Russia’s Metalloinvest Expected IPO Would Give Investors “Green” Metallurgy Play

By Sergey Suverov

  • Environmental pressure will drive demand for “green” steel
  • GHG reductions rely on the industry shift to electric arc furnaces, which need specific raw materials as feedstock to produce steel
  • More than 50% of the HBI market, the most sustainable material for steelmaking, is taken by one player
  • Metalloinvest сonsiders an IPO in 2022; valued by industry analysts at $20+ billion

The market for “green” steel

Ferrous metals production is a significant source of greenhouse gas emissions. The industry accounts for about 7-9% of all greenhouse gas emissions, according to Worldsteel, the global association of steel producers.

The development of “green” technologies in steel production over the coming years will undergo a vast expansion due to investor interest. Infrastructural investments and active construction are underway globally as ESG issues gain larger attention. The investment isn’t all altruistic, EU officials also plan regulatory measures. EU lawmakers announced a carbon tax to push the transition to ecologically efficient production technologies.

  Demand for “green” steel will continue to rise, and steel production technologies with low or zero CO2 emissions will emerge at an accelerated pace as a result of higher investor standards and stricter regulation. One obvious route to reduction will be the gradual replacement of blast furnaces with electric (EAF) ones, which operate at a lower intensity of CO2 emissions. The biggest player in metals and mining, China has already announced a gradual transition to EAF steel production.

Рисунок 2

*MIDREX Technologies

EAF-based mills produce 28% of world steel, though they account for only 8% of the CO2 generated by the steel industry. On the other hand, blast furnace / basic oxygen furnace route produces 72% of world steel with a higher CO2 generation rate (92%):  

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