ResponsibleSteel™ Certification: Sustainability in South Africa's Green Steel Industry
The Importance of Steel Production in South Africa:
The global steel industry plays a critical role in various sectors, including construction, automotive, and manufacturing. Its versatility and strength make it indispensable in creating durable structures and products. Furthermore, steel's recyclability contributes to sustainability goals, as it can be reused without compromising its quality. The steel industry's significance is evident in its economic impact and employment generation on a global scale.
In South Africa, the steel industry has been a pivotal contributor to the country's industrialisation and economic development. The sector has historically been closely tied to the mining industry, as iron ore and coal are essential raw materials for steel production. South Africa's steel industry has undergone transformations over the years, adapting to changing market dynamics and technological advancements.
The July 2023 bulletin from the South African Iron and Steel Institute reflects the industry's resilience and growth. The substantial increase in steel production to 429.9 thousand tonnes of crude steel in June 2023 highlights the industry's ability to respond to demand and market conditions. This growth is particularly noteworthy given the 56% surge from June 2022 and the 4.8% rise from May 2023.
However, the process of steel production is characterised by its significant energy demands, often placing a substantial burden on existing energy resources. Traditionally, coal has been the predominant energy source driving this intricate industrial procedure. However, the global pursuit of decarbonisation is becoming an industry obstacle due to its heavy reliance on coal. This reliance not only contributes to environmental concerns but also hinders the realisation of the steel sector's ambitions to transition towards more sustainable and environmentally friendly practices.
How is Steel Produced in South Africa?
The steel industry in South Africa displays two main methods of steel production. Around 60% of the steel is manufactured using a process known as blast furnace-basic oxygen furnace (BF-BOF). In this method, steel is produced using iron ore and coal as raw materials. The remaining 40% of steel production in the country comes from a different method called electric arc furnace (EAF). This approach relies on recycling scrap steel as its primary input material.
As South Africa aims to move towards an economy with lower carbon emissions, there is a growing emphasis on increasing the use of EAF technology. This is because EAF production is generally considered to have a smaller carbon footprint compared to the traditional BF-BOF method. However, both methods have their own environmental challenges that need to be addressed.
Steel Production and South Africa's Carbon Footprint:
The process of making steel is energy-intensive and has a significant impact on the environment. Traditionally, coal has been a major source of energy in steel production. It is used both for producing iron from iron ore and for providing the heat required in the steel-making process. To reduce the carbon emissions associated with steel production, there is a need to shift away from coal and explore more environmentally friendly energy sources. This could include using hydrogen or renewable energy sources to power the steel-making process.
One potential solution to reduce emissions is carbon capture and storage (CCS) technology, which could capture, and store carbon dioxide produced during steel production. However, adopting these modern technologies and approaches requires substantial investments in new equipment and infrastructure. This can be especially challenging for smaller or medium-sized steel companies that may already be facing financial pressures.
The South African steel industry is also connected to global markets. Many of the raw materials used in steel production, such as iron ore and coal, are imported from other countries. To achieve significant carbon emissions reductions, collaboration is needed across the entire supply chain to ensure that these inputs are sourced in an environmentally responsible manner.
Furthermore, as countries around the world are increasingly focused on addressing climate change, new regulations are being introduced that could affect the steel industry's exports. For example, the European Union (EU) is implementing a Carbon Border Adjustment Mechanism (CBAM) that could impact the competitiveness of steel products from South Africa. Similar measures are being considered in other markets like the United Kingdom, which could further complicate the global trade landscape for South African steel producers.
Energy Consumption, and the Impact of Load Shedding on Steel Production:
The steel industry's influence reaches beyond its direct economic contributions. In countries like South Africa, where energy supply and demand have a significant impact on industrial operations, the steel sector's growth can intersect with challenges in the energy sector. One of the most notable challenges in recent years has been the issue of load shedding, a controlled interruption of electricity supply, often due to supply-demand imbalances.
South Africa has faced a series of load shedding episodes in the past, largely attributed to operational issues within the state-owned power utility, Eskom. Load shedding can have cascading effects on industrial sectors, including steel production. The steel industry, being energy-intensive, relies heavily on a consistent and reliable electricity supply. Load shedding can disrupt production schedules, increase operational costs, and affect the overall competitiveness of the industry.
Given the energy-intensive nature of steel manufacturing, load shedding can lead to production downtime, equipment damage, and inefficiencies. In some cases, industries might need to rely on backup power sources, which can further strain resources and increase costs. The steel industry's resilience and growth in the face of these challenges, as seen in the surge of steel production mentioned in the July 2023 bulletin, highlights the sector's adaptability and strategic planning to mitigate the impact of energy-related disruptions.
Efforts to address load shedding and stabilise the energy supply are essential not only for the steel industry but also for the broader economy. Investments in energy infrastructure, diversification of energy sources, and improvements in the operational efficiency of utilities like Eskom are crucial steps to ensure a stable energy supply for industries reliant on electricity, like steel production. A stable energy supply can enhance productivity, support economic growth, and maintain the competitiveness of key industrial sectors within the country.
The Cost of Steel Production in South Africa:
The cost dynamics within the steel industry in South Africa present both challenges and opportunities in the context of the global market. While the production of steel involves numerous factors such as raw materials, energy, labour, and infrastructure, cost differentials can significantly impact the industry's competitiveness on the global stage.
In comparison to some global counterparts, the cost of steel production in South Africa has historically faced certain disadvantages. The nation's steel industry relies on imported iron ore and coking coal, which can lead to increased costs due to transportation and currency fluctuations. Additionally, factors like inadequate energy supply, as exemplified by load shedding, can raise operational costs, and impact the overall cost-efficiency of steel production.
On a broader scale, the competitive landscape for steel production is shaped by factors such as economies of scale, technological advancements, and regional cost variations. Countries with access to abundant and inexpensive raw materials, efficient energy sources, and streamlined production processes often enjoy cost advantages. In contrast, countries with higher input costs, infrastructural challenges, or volatile energy supplies might face cost-related hurdles.
However, South Africa's steel industry has demonstrated resilience and potential for cost optimisation. Strategic investments in domestic raw material production and supply chain improvements can help mitigate the impact of importing raw materials. Furthermore, advancements in technology and operational efficiency can enhance cost-effectiveness within the industry. Initiatives to stabilise the energy supply, reduce operational disruptions, and enhance overall energy efficiency can contribute to better cost management and competitiveness.
Steel's Contribution to a Low-Carbon Future:
The intrinsic value of steel far transcends its function as a mere structural material. It occupies a significant role in driving sustainable progress across various sectors:
Energy Efficiency:
A testament to the steel industry's dedication to energy efficiency is evident in its achievement of halving energy consumption per tonne of steel produced over the past three decades. Nonetheless, this accomplishment presents new challenges. Ongoing progress relies on pioneering revolutionary steelmaking technologies that usher in an era of unmatched efficiency. Crucially, addressing carbon emissions remains a priority, with the sector contributing around 4-5% of the world's total CO2 emissions.
Recycling:
Steel's inherent recyclability positions it as a vital ally in combating carbon emissions. Its unique ability to be recycled indefinitely, without compromising its integrity, situates it at the forefront of recycling achievements. This is particularly pronounced in industries like automobiles and packaging. The introduction of policies prioritising recyclability and designing for dismantling could amplify recycling endeavours.
Utilising By-Products:
Steel production yields valuable by-products that hold the potential to curb CO2 emissions. For example, blast furnace slag finds a renewed purpose in cement production, leading to substantial emission reductions. Implementing robust legal frameworks for both industrial by-products and raw materials ensures their sustainable utilisation.
Maximising the Lifespan of Finished Steel:
The enduring life cycle of steel is a standout feature across diverse applications. Its contribution to energy efficiency in realms like buildings, machinery, and transportation far exceeds the initial emissions associated with its production. Consider electrical steels that enable extraordinarily efficient transformers and motors, yielding energy savings that outweigh the emissions generated during their production phase.
The Path to a Low Carbon World Can Be Found Through ResponsibleSteel™:
Pursuing a low-carbon world demands a multifaceted strategy for iron and steel production. Achieving carbon-free steelmaking necessitates a versatile array of technological solutions, which can be adopted individually or in constructive collaboration, contingent on local factors.
How Becoming ResponsibleSteel™ Certified Can Lead to Sustainability for the Steel Industry:
Amid these transformative dynamics, ResponsibleSteel™ certification emerges as the bedrock of the steel industry's sustainable trajectory. Amidst South Africa's steel sector's intricate landscape, this certification stands as a firm commitment to responsible and sustainable steel production.
