NZ Steel’s big news signals the vision for low-carbon steel as an emerging reality

By Dr Troy Coyle, CEO, HERA

As HERA has long maintained, it will take a joint effort by the public and private sectors to steadily reduce the carbon emissions of the building and construction industry in Aotearoa, particularly in relation to the role of steel. To its great credit, the steel industry and its local and global partners has been doing the mahi to make steel a global circular economy leader and help realise Aotearoa’s climate commitments. 

Turning steel into a low-carbon and circular product involves a multifaceted approach including circular design for buildings, expanding steel’s lifespan, carbon offsetting, recycling, and development of a material passport to improve re-use and repurposing.

It also involves practically changing how steel is produced and a great leap forward for the industry has come in the form of a recent announcement that NZ Steel is co-investing $160 million and will receive up to $140 million from the Government Investment in Decarbonising Industry (GIDI) Fund, which will support the installation of an electric arc furnace (EAF) at the Glenbrook plant.

This will halve the plant’s coal use, replacing it with electricity to recycle scrap steel – removing 800,000 tonnes of CO2 each year, equal to permanently removing 300,000 cars off the road, and achieving more than 5% of all New Zealand’s required emissions reductions between 2026 and 2030.

NZ Steel employs 1,400 people directly and is the country’s only producer of flat rolled steel products for the building, construction, manufacturing, and agricultural industries. I asked the company’s sustainability and market development manager, Israel MacDonald, how the decarbonisation agreement was formed and what it means for industry, and he kindly explained:

“It demonstrates the effectiveness when industry, an energy provider, and government work together for the purpose of emissions reductions. The bulk of the work [behind this agreement] has come together in the last 12 months; moving at a very fast pace with a lot of internal resources with external support.

“Building an EAF is in line with the global transition to lower emissions steelmaking, and this is a key link in our circularity chain that will complete the cycle from manufacturing, use, and end-of-life recycling, giving Aotearoa the ability to process post-consumer steel in large quantities with the EAF. We need the systems to collect end-of-life resources and the facilities to process this into valuable assets again. [It also prevents] around 300,000t of scrap having to be exported, cutting the emissions impact of materials transport.”

Israel says that while there isn’t yet a consensus for global best practice as it relates to lower emissions steelmaking, “One aspect that make this project unique globally is it’s the first EAF to be installed solely for the purpose of an emissions reduction. With the EAF we are expecting our average crude steel embodied carbon to start off at up to 1.6t CO2-eq per tonne of steel, and then reduce further with increased scrap ratios against a world average of 1.9t CO2-eq.”

In addition to giving a clear path forward for a lower emissions steel making process in New Zealand there are additional benefits says Israel. “The ability to help stabilise the electricity system is a good thing for all electricity users, [and there is also] the benefit of retaining in New Zealand the manufacturing of key materials such as steel. This is an important part of building key infrastructure and de-risking the supply chain, such as when high winds damaged the Auckland Harbour Bridge and NZ Steel was in the supply chain that supported the quick repair. Having a local manufacturer is also key in helping reducing risk for downstream fabricators in knowing that they will have continuity of supply.”

In terms of a route to 100% renewable / carbon neutral steelmaking, MacDonald says, “There is a lot of research and work going on. If we look at the direct reduction of iron using the green hydrogen route, Victoria University is working on research which NZ Steel is actively supporting through funding and technical knowledge sharing. [Like other] sectors looking at hydrogen to decarbonise, one of the key challenges will be the ability to produce hydrogen with renewable energy at scale.” 

Dr Troy Coyle brings more than 20 years’ experience in innovation management across a range of industries including materials science, medical radiation physics, biotechnology, sustainable building products, renewable energy and steel. She is a scientist with a PhD (University of NSW) and training in journalism and communications.