Ecological transition

Feralpi shows the way to reduce emissions hard to abate

Steel bigwig invests 400 million in renewables, circular economy, an electric furnace in Brescia, a hi-tech rolling mill in Germany

by Laura La Posta

6' min read

6' min read

Feralpi accelerates towards the ecological transition, as part of the 400 million euro investment plan planned and implemented in spite of the difficult steel situation in Europe. The latest green investments concern the maxi electric induction furnace, in place of the previous methane-fuelled one, which has just been installed in the Brescia plant in Lonato del Garda (which drastically cuts climate-changing emissions), then a new hi-tech rolling mill twin to the Italian one in the German plant in Saxony, and also important investments in the production of energy from renewable sources (photovoltaics in Italy and, in the future, wind power and green hydrogen in Germany), as well as significant good practices of circular economy concerning processing waste. The starting point, then, is already very good: 98.6% of Feralpi's steel is made from recycled, recovered or by-product material, while waste and production residues are mostly sent for recovery (88%) or classified as by-products.

"The electrification of production processes represents an important decarbonisation lever as it acts on the reduction of direct emissions. For this reason, Feralpi has included electrification among the drivers of its industrial development in synergy with its ESG strategy and the newly launched scorecard,' explained Isabella Manfredi, chief sustainability & communications officer, at the end of a visit to the renovated Brescia plant. A renovation launched precisely to replace, where possible, the use of fossil fuels with energy from renewable sources (self-produced or supplied by partners such as Enfinity Global and the investee Alpicapital). Of particular note, among recent achievements, is the replacement of the methane gas reheating furnace with new induction furnaces, a cutting-edge technology based on electricity, which we are now replicating in the German plant'.

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A visit to the Feralpi facilities in Lonato sul Garda, which are open to visitors a couple of times a year, offers scenery of rare suggestiveness and strong visual power, with impressive steel castings on view (beyond the glass windows) and a large rolling mill as far as the eye can see, all governed by hi-tech sensor technology, artificial intelligence systems, advanced software taming billions of data per second, under the watchful eye of highly specialised men and women who, with a few touches of joystick, rectify the dance of containers draining molten steel like pasta. Outside, rows of trucks deliver the scrap that constitutes the basic raw material for production, automated mechanical systems sort it, graphite bars to be used in hi-tech plants, warehouses are being rebuilt, electrical and district heating systems to bring the heat produced to the city, zero-impact offices and even an open-air museum with works created with the entire range of steel produced. All in the name of energy efficiency and combating waste, with extensive recycling and reuse of production waste thanks to the SteelZeroWaste project.

The group, one of the leading steel producers in Europe (with 2.5 million tonnes of steel produced each year, a turnover of EUR 1.7 billion in 2023 and more than 1,900 direct employees in seven countries), is highly energy-intensive: its electricity consumption is estimated to be three thousandths of that of Italy. It is therefore not surprising to see heavy investment in photovoltaic plants, with multi-million euro allocations, and experiments on the use of green hydrogen planned in Germany, dreaming of the safe and clean mini nuclear reactors on which Italy has great manufacturing expertise.

The Italian 'best practice' is now being replicated in Germany, where the subsidiary Feralpi Stahl is the tenth largest steel producer with a production of about one million tonnes of steel per year. 'In the Riesa plant, where more than 800 employees work, we are currently completing the new rolling mill, built by Danieli, which should come into operation in the spring of 2025,' explains chairman Giuseppe Pasini. 'It is the most innovative rolling mill in Europe in terms of technology and sustainability, since it is a totally electrified plant. That is, there is no use of gas (traditionally used to heat semi-finished steel products before rolling) thanks to new induction furnaces powered exclusively by electricity. This results in the substantial elimination of direct CO2 emissions and the absence of NOx emissions. It was necessary to create a connection to the existing continuous casting plant and we came up with the idea of creating a scenic corridor, 300 metres long and six metres above the ground. The transfer of the billets (i.e. the semi-finished products produced after continuous casting and destined for subsequent rolling) will take place directly through a roller way located in the corridor, so that the heat will be conserved, reducing electricity consumption by around 80% compared to more traditional heating techniques.

Not only that: artificial intelligence and big data systems will ensure the real-time connection of the existing system, ensuring lower energy consumption, thanks to the dynamic control of the thermomechanical system, and the best possible quality of the end product. "The steel produced in this way has better strength values and allows a more efficient use of materials in production, greatly reducing waste,' Pasini explains. 'Production (up to 1.3 million tonnes), employment (with 100 new employees), and innovation will also benefit: the world's largest spooler (i.e. a rebar spooler) will be produced, weighing up to eight tonnes. It will also be the first spooler 'Made in Germany'.

The further reduction of emissions (Scope 2) will be possible through the direct contribution of renewable energies from wind, photovoltaics and hydrogen. Feralpi Stahl is in fact one of the partners of the Regional Alliance for Energy and Hydrogen (Ewi), which brings together the region's most important manufacturing and energy-intensive companies with the aim of expanding the infrastructure for clean energy sources.

These are courageous investments, in the current scenario of suffering of the European steel industry due to the collapse in prices caused by Chinese competition, the current slowdown in purchases and the high costs of the ecological transition. But investments - also made by leading groups such as Marcegaglia, Arvedi and Duferco - are necessary to remain on the market, given the European objectives of converting steel to green steel by 2030. A goal that is perhaps too ambitious, but dictated by one fact: in terms of emissions, the steel sector as it is would be destined to consume alone half of the total carbon budget we still have available to keep atmospheric warming at 1.5 °C by 2050.

Emissions, therefore, must be cut even and above all in this sector, but unfortunately these are hard-to-abate emissions, difficult to cut with current technologies and existing costs. It is unthinkable that companies can do it alone, without European incentives for the ecological transition and in a scenario of strong national misalignments, with strong state aid granted only in some countries (starting with Germany, see the investigation in Il Sole 24 Ore of 5 September). The situation risks becoming explosive with the revision of the Ets directives (the system for trading greenhouse gas emission quotas in the EU) and with the definitive introduction, starting from 1 January 2026, of the Cbam (Carbon boarder adjustment mechanism), a duty on imports of goods from non-EU countries produced in environmental dumping (with a higher carbon intensity than those from the old continent, 'virtuous' thanks to the Ets system offsets).

"The Cbam mechanism, which also aims to avoid the risk of company relocation and economic disadvantages for European industries that could weaken the achievement of European decarbonisation targets, is unfortunately marred by problems and inconsistencies that many manufacturing sectors have pointed out," says President Giuseppe Pasini. One thinks of the interaction with suppliers or the verification of the completeness and correctness of information. This leads to potential risks of penalties in the case of inaccurate or incomplete reports. Furthermore, there is a real risk that third countries from which we import goods and products will take retaliatory measures against Europe and its introduced environmental duties. In addition to this, the Cbam mechanism foresees the disappearance of free CO2 quotas as of 2030. This will particularly affect all hard-to-abate sectors with non-electrifiable processes'.

What to do, then, at European level? "It is necessary to rethink the instrument and use different forms of protection for European industry," Pasini concludes. "For example, by introducing financial measures to compensate for the costs of decarbonisation and not environmental tariffs, which risk being difficult to implement with the mechanism adopted and cause serious distortions in market mechanisms.

After the appeals of Federacciai and Business Europe and the lucid analysis of the Draghi Plan on European competitiveness, a turning point could come from the announced Clean Industrial Deal, which the new von der Leyen Commission will present in the first hundred days of its mandate and which should revive investment in infrastructure and industry, particularly in energy-intensive sectors, helping to create leaders in green steel as well.

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