Swiss Steel Group CEO Frank Koch explains how he will position the company in the future and make it greener.
Mr Koch, you have been at the helm of the Swiss Steel Group since July 2021. How has the company developed since then?
2021 was demanding and a real challenge due to the drastic increase in energy prices. 2022 doesn’t look any easier, but we are now on a good path to further consolidate things. However, with a war raging in Ukraine at the tail of a global pandemic, we now have new imponderables ahead of us. And we won’t know whether the pandemic is really over until after next winter. It is crucial that we do not deviate from our basic strategic path. But more on that later.
What impact does the war in Ukraine have?
First and foremost, it is bad on a human level. Ukraine is an important player in the European steel market, and I know many people from these companies personally. When I see the pictures from the Azov steel plant, it hurts me a lot.
Business-wise, the war makes the industry even more volatile. It’s not only the skyrocketing energy prices making our products more expensive; it’s also the uncertainties in planning and supply chains that put enormous demands on us. It is not yet clear how the market will take this. We are working closely with our customers and finding solutions in partnerships everywhere. It is particularly important for us to be able to reliably keep delivery promises and not burden our customers with short-term bottlenecks.
What are your short-term goals with the Swiss Steel Group?
The goal is to consolidate the group further and put it on a solid financial footing so that we are prepared for the next two to three years, which will still be quite turbulent, mainly due to external factors. Our Green Steel initiative is crucial to our medium and long-term success and part of our current strategic direction. Our new strategic approach will also involve reorganising parts of the group to combine forces and take care of our customers’ needs in an even more focused way. We call this expanded initiative “SSG 2025 – for a future that matters”.
You mentioned the “Green Steel” initiative. What does this look like?
“Green Steel” is the gradual, systematic decarbonisation of all our activities. We have analysed the three most important areas with the largest footprint and are now systematically working on implementing solutions in every plant and organisation in the group.
How should we look at that?
We distinguish between Scope 1, 2 and 3, which are not different priorities, but different thrusts that all have the same high priority. Picture a cube. The volume is determined by three dimensions – length, width and height. A reduction in any of these dimensions automatically reduces the total volume of the cube. In the Green Steel initiative, our three scopes are the defining dimensions. By combining them, we achieve rapid and comprehensive decarbonisation.
What do Scope 1, 2 and 3 mean in detail?
Scope 1 is the direct emissions from the company’s production.
Here we are already doing very well thanks to our production process, the electric arc furnace route, which causes 78% fewer emissions than the blast furnace route.
Scope 2 involves indirect emissions associated with purchasing electricity and other energy. This is where we are increasingly and already very successfully focusing our efforts. We are switching to renewable energies such as declared green electricity wherever possible, e.g. wind, photovoltaic or hydropower. This enables us to reduce our carbon footprint massively. Our steelworks in Emmenbrücke, Switzerland, recently started using only certified electricity from Swiss hydropower plants in the two electric steel furnaces for a massive emissions reduction which is almost unrivalled at the moment.
Scope 3 concerns all other emissions that arise in the company’s value chain, caused by suppliers, services or logistics. For example, replacing externally sourced alloying metals with high-alloy scrap is one solution we are pursuing in our steelworks. Until now, it has been difficult to produce a consistent quality without adding alloying elements obtained in the primary route, such as nickel, chromium or manganese. This is now possible with new, highly intelligent processes developed by our Ugine plant in France, which allow us to accurately define the steel quality using scrap alone and produce better material with much less energy. Thanks to this system, we are not only recycling but upcycling. Achieving production without importing alloying metals will also help us become independent of political uncertainties.
How does “Green Steel” set you apart from the competition?
We already produce our steel exclusively from scrap and, as Europe’s largest steelworks on the electric arc furnace route, we are also one of the largest recycling companies in Europe. The scrap route has decisive advantages over the blast furnace route, which produces steel from iron ore. Although raw material procurement is much more demanding, it requires much less energy and produces much lower emissions. But here, too, we can do even better with targeted investments in more economical plants that reuse waste heat. In our Swiss rolling mill, for example, the waste heat flows into the local district heating network and supplies up to 60 households. This was made possible by an investment in a new walking beam furnace, which cost us CHF 60 million.
What are the advantages for the customers of “Green Steel”?
The core theme of “Green Steel” is “Measure, Act, Document”. We measure our emissions, take action, measure the impact and document it. We pass this documentation on to our customers. Today, we can prove exactly how much CO2 was released during the production of the steel that leaves our factory. This is crucial for customers because they know exactly how big their product footprint is. We also hope that this documentation will help them choose the steel supplier with the lowest emissions in the future. This is becoming increasingly important in all metalworking industries. For the customers, “Green Steel” is a big plus because they are also called upon to reduce their CO2 footprint. This is a clear market advantage for us.
What are the costs of these benefits?
We didn’t ask ourselves what it would cost; we asked ourselves what it would cost if we didn’t do it. We cannot ruin our planet and think it doesn’t cost anything just because it never showed up in the accounts in the past. “Green Steel” has costs, but they are outweighed by the benefits, including financial ones, especially if we can show that we are the lowest-emission steel producer in Europe.
But I would like to say that for me, sustainability is not just a corporate issue. I see it as our social responsibility, which we have to face up to. If I ever have the slightest doubt about this, my children will remind me of it.
Does “Green Steel” also have an effect outside the company?
We cannot decarbonise the economy single-handedly, but we have seen that our efforts are creating knock-on effects with our customers,
and they are engaging more intensively with the idea of decarbonisation. Our new products also actively offer them an opportunity to reduce their footprint. The demand is a confirmation of our strategy.
How does this work in concrete terms?
Let’s look at the construction industry. Cement production, and concrete in general, are extremely CO2-intensive. Today, however, a large proportion of concrete is only used to cover the steel reinforcement in a concrete structure and prevent it from rusting. Hundreds of thousands of tonnes of concrete are only used as rust protection —which is absurd. We are producing rust-resistant reinforcing steel in our Swiss plant to enable much lighter, more elegant and, above all, more ecological concrete structures with the same strength. Our product has the potential to develop a positive effect on the climate far beyond the steel industry.
Dear Mr Koch
Thank you for the interview.
