How will the takeover of Thyssen Krupp help Liberty Steel?

It will increase our footprint and give us a national footprint in the EU. In the future, what we will see is more regional consolidation and not global consolidation, including  in India and China, US, UK and EU. In global takeovers synergies are not high. We do not focus on the number of sites. The UK has a number of small ones, France has two important sites, Rumania, Czech Republic have two each. Liberty has two big ones in the Czech Republic and Rumania. There are a lot of small ones in Australia. Some big ones in Germany and Italy.

Quite a few are in the process of making green steel. We do not attach much importance to size. We also have downstream facilities which require steel which can be sourced from elsewhere in Europe. Currently, we have an agreement with ArcelorMittal and we used to source material from them. There are some disruptions currently, but having our own source will help in improving capacities and also save some Thyssen Krupp plants, which may otherwise be shut.

Do you feel that graphene is the wonder material that will substitute or complement steel in the foreseeable future?

You can replace steel to some extent with aluminium. You can use aluminium for small houses, but not for skyscrapers. Likewise aluminium, which is lighter and recyclable, can be used for aeroplanes, and steel cannot be used there. Plastic parts can be used, to some extent, in automobiles but they are non-recyclable. The demand for steel will continue. Even during the pandemic, steel for construction continued to grow at 2 per cent in Europe, although demand for steel for  automobiles saw a 26 per cent decline. Infrastructure, buildings, etc, will continue to be in demand and demand for steel will be present; also steel will be used in daily consumer appliances like washing machines.

Graphene is a new material and there are tests which are continuing in laboratories. However the total life cycle cost of graphene has yet to be established. There are problems in production. It is also not recyclable. I think as far as lightness  goes, automobile steel is becoming lighter. For example, instead of 700kg of steel it is around 650kg which is still very significant. I am of the firm opinion that steel does not have products which can substitute it. Steel has got more mechanical resistance. Even in the case of electric cars, different types of engines which use synthetic fuel including hydrogen, will require the use of steel. Steel will not disappear for sure.

How far has Liberty come with Green Hydrogen?

Nowhere as yet. We do not produce hydrogen as yet. In traditional steel-making through blast furnaces, 1.9 tonnes of carbon dioxide  is emitted to produce one tonne of steel. In recycling scrap, the ratio goes down to 0.25 tonnes to make one tonne using electricity and scrap. In the future, we will be using natural gas or hydrogen which will cut down carbon emission to 0.3 to produce one tonne of steel. Once we move away from a blast furnace to natural gas you have enough green hydrogen which will remit only 0.1 tonne carbon dioxide  to produce one tonne of steel. Nearly 80 per cent of furnaces can be changed to electric arc furnaces.

However, capex investments will be required for shifting to natural gas or hydrogen. Renewable energy will be required. In France they use nuclear energy to produce hydrogen. The challenge for hydrogen is transportation and how quickly one can get good quality, renewable fuel. In the future, we could see gas lines sourcing gas from Africa too. Natural gas will cut carbon emissions by 50 per cent. 

What about Thyssen Krupp’s readiness in becoming carbon neutral by 2050?

I do not know the detailed plans Thyssen Krupp has. However, there is a strict mandate in the EU to become carbon neutral by 2050. Liberty wants to do it by 2030.  Very few steel companies will leave it to future CEOs or successors. Plans have to be in place now to reduce carbon footprints. The young consumer will influence products. They want green steel. They will elect politicians who will draw up national projects. Europe, which feels it was left out in the information technology boom, aspires to be a frontrunner in hydrogen technology. Companies and their management are pushing to make it happen faster. 

Thyssen Krupp also has other divisions which use steel, advanced material, marine, ship building, etc?

It sure does. However 50 per cent of steel is used in the German automotive industry. The other divisions are not as relevant and steel division can be carved out easily.