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Interview Home > Interview

Steel and the circular economy: Interview with Dr Edwin Basson, worldsteel director general


Sep. 21, 2018 - The circular economy concept is simple in its proposition: Create a regenerative system in which the use and waste of resources are minimized by re-using and re-manufacturing materials prior to recycling.

Less simple is its implementation, which requires the global economy to redesign its processes and detach itself from the old linear model of take-make-dispose.

These were the topics surrounding a conference organized by the World Steel Association (worldsteel) in Brussels with a spotlight on steel, circular and clean material by nature.

S&P Global Platts discussed these topics with Dr. Edwin Basson, Director General at worldsteel.

Basson’s experience in the steel sector started in 1994, when he joined Iscor Ltd. in South Africa as Chief Economist, leading strategic initiatives for the company in later years. He became General Manager for Marketing Strategy in 2004, after which ArcelorMittal acquired Iscor. From 2006, he acted as Vice President, Commercial Co-ordination, Marketing and Trade Policy at ArcelorMittal. Basson has been part of worldsteel since 2011 as Director General.

1. In the circular economy we are trying to produce sustainable materials that pollute less, how does steel compare with competing materials (i.e. aluminum)?

I am going to expand your question to include other competitive materials. Steel is a useful product in such a large spectrum of applications, and we find specific competitive materials by sectors. For example in construction a competitive material is not aluminum but things like concrete or timber and they raise different questions in terms of re-manufacturing or recycling.

Looking at sector specific solutions, in the case of aluminum the key benefit was its light weight. [But] in the automotive sector, the benefit of having a lightweight material in terms of CO2 emissions cannot be recovered in the distance the vehicle travels. Steel has never found that aluminum has been a threat, maybe in some other markets, [but] steel sells five times as much as aluminum in the automotive industry. There is growing concern with automation, electrification and car-sharing, and the material question is becoming less of an issue. Automakers want to focus on properties of the materials, so steel remains a competitive product. It will be competitive product in the future. When we start looking at the re-use and re-manufacturing concept, steel has an intrinsic strength. It is a very clean product, not an alloy and you can re-use it in different applications. We are positive about it. The actual question will be how we are going to change the design of the vehicle in the automotive sector.

Do you see a time frame in which this is going to happen?

Redesigning and reimagining the vehicle has been taking place in the last 5-6 years. We have also seen circular economy concepts like car-sharing happening now. The redesign of vehicles has happened already [in areas such as] easy access, control and self-driving cars.

The question is how soon this will take place on a larger scale. And in this context there are two key questions: What will be the future for electric vehicles? And the role of automation? Both questions have been researched and evaluated. The answers will find their ways [into] new designs in the automotive sector of the future. Let us talk about safety, where the passenger sits and how much she or he weighs, how the vehicle is going to be used? long or short distance transportation? There are no clear answers for now. They will become clear but I am very sure that steel will play a role in all of this. Modern steels are formable and light enough to be able to provide with the answers.

It is not impossible to imagine automated vehicles to drive on predesigned routes. We heard in the presentations the unproductivity of the average EU car is 92% as the car is parked. We can get rid of the driver, then at least you can partly increase the productivity of the vehicle. We will see!

2. Renewable ways of extending the life of materials is one of the objectives of CE, but now we are operating in a difficult political environment and it is hard to focus on circular economy with section 232, safeguards etc. How is this impacting CE?

Just a brief clarification to qualify the answer I will be giving you. For antitrust reasons I cannot get into specifications of trade issues.

Yes, 232 trade restrictions in all steel products are an inconvenience and change, in a small way, the direction of trade and might change the value of the trades. But historically a product like steel, because it is so usable across so many areas, it is ingrained in the production structures that already exist.

How much steel has been traded across continental borders and goes on open waters? Even in previous restrictive times in the late 70s early 80s, as much of 30% , one out of three tons of steel, goes on open waters. That has grown in open times, has gone up to 40%. So, I am quite confident in saying that despite trade restrictions, trade in steel is going to continue at an average of 30% on a long-term average figure.

The second thing we might see is a reaction not only to the restrictions [to trade] but to the changes that we already see at political and societal levels. We might see the re-emergence of regional economic blocks as an important part of the global mix.

Steel is a very large group of products with a total of 1,600 million tons per year, and it is used globally within different applications, so it is going to remain a very important part of trade on a global or on a regional level. We do not know the final picture but steel will be in it. I am definitely not concerned about the restriction impact on steel.

Some regions might decide not to embrace circular economy, others will. So, we have slightly more regional fragmentation, with differences of speed and efficiency of those who implement changes.

However, I believe that forces of international competitiveness are strong and vibrant and will eventually force a search for common and equal regulation in the world. Secondly, issues such as cost of energy and quality of labor will play a role in economic vibrancy of regions. So, I would say that yes there might be drives towards regional differences but just as many forces will drive to equal common standards for trading.

3. China Blue Sky initiative: Is China going to reach the goal by 2020 and is it achievable and sustainable?

I believe China will make a success out of it and if we look at the history of implementation of very large impact policies on the environment, they all have been so far successful. If we look at history, China is not unique. The UK after its industrial phase had similar environment conditions in the 40s and 50s and they have implemented changes alongside the rest of EU and today we are living in a much cleaner environment. This is why the EU is such an architect of environmentally sensible policies. I remember in my life time in San Francisco they changed environmental policies with the same aim. Other countries have done the same thing with the focus of getting a more sustainable environment for their people. China is efficiently implementing them as well. We have seen the impact of the policies already. China wanted to reduce 150 million mt of steel over a five-year period. We are now in the third year and they have reduced steel making capacity by 150 million mt.

Informally they have also reduced something like 60 million mt of induction furnace capacity. If you look at the latest policy announced in June, a continuation of the one leading to 2020, it implies a focus on the use of coal, steel production and aluminum to improve the air not only in three main cities but in 82 municipalities including tier 1 and 2 cities. This is a substantial impact in environmental terms in the next three years. They will continue the rationalization of production capacity for steel, aluminum and coal use.

We should watch these developments because, as a result of China’s size in global steel and aluminum trades, these changes in China have a strong potential to spill over into other Southeast Asia regions and also into other parts of the world. It is too early to say what will happen but I am sure China will succeed in its aim to have cleaner air.

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