Renewable energy, hydrogen and high quality iron ore. Canada and Quebec have all the ingredients to develop the green steel sector, according to the Boston Consulting Group. The recipe remains to be found.
Posted at 8:00 a.m.
renewable energy
Steel production generates 7% of global demand emissions. Tackling it will require significant investments, but also core resources that Canada – Quebec and Newfoundland – have and can be leveraged, according to Simon-Pierre Monette, managing director and partner at BCG. to Montreal.
“For steel, we could see the same dynamic as for the aluminum sector, which is working to reduce its emissions by using renewable energy for primary production, modernizing its processes (with technology developed by Elysis ), and with an increased use of recycling”, he explains in an interview with The Press.
Canada, with the energy resources of Quebec and Newfoundland, can contribute to greening steel production, either by supplying steel mills directly or by producing the green hydrogen they need.
Proven technologies
To reduce the carbon footprint of steel production, proven technologies already exist, emphasizes Simon-Pierre Monette. Electric arc furnaces, which replace traditional blast furnaces, can reduce industry emissions by 45% using natural gas as fuel. The reduction can be up to 92% if natural gas is replaced by green hydrogen.
Currently, only 6% of steel production in the world uses electric arc furnaces. According to BCG, this technology should progress to reach 30% of total production in 2050.
Despite its wealth of green energy and iron ore, Quebec has yet to convert its two steel mills, operated by ArcelorMittal and Rio Tinto Alcan, to arc furnace technology.
In Canada, only one steel mill, ArcelorMittal’s Dofasco plant in Ontario, has announced plans to switch to arc furnace technology with $900 million in federal and provincial assistance.
A quality raw material
To produce steel with electric arc furnaces, you need a quality ore with a low concentration of silica and alumina. This quality ore is another asset of Quebec, where the iron ore is of high quality. “The Labrador Trough is an area of choice for mining investments in favor of the transition to green steel”, underlines the specialist.
In addition to their mineral resources, Quebec and Newfoundland have hydroelectric wealth that can be used to produce green hydrogen and replace natural gas in processes.
“Iron reduced by hydrogen could access a major steel production market in Canada and the United States,” says Simon-Pierre Monette. We estimate that by 2050, the adoption of arc furnaces in North America could generate up to two megatons of green hydrogen demand each year to produce hydrogen-reduced iron, a demand that represents approximately 4 billion US dollars. »
The ingredients, not the recipe
Energy, hydrogen and quality ore. Canada has all the necessary ingredients, but not yet the recipe to be a leader in the production and export of green steel, agrees Simon-Pierre Monette. “It’s a chicken or the egg question. What do we begin with ? »
The development of a value chain requires partnerships, he believes. Partnerships between energy producers, mining companies and steel mills are needed. The contribution of governments is also essential, if we want to one day be able to differentiate green steel from steel and give it a premium on the commodity market.
It is possible to tax the carbon content of steel-based products, to promote green steel, he suggests. Green steel content targets in the construction and automotive sectors could also have a significant impact in the development of a green steel industry.
Finally, a capital injection, perhaps from the Canada Infrastructure Bank, he suggests, is essential. “The transformation of the steel sector will require a lot of capital,” he insists.