In most metallurgical works, the path to “green” steel leads via natural gas and later hydrogen, which replace coal.

The stainless steel manufacturer Aperam is pursuing a completely different approach: it fires its two blast furnaces in Brazil with charcoal to melt the ore.

The company manages huge plantations with fast-growing eucalyptus trees.

Around 120,000 hectares belong to the group, which uses the forest certified as sustainable by the Forest Stewardship Council (FSC) as a carbon sink.

"This is how we close the cycle: The trees draw the carbon dioxide from the atmosphere that is emitted again during steel production," explains CFO Sudhakar Sivaji in an interview with the FAZ

Helmut Buender

Business correspondent in Düsseldorf.

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Thinking in material cycles is part of the DNA of the stainless steel specialist, which was created ten years ago as a listed spin-off of the industry giant Arcelor-Mittal and has its headquarters in Luxembourg.

The company generates around 90 percent of its production from scrap steel, which is melted down in electric arc furnaces.

Two of these plants are also located in Brazil.

The industrial network in Europe, where Aperam is number two behind Finland's Outokumpu, includes electric steel mills, casters and rolling mills in Belgium and in France.

The group is represented by service centers in Germany.

Because scrap recycling generates far less CO2 than the blast furnace route, Aperam scores with a comparatively favorable climate balance.

"We have the lowest CO2 footprint in the entire steel industry," claims Sivaji, who joined Aperam in 2020 and previously worked for the German industry leader Thyssenkrupp for many years.

On average, Aperam production produced approximately 0.47 tonnes of carbon dioxide per tonne of steel, compared to approximately 2 tonnes for traditional primary steel production.

Sivaji wants to push the value further - and sees a growing interest on the part of customers.

“The less CO2, the shinier the stainless steel,” he says.

This could be expressed by a separate brand that Aperam wants to develop for material produced in a particularly climate-friendly manner.

Abundant availability of stainless steel scrap

"We don't see green steel for climate protection as a threat, but as an opportunity for our business," says the CFO with an Indian background and German passport.

The group, which still owns a good 40 percent of the Mittal family foundation, underpinned this ambition with the purchase of the stainless steel recycling company ELG.

The scrap specialist, which was taken over from the Haniel Group last year for an enterprise value of EUR 357 million and has around 1,200 employees, around 250 of them in Germany, was already one of the most important suppliers of raw materials.

It will now be integrated into the group as a separate segment, which generated sales of 5.1 billion euros last year from the sale of around 1.8 million tons of steel.

The aim is to get better access to particularly sought-after materials and to integrate deliveries more closely into the production chains.

The more type-specific the melting furnaces can be charged, the lower the energy consumption and CO2 emissions.

ELG collects around 1.2 million tonnes of stainless steel scrap at 51 locations in twenty countries, around 800,000 tonnes of which is in Europe.

"Other manufacturers have iron ore mines, we have a mine for stainless steel with ELG," says Sivaji.

Exports to third countries

So far, of course, there is plenty of stainless steel scrap available on the market.

A significant part is exported to third countries.

But demand is increasing rapidly, not least because Asian competitors are also increasingly using recycled material.

This is reflected very clearly in the prices, which have more than doubled since 2019.

"We look to the future and secure our source of raw materials for further growth," says the CFO.

However, ELG should continue to supply other customers, and vice versa, Aperam will use other suppliers.

He cited the transport costs as one reason, which would be too high for truck distances of more than 300 to 400 kilometers.

Securing their own sources of supply for recycling material also drives other metal companies.

One of them is the aluminum manufacturer Speira: It is currently waiting for antitrust approval to take over Real Alloy Europe, one of the leading European recycling companies for aluminum and magnesium scrap with around 600 employees in Germany, Norway, France and Great Britain.

Another transaction is already casting its first shadows: The Berlin disposal group Alba, attracted by the growing interest from the steel industry, has put its steel and metal recycling in the shop window.

A strategic investor is preferably sought who will take over the majority in the listed subsidiary Alba SE.

A complete sale is also conceivable.

At Aperam, however, the interest is currently more in the integration of the new subsidiary ELG.

“We see recycling as a clear growth story.

But first we want to focus on our organic growth potential,” says Sivaji.