Ferro-alloys.com: Latin America's steel industry will not attain net-zero emissions status by 2050 without state aid, which is currently not on offer, according to industry representatives at the Latin American Steel Association, or Alacero, annual congress in Buenos Aires this week.

"The steel sector in general won't reach net zero in 2050 by itself, with its own [financial] resources," said ArcelorMittal Brasil President Jefferson de Paula, also CEO of AM long products and mining LatAm.
In Latin America, state aid for this wasn't even yet under discussion, he added, highlighting the technological and cost challenges EU mills were facing on decarbonization even with government support.

"EU governments are putting up Eur38 billion ($41.3 billion) in the 2020-2030 period for steelworks' decarbonization," de Paula said.

ArcelorMittal, of which 35% production was in Europe, had accords with the governments of France, Germany and Spain on equipment and process investments to reduce carbon emissions. The governments were putting up 50% of the investment and ArcelorMittal the remaining 50%, he said.

"But I don't see how these investments will be made in Latin America," de Paula said. "I don't see how Latin American governments will follow the European example because economic conditions are different and the funds aren't available. This matter is very much on the table in Europe but it isn't even on the table here: this is really serious."

"Decarbonization needs to be achieved by four hands: government and companies working together," he said.

Globally, the steel industry needs to reduce its carbon emissions by 80%-95% by 2050 compared to 1990 levels to meet the Paris Accord climate target.

ArcelorMittal has pledged to reach net zero emissions globally by 2050 and would spend no less than $10 billion by 2030 as part of this pathway, de Paula noted.

Latin America produced 58.3 million mt of crude steel in 2023, compared to 152 million mt in the EU, according to industry data.

Renewable energy advantage
Speakers including Ternium CEO Maximo Vedoya claimed Latin America had a decarbonization head start on other regions due to its relatively high proportion of renewable energy in the electricity matrix, and the use of direct reduction and natural gas in steelmaking in some countries.

For each metric ton of steel produced in Latin America, 1.6 mt of CO2 was emitted, while the world average was 1.8 mt, and China's around 2.1 mt, the World Steel Association has said.

De Paula noted that steelmaking accounted for 6%-7% of overall CO2 emissions globally, while Latin America's steelmaking accounted for 3%-4% of overall CO2 emissions.

Mexico had a a competitive edge, due to its nearshoring trade and manufacturing links with the US and its improved industrial infrastructure, congress participants said.

Vedoya said Ternium had chosen Mexico for the $5 billion steelworks expansion at Pesqueria, due onstream in 2026, which would have a low carbon footprint due to natural gas and DR.

Gerardo Esquivel, an economics professor at the National Autonomous University of Mexico, said Mexico was likely to choose to strengthen its links with the US and the US-Mexico-Canada trade when USMCA came up for potential revision in 2026. This could attract foreign and Mexican investment into new industrial hubs in Mexico, he said.

"The new Mexican president, Claudia Sheinbaum, has made it clear she wishes to deepen relations with the US and Canada rather than paying attention to the BRICS," Esquivel said.

• [Editor:Alakay]