Future Steel Forum
 
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Decarbonizing Steel: How Demand for Greener Steel will Upend the Supply Chain and how Digitalisation can Help by Dr. Nils Naujok, Partner, Oliver Wyman’s Energy & Natural Resources Project and Holger Stamm, Principal, Oliver Wyman, Dusseldorf, Germany.

When BMW invested in US clean steel start-up Boston Metal, and Mercedes Benz bought a stake in Swedish start-up H2 Green Steel, the investments represented more than the greening of an industrial portfolio. They marked the first steps in the decarbonization of steel — a process that will require the reinvention of not only how steel is made but essentially a reimagining of the entire steel supply chain.

Steel will have no choice as its largest consumers — companies like Mercedes and BMW — increasingly demand ‘green steel’ in their quest to meet their own climate targets. But steel producers will not have to do it on their own as upstream and downstream on the supply chain begin to work together.

There is no cheap, easy solution to the challenge. Instead, it will require a whole spectrum of technology changes and individual efforts to increase efficiencies to move the industry forward. During this transformation journey the steel industry will meet significant challenges and issues that can be addressed by a new degree of digitalisation, for example:

1. Sourcing (raw materials, renewable energy, hydrogen) requires a new and digital-enabled risk management.

2. Circular business models (ensure the access to scrap) require digital lifecycle assessment, new digital logistics and scrap optimization capabilities.

3. Related supply chain transformation requires digital tools and AI solutions e.g., for carbon and environmental footprint transparency, SC transparency and traceability, supply chain risk monitoring.

But given the amount of investment required and the length of time needed to bring product to market, the advantage will go to those willing to move quickly and take calculated and shared risks through partnerships to help create new industrial ecosystems and position themselves along steel’s value chains.

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