By Niklas Pollard
STOCKHOLM/OSLO (Reuters) -Swedish steelmaker SSAB aims to boost its annual profit by at least 10 billion Swedish crowns ($968 million) from 2030 onwards as it shifts to carbon-free metals production, the company said on Tuesday.
SSAB last year said it would accelerate a switch to fossil-free steel production, investing heavily to almost eliminate carbon dioxide emissions, albeit depending on access to large amounts of non-polluting electricity.
“Altogether, we can see an annual earnings potential of at least 10 billion crowns once the transformation is completed,” SSAB’s CEO Martin Lindqvist said in a statement ahead of a strategy update.
The annual improvement in earnings would come from 5 billion crowns of cost cuts, with higher volumes and premium product deliveries contributing the rest, compared with the company’s current system of blast furnace technology, SSAB said.
The company’s investment plan includes building two modern mini-mills in Lulea, northern Sweden, and Raahe in Finland, which will lower costs and boost flexibility as part of a move to become fossil-free, though it still has obstacles to clear.
“We feel very confident of the things we can control ourselves,” Lindqvist told a meeting of investors and analysts. “We will need electricity and grid connections as well – that means power allocation.”
The provision of cheap and environmentally friendly electricity poses a challenge.
Meeting the needs of a shift to fossil-free steel, including a ramp-up of sponge iron production, and other “green boom” projects in northern Sweden may require some nuclear power in addition to a major expansion of renewables such as wind power.
Lindqvist said its “green steel” push would require about 9.5 TWh of energy by 2030, a lower estimate than some outside assessments. Sweden consumed a total of about 137 TWh of electricity last year but was also Europe’s biggest power exporter, he said.
Sweden’s centre-right government hopes to boost nuclear power generation but any significant upgrade or expansion to its ageing reactors is years in the future.
SSAB, state-owned miner LKAB and utility Vattenfall are working in a joint venture called Hybrit to eliminate CO2 emissions from the production chain, potentially cutting Sweden’s total emissions by 10% or more if successful.
The spending required to achieve the shift to fossil-free steel will be vast. SSAB said investments in the transformation of the Nordic production system was expected to total 50 billion Swedish crowns ($4.83 billion), in line with earlier estimates.
($1 = 10.3347 Swedish crowns)
(Reporting by Niklas Pollard and Terje SolsvikEditing by Jane Merriman, Mark Potter and David Goodman)