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ArcelorMittal gets EIB loan to reduce carbon emissions
The EU has ambitious plans to make the steel industry more sustainable
27 May 2020 | Michael Marray

ARCELORMITTAL has been granted a 75-million-euro loan from the European Investment Bank (EIB) for the construction of two projects at its Ghent plant in Belgium. The projects aim to reduce carbon emissions by converting waste and waste by-products into valuable new products, and helping to develop low carbon steelmaking technologies in line with the European Union’s (EU) climate objectives.

One of the projects is known as Steelanol, a 165-million-euro industrial scale demonstration plant that will capture waste gases from the blast furnace and biologically convert them into recycled-carbonethanol, the first commercial product of ArcelorMittal’s Carbalyst family of recycled carbon chemicals. The ethanol produced can be blended for use as a liquid fuel. The plant is expected to be completed in 2022, and will produce up to 80 million litres of recycled carbon ethanol a year.

The second project is named Torero, and is a 50-million-euro large scale demonstration plant to convert waste wood into bio-coal, partially replacing the coal currently injected into the blast furnace. In the early stage, the Torero plant will be able to convert up to 60,000 tonnes of waste wood into around 40,000 tonnes of bio-coal every year. This volume will be doubled in a second stage of the project, after the start of the first Torero reactor. The initial phase is expected to be operational by the end of 2022.

The Steelanol and Torero projects have also received funding from the EU’s Horizon 2020 research and innovation programme under grant agreements totalling 22 million euros.

The EU has ambitious plans to make industry more sustainable, under its so called European Green Deal.

“Even in the current difficult times, Europe keeps its ambitious climate targets and the EIB, the EU climate bank, is committed to continuing to be a key partner,” says EIB vice-president Ambroise Fayolle. “In particular in the steel industry, it means finding new ways to power machines and processes that are essential for reducing carbon emissions.”

To date, ArcelorMittal has committed more than 250 million euros and leveraged their R&D facilities around the world to develop and test technology that will help make steelmaking carbon neutral.

“These two projects are our first large-scale implementations of new breakthrough solutions, as part of our commitment to reduce carbon emissions and transform steel production,” says Geert Van Poelvoorde, CEO ArcelorMittal Europe – flat products. “With the EIB and European Commission’s support, we can scale up technologies and transition steel to carbon neutrality, and thereby play a significant role in helping Europe achieve its green ambitions.”

ArcelorMittal, the world's leading steel company, was formed in 2006 after the takeover of Arcelor by Mittal Steel of India. Lakshmi Mittal is the current chairman and CEO, and his son, Aditya Mittal, is president and CFO. In 2019 it had revenues of US$70.6 billion and crude steel production of 89.8 million metric tonnes, while iron ore production reached 57.1 million metric tonnes.

ArcelorMittal Europe has committed to reduce CO2 emissions by 30% by 2030, with a further ambition to be carbon neutral by 2050, in line with the EU’s Green Deal and the Paris Agreement. EU Commission President Ursula von der Leyen is determined to press ahead with sustainability goals in spite of the economic challenges posed by the Covid-19 crisis.

The EIB is the EU’s long-term lending institution and is directly owned by all the member states. It makes long-term loans available in support of EU policy objectives. The borrower of the EIB facility is C-shift, a wholly owned subsidiary of ArcelorMittal Belgium, which is a wholly owned subsidiary of the ArcelorMittal Group. Given the high risk involved, these EIB loans are guaranteed by the European Commission in the event of default.

In another initiative related to the EU’s green development strategy, the EIB has announced it will increase its investments in battery-related projects to more than 1 billion euros in 2020. This matches the level of support the EIB has offered over the last decade.  

The support will also benefit from the partnership with the European Commission via InnovFin Energy Demonstration Projects (InnovFin EDP). InnovFin EDP is a venture financing instrument designed to support the demonstration of innovative clean energy projects in the fields of renewable energy, energy storage - including battery pilot lines, smart energy systems and carbon capture, use and storage. The aim is to bridge the gap from demonstration to commercialization and thus contribute to the deployment of the next generation of innovative low-carbon energy technologies.

Battery production is viewed as a key industry of the future, and having fallen far behind China, the EU is currently taking steps to put in place large scale battery production with the EU giving state support to private industry initiatives.

At a meeting of the European Battery Alliance on May 19, EIB vice-president Andrew McDowell confirmed the bank’s commitment to supporting a strong, independent European battery industry. The alliance was initiated by European Commission Vice-President Maros Sefcovic in 2017, who also hosted the meeting.

The Covid-19 crisis has highlighted Europe’s vulnerability to interruptions in the supply of critical materials and technologies, and as the green energy transition accelerates, creating a European battery industry is vital to protect Europe’s competitive position in the world economy, explains McDowell.

“With the support of the European Battery Alliance, the EIB is significantly stepping up financing of all stages of the battery value chain, from research and development, raw materials extraction and processing through to battery production, e-charging infrastructure and recycling.”

The pandemic has further highlighted that the rationale behind the European Battery Alliance is more relevant than ever – to bolster Europe’s resilience and strategic autonomy in critical industrial sectors and in key, game-changing technologies, adds Sefcovic.

“I am very pleased to see that the private sectors have kept the momentum thanks to the traction created by the Alliance. Accelerating our work is both possible and needed. The Commission will therefore continue to mobilize all industrial actors, member states and the EIB to shift things into a higher gear – leveraging investment, establishing a fit-for-future regulatory framework and building our raw materials resilience.” 

According to the EIB, further developing an independent European battery ecosystem would allow the Union to play an important role in a market which is projected to grow to 250 billion euros a year by 2025. Additionally, a secure local battery capacity will boost the European automotive industry and safeguard thousands of jobs.

However, battery energy storage in Europe – still in the early phases of its development – is facing challenges in manufacturing, shipping, and R&D due to the economic fall-out of the pandemic. Critical battery components are manufactured in China, either by domestic or international producers, and car makers in Europe have suffered from severe disruptions to their supply chain. As a consequence, European car manufacturers had to lower their production even before the Covid-19 crisis hit Europe because they ran short in supplies of battery cells.

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