Glimpses of the metals industry’s future, including the many promising circular pathways for meeting the world’s growing appetite for sustainably sourced products, are all around us.

Last fall, for example, BMW announced that starting in 2025, it would source only steel produced without fossil fuels. To that end, it has invested in Boston Metal, a U.S. startup that has developed a CO2-free process for producing steel, and has struck a deal to source steel from Swedish startup H2 Green Steel, which touts a production process that involves hydrogen and electricity from 100 per cent renewable energy sources.

The circular thread stretches to the Lower Columbia region of British Columbia, where Metal Tech Alley is building a cross-industry business network by applying circular principles to metallurgy and advanced materials, digital fabrication, industrial recycling and other areas with potential synergies. It is anchored by Teck Resources’ Trail operations, where recycling programs for lead batteries, zinc alkaline batteries and cathode ray tube glass are a strong example of circular principles at work. In the United Kingdom, Tata Steel Europe is using a blockchain-based shared ledger to store data about the chemical composition of the steel panels it is supplying to the massive HS2 high-speed railway construction project, with an eye towards the repurposing or recycling of the panels at the end of their lifespan.

As compelling as these glimpses of a circular future are, plenty of other factors have complicated not only the future but the present state of the metals business, from supply chain disruptions to government policies to environmental, social and corporate governance (ESG)-related raw materials sourcing issues. Concerns about dangerous conditions in Congo’s cobalt mines have threatened to disrupt the production of electric vehicle batteries, for example. Shortages of magnesium and silicon have reverberated in markets from automobiles to building materials. And on the policy front, a new European Commission policy to tax imports of certain materials and goods, including steel and aluminum, based on the greenhouse gases emitted to manufacture them, will likely have broad ramifications in global markets.

Amid such a high degree of volatility and uncertainty, one thing is clear in 2022: The pressure on metals companies to reduce their carbon footprint, maximize resources and responsibly source materials will continue to mount. To position themselves to thrive in an increasingly sustainability-driven, circular economy-minded world, companies will need to focus on three priority areas.

New processing technologies

The chorus of shareholders, business and supply chain partners, customers and, of course, regulators calling on metals companies to behave more responsibly in terms of their environmental impact is growing louder. Certain segments of the industry are responding by exploring and commercializing more circular processes, such as CO2-free steel production. One of the industry’s largest extraction companies, BHP, has partnered with various major steelmakers to investigate technologies and processes for decarbonized steel manufacturing.

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A new Canadian venture involving Algoma Steel and funded by the Canada Infrastructure Bank is embarking on a new “green steel” project in which Algoma will equip its manufacturing plant in Ontario with two electric arc furnaces (EAFs) to replace existing blast furnace and basic oxygen steelmaking operations. The plant will use prime recycled scrap metal sourced by venture partner Triple M Metal, eventually producing up to 3.7 million tons of raw steel annually, up from 2.8 million tons, while reducing CO2 emissions by 70 per cent.

Track-and-trace technologies

Strong digital track-and-trace capabilities are critical to the success of circular ventures like those that involve recycling, enabling them to verify the origins of, and the carbon footprint associated with, the materials they produce and use, not only to comply with regulations, but also for competitive reasons, knowing that sustainability factors will carry increasing weight in the choices their customers, shareholders and supply chain partners make. Because an individual company’s ESG efforts are fundamentally intertwined with, and impacted by, the actions of its suppliers, partners, etc., those track-and-trace capabilities should extend from a company’s own operations to the entire supply chain, so it is clear, for example, that the cobalt in an electric car’s battery was sourced in an ethically responsible way, or that the aluminum in certain vehicles was manufactured using renewable energy. For that to happen, all the segments of a supply chain will need to establish channels through which to readily and securely share data and gain visibility and insight into materials sourcing upstream, to returns and recycling processes downstream. Here again, digital technologies are playing a key role by supporting initiatives like a blockchain-based registry that is being used to verify the quality and authenticity of metal products in Russia. In the U.K., the HS2 project is using a similar ledger to provide “a locked-in evidence trail” for every aspect of the project, as Alex Small, manager of building information modelling and digital platforms at Tata Steel Europe, explained during a panel discussion last spring.

Industry ecosystems

As these and many other metals-related projects demonstrate, making track-and-trace capabilities and new processing technologies viable cannot be accomplished singlehandedly but rather takes collaboration not only between companies but between industries. The third critical piece to the puzzle is to establish digitally connected business networks or ecosystems, within which companies can pool data, leverage one another’s strengths, share risk and collectively explore and develop sustainable pathways, from extraction to end product. With carbon-reduction as the catalyst and business networks as the connective tissue, metals companies can look towards a circular future with much greater strategic clarity.

Stefan Koch is global lead of the metals, mill products and mining industry business unit at SAP SE.