Big impact, small footprint

Indiana-based electric arc furnace (EAF) steelmaker Steel Dynamics Inc. (SDI) continues to find new ways to convert ferrous scrap into steel products while emitting CO2 at well below the industry average, according to executives with the company.

SDI Executive Vice President and Chief Financial Officer (CFO) Theresa Wagler tells Recycling Today the company uses 90 percent to 95 percent scrap to make its rebar and other long products. SDI has a growing presence in the flat-rolled steel market, and those mills might rely much more on pig iron, direct-reduced iron (DRI) or hot briquetted iron (HBI), with scrap consisting of 20 percent to 25 percent of the feedstock in that business unit.

Strategies to retain and grow market share in the competitive North American steel sector remain a high priority for SDI. However, the company’s leaders say they also want to stay true to their scrap-consuming origins, in part to carve out a low-carbon-footprint sustainability advantage.

Chemistry class

Copper and other residual metals found in scrap can make prime grades the only viable scrap feedstock at a sheet mill. Wagler says that grade has remained in short supply much of the past three years.

However, she says SDI continues to work with its own OmniSource business unit and other scrap suppliers to upgrade ferrous shred to produce a grade she says is “almost like a prime type of shred.”

Maintaining and even increasing the recycled content of its steel is important not only to SDI but also to many of its customers, Wagler, who has been with SDI since 1998, says.

In the construction, automotive and several other sectors, measuring carbon footprints and product life cycles has become standard, which is good news for SDI, Wagler says. “From the customer side, we are the recycled content,” she says. “We’re the decarbonization story already—today.”

It is unclear to what extent projects tied to the big ticket infrastructure law will favor recycled-content steel, Wagler says. However, U.S.-centric “melt and pour” requirements for steel are spelled out, seemingly favoring domestic mills.

“Of the $1.2 trillion potential in the bill, some $850 billion of it has steel-containing aspects,” Wagler says. “Our belief is there is going to be a benefit for those of us who produce recycled steel.”

She says rail infrastructure also is getting a boost, and “we are the primary rail producer” in the U.S., referring to SDI’s Steel of West Virginia facility. “It’s a real leg up for us.”

Additionally, the solar and wind energy components of the law provide demand for steel going into housings for solar panels and windmill structures.

In the automotive sector, Wagler says the recycled content of SDI steel has helped it “have traction” at service centers and with original equipment manufacturers. “They want to be able to say their whole supply chain has carbon reduction or neutrality embedded,” she says of some customers.

Seeking out new sources

The steelmaker is working to create what Wagler calls an “almost-perfect closed loop system” at its Sinton, Texas, flat-rolled mill. Several manufacturers of finished products and components in the U.S. and Mexico have agreed to supply their generated scrap directly to the mill, “eliminating carbon emissions” because of the short journey.

To supply its Sinton mill, SDI also recently purchased Monterrey, Mexico-based multilocation scrap processing firm Roca Acero S.A. de C.V. It is the second Monterrey-based scrap company SDI has acquired, following Zimmer S.A. de C.V. in early 2020.

The closed loop arrangements, the scrap processing acquisitions and ongoing efforts to use more shredded scrap as feedstock all are part of SDI’s path to decarbonization, Wagler says.

During a conference call with steel sector analysts this April, the company’s executives referred to what they consider the advantages of SDI’s vertically integrated operations and the rising role that obsolete scrap is playing at its mills.

“The team continues to effectively lever the strength of our circular manufacturing operating model, benefiting both our steel and metals recycling operations by providing higher quality scrap, which improves furnace efficiency, and by reducing companywide raw material working capital requirements,” Wagler said at that time.

SDI Chair, President and CEO Mark D. Millett also endorsed the strategy, commenting, “In today’s environment, our advantage of having our metals recycling platform is even greater. In the last 18 months, our recycling and steel teams have worked closely in developing a higher quality shredded scrap that can be used in place of prime scrap.”

Millett singled out the company’s Sinton mill and two other flat-rolled steel facilities—in Butler, Indiana, and Columbus, Mississippi—as places where new ferrous scrap sourcing and sorting methods will come into play.

Thanks to the use of cleaner shred, Millett said, “The combined efforts resulted in our Butler flat-roll steel division reducing its need for prime scrap from 65 percent of its mix to only 40 percent while achieving the same steel qualities. We are currently rolling this out to our Columbus and Sinton steel divisions, allowing for a lower cost, readily available lower scrap supply.”

SDI has shareholders to please, and the use of upgraded shred has a positive bottom-line result tied to the exorbitant price of prime scrap, Millett said. “Given the historically high spread between prime and obsolete grades, which is around $170 a ton today, the reduced prime scrap requirement has provided a significant cost savings,” he said in April.

The cost advantages being achieved are not coming at the cost of cutting corners environmentally, SDI is quick to point out. Quite the opposite is true, Millett and Wagler say.

Actions behind the words

Photo courtesy of Steel Dynamics

Millett singles out the Sinton mill as one that can help the company achieve its market share and profitability goals while also making progress on decarbonization.

“This EAF steel mill represents next-generation, lower-carbon-emitting steel production capabilities providing differentiated products and supply chain solutions,” Millett said to industry analysts regarding the Sinton facility.

He said the site “provides us with a more diverse value-added steel product portfolio and benefits our customers with an even broader climate-conscious supply option. Sinton’s strategic location is centralized in an underserved consumer region that represents over 27 million tons of relevant flat-roll steel consumption in the U.S. and Mexico. We offer shorter delivery lead times, providing a superior customer supply chain solution for the region. We also effectively compete with steel imports arriving in Houston and the West Coast.”

Prospects for the mill look good, Millett added, saying, “We currently expect 2022 shipments from Sinton to be over 1.5 million tons, achieving utilization of approximately 80 percent by the end of the third quarter and over 90 percent before year-end.”

EAF mill operators such as SDI might not have always placed their recycling credentials front and center. However, the Indiana-based steel producer has joined most of the other large industry players in recently calling attention to the role of recycling in its operations.

The company’s website features a headline that reads, “Sustainable. Intentional. Transformational.” In a brief writeup headed “What we do” beneath that slogan, the steelmaker says, “We operate using a Circular Manufacturing Model, producing lower-carbon-emission, quality steel using EAF technology with recycled ferrous scrap as the primary input.”

The visible commitment to decarbonization (and recycling) is not temporary, and SDI is backing up that commitment with action, Wagler says. “Some of our customers say our Columbus, Indiana-based flat-roll division has the lowest Scope 1 [direct greenhouse gas] emissions of all their suppliers,” she says.

SDI describes its Circular Manufacturing Model as consisting of several aspects, including an “exclusive use of EAF technology” that in 2019 meant 84 percent of the material used in its furnaces was “recycled ferrous scrap and internally generated iron substitutes.”

The company also points to its network of scrap yards and facilities (with OmniSource comprising the largest portion of that) as part of its circular model. The company indicates its processing and trading operations combine to help recycle some 11 million tons of ferrous scrap annually and some 500,000 tons of nonferrous scrap.

Despite the credentials solidly in place, more decarbonization measures are coming, Wagler says. She adds that SDI’s target to reach carbon neutrality by 2050 is possible, saying she also would like to see a premium price attached to low-carbon steel “one day.”

Wagler says that within SDI, “there is an incredible excitement and momentum” toward its recycling-based, low-carbon approach.

The author is senior editor with Recycling Today Media Group and can be contacted at btaylor@gie.net. Editorial Director DeAnne Toto also contributed to the reporting for this story.