ArcelorMittal removes Russian materials from the steel supply chain
ArcelorMittal SA, Europe’s largest steelmaker, eliminated Russian raw materials from its supply chain following the invasion of Ukraine.
Governments and businesses across Europe are trying to reduce their dependence on Russia, driving up energy and commodity prices. The country has been a key supplier of iron ore and coal for blast furnaces in the region and ArcelorMittal has taken three weeks to plan how to stop the flows.
The steelmaker said it previously sourced about a fifth of the coal from its European steel mills from Russia. The company also bought iron ore from Metalloinvest from sanctioned billionaire Alisher Usmanov, according to its annual report.
“We are independent now,” Geert Van Poelvoorde, the steelmaker’s European managing director, said in an interview from Ghent, Belgium. “For the third quarter, we need to buy a little more non-Russian. But that’s not a big deal.”
The war in Ukraine will reshape global commodity flows, according to Van Poelvoorde. In a few months, Russia will redirect coal exports from Europe to China, which in turn will buy less fuel from Australia.
“The Russians have always been very opportunistic,” Van Poelvoorde said. “There will be a global rebalancing.”
Steel prices hit a new high in Europe after the European Union moved to curb Russian exports to the bloc. High energy prices have also forced some steel mills to cut production, further affecting supply.
ArcelorMittal’s portfolio of iron ore and coal mines has helped ease the company’s pivot away from Russia, but other European steelmakers will find it harder to source from alternative sources. About half of the coal consumed by the European steel industry comes from Russia, according to Van Poelvoorde.
The European Union is discussing massive borrowing to fund energy projects that would help wean the bloc off its dependence on Russian gas. Decarbonization will increase the scale of the challenge, with the main path to net-zero steelmaking requiring large amounts of green hydrogen that can only be produced with large amounts of renewable electricity.
Using hydrogen to decarbonise ArcelorMittal’s Ghent plant – which produces 3.6% of the EU’s steel – would require four gigawatts of electrical capacity, Van Poelvoorde said. This equates to around one-sixth of Belgium’s current total.
“The commission and the member states should be aware of the numbers, because I think they’re understating what we’re talking about a bit,” he said. “We need massive energy.”
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