaking, and longer-term for direct electrolysis steelmaking
  • Circular carbon steelmaking, which uses circular carbon energy sources, such as waste biomass, to displace fossil fuels in steelmaking, thereby enabled low-emissions steelmaking
  • Fossil fuel carbon capture and storage, where the current method of steel production is maintained but the carbon is then captured and stored or re-used rather than emitted into the atmosphere.

ArcelorMittal believes that all three pathways offer significant emissions reduction potential aligned with science-based targets and is currently testing various technologies across all three pathways in its European operations. This technology portfolio will enable the Company to pursue the appropriate option depending on the pace of technology and public policy development, which will impact which pathway becomes the most viable in the countries and regions where the Group operates.”

But Arcelor makes it clear that government investment will be required to bring about green steel. The paper says governments will need to assist by:

  • Facilitating necessary clean energy infrastructure will be needed to advance large-scale implementation of low-emissions technologies
  • Access to sustainable finance in order to accelerate and roll out technology development
  • Accelerate transition to a circular economy by incentivising the use of waste streams as inputs in manufacturing processes.
  • The Access to abundant clean energy at affordable prices will be key to be able to scale up low-emissions technologies

The full ArcelorMittal action plan can be accessed here.https://storagearcelormittaluat.blob.core.windows.net/media/hs4nmyya/am_climateactionreport_1.pdf

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