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Salzgitter, LKAB Partner on Steel Decarbonization



June 5, 2022 - Steelmaker Salzgitter and mining group LKAB have formed a partnership focused on decarbonizing the steel industry through the use of low-carbon iron ore pellets, the companies said June 3.

With its SALCOS project, Salzgitter is working with partners from the steel industry and research institutions to achieve virtually carbon dioxide-free steel production by 2033. To achieve this, Salzgitter will require very high-quality iron ore pellets for the new steelmaking process, which involves both direct reduction plants and electric arc furnaces.

Through the partnership with LKAB, the companies will examine which prerequisites need to be created to achieve this and will evaluate the potential development of iron ore-based raw materials for the future steelmaking process, they said.

LKAB produces about 80% of the iron ore mined in the EU and has started to transition its production of iron ore to carbon-free sponge iron (HBI/DRI), a strategy it says is aimed at enabling an annual emissions savings of more than 40 million mt of CO2 in the steel industry before 2050.

"For such a change to materialize, you need not only the incentives and level playing field on the market, but also an industrial value chain approach," Jan Moström, CEO of LKAB, said in a statement.

Salzgitter noted that achieving its goal of virtually CO2-free steel production is subject to "expedient and suitable economic policy framework conditions and significant public subsidies." The company previously said it aims to cut its CO2 emissions by more than 95% by 2033.

The German steelmaker has announced several agreements to supply green steel to customers from the end of 2025, including deals with Volkswagen and cold-rolled coil supplier Mendritzki Group.

In 2025 the company will start to produce via direct reduction plants and electric arc furnaces, and plans to produce more than 1 million mt of green steel via this route in 2026, S&P Global Commodity Insights previously reported.