Green steel and the Tatas

Q What qualifies as green steel?

A There is no official definition for what qualifies as green steel; so multiple companies refer to what they produce or plan to produce as green steel. There are companies that are using electric arc furnaces to recycle steel and use green energy if it is available in the grid and call it green steel. There are companies which are developing hydrogen as a substitute for coal as a reductant in the steel making process. But making hydrogen is also energy intensive and so the source of energy in the grid needs to be green. While currently there are a lot of plans, there is not much actual production of ‘green’ steel in the market. As of now even if it is produced, it will be more expensive than the conventional routes and so either governments or customers have to support this initiative to make it financially viable.
 
Q Is it possible to use liquid hydrogen instead of coking coal?

A Hydrogen (more as a gas than a liquid) can be used as a substitute for coking coal as coking coal is not just a source of energy but a reductant. You could either work on injecting hydrogen in the blast furnaces and reduce the consumption of coke and hence reduce the carbon footprint of the process or you could use hydrogen to substitute gas in gas-based DRI production and use that in an electric arc furnace along with steel scrap to produce green or greener steel. But the challenge is production of hydrogen which is energy intensive and therefore the source of energy for hydrogen production needs to be green. Otherwise, the hydrogen produced is not called green hydrogen and is called blue or grey hydrogen and hence one is not fully solving the problem. Also, you need a lot of hydrogen to substitute the coal used in the steel industry currently and it needs to be available at competitive prices. We are some years away from all this.

Q What is the Tatas doing to reduce its carbon footprint?

A At Tata Steel we have multiple initiatives in place. First and foremost is to make sure that our sites are benchmarks in the industry for their carbon efficiency in the processes they use. Our Ijmuiden site in the Netherlands is one of the most carbon-efficient integrated steelmaking sites in the world. Our Jamshedpur site is the most carbon efficient integrated steelmaking site in India. Despite this, we are working on further improvements over the next few years, not only in these sites but also in the other three, main steelmaking sites with us.

We are investing in new processes and the Hisarna process, which is at the pilot scale in Ijmuiden, will be scaled up in India and the Netherlands over the next few years. This will not only help us make better use of inferior quality raw material but also be more carbon-efficient than the blast furnaces and generate cleaner CO2 that is more amenable for storage and usage. We are also doing a lot of work on carbon storage in the Netherlands.

In SE Asia, we produce most of the steel through the more carbon-efficient recycling route and a prerequisite for that is a good steel recycling ecosystem. We have started work in this area in India and have set up India’s first high-quality steel recycling facility in Rohtak, Haryana. Our steel recycling business will be the precursor to us producing steel in India through the recycling route.

We are also collaborating with companies like Shell and others across other industries to do joint projects and share learnings to reduce our carbon footprint. We also factor in a carbon cost when we evaluate projects and that helps us take the right capital allocation decisions.

We have been recognised for our efforts by the World Steel Association multiple times in the last few years and are ranked quite high in the Dow Jones Sustainability Index.
 
Q Can Port Talbot be made competitive? If others are confident, why not Tatas?

A The Port Talbot site has some inherent disadvantages. They are short on coke and often have to buy coke. They don’t have a pellet plant and so have to buy pellets. They are short on power and so have to buy power from the grid. The cost of power in the UK is almost two times the cost of power in some other European countries. In view of the above disadvantages, there is a fair amount of investment required to make the site structurally viable. This is despite Tata Steel making significant investments at the site over the last decade to reline the blast furnaces and augment other facilities. We had two other major sites in the UK which we had divested over the last decade and those who bought it from us were not able to run it as long as we did.

These are challenging sites and while operationally the teams are doing a great job, the structural challenges will require a lot of heavy lifting. While we have demonstrated great commitment over the last 13 years, we now need support and have reached out to the government for the same, to take it further.