Steelmaker Algoma says U.S. steel tariffs are pushing it to accelerate its transition to electric steelmaking.
Prime Minister Mark Carney met with US President Donald Trump this week to try to ease the situation a little. 50% US tariff Canadian steelmakers have been in crisis since June, along with low global steel prices due to oversupply China is blamed for this.
Algoma, in a press release announced last week that it was received $500 million in government loanssaid the tariffs have made its blast and coke oven operations unsustainable and it will cease those operations as it “accelerates the transition” to electric steelmaking.
Meanwhile, other Canadian steel producers are facing similar economic pressures to decarbonize.
This is why decarbonizing steel is so important, as it is being done in Canada, and is essential to successfully transitioning through challenging times.
How big is the steel industry's impact on the climate?
Worldwide, steel production generates approximately seven to nine percent of global greenhouse gas emissions that cause climate change.
In Canada, steel is produced around 13.1 megatons of CO2 or in 2023 — equivalent to the emissions of about three million gasoline-powered vehicles, or two percent of Canada's emissions.
Canada's steel industry is concentrated in Ontario, and the province's three largest industrial CO2 emitters are all steel mills. Together they generate 40 percent of industrial greenhouse gas (GHG) emissions in the provinceThis is more than the oil refining, forestry, mining and chemical sectors combined.
The federal and provincial governments have invested $2 billion to convert Ontario's power plants to low-carbon energy sources.
Major Canadian steelmaker Algoma Steel will receive $500 million in federal and provincial loans to help the industry survive U.S. tariffs.
Why does steel production generate so much carbon dioxide emissions?
Emissions come from two main sources:
- Fossil fuel (usually a coal-derived fuel called coke) that is burned to produce the high temperatures needed to make steel.
- CO2 is produced as a byproduct of the chemical reaction needed to make steel (which is 99 percent pure iron with a small amount of carbon) from raw materials—mainly iron ore and coke.
Ross Linden-Fraser is the scientific director of the Canadian Climate Institute. In Canada, he said, steelmakers are using the “two most popular routes” to decarbonize.
Algoma: Electric arc furnaces for secondary steel production
Algoma eliminates the CO2-generating chemical reactions part of the equation entirely by eliminating the production of steel from iron ore altogether at its Sault Ste. Plant in Marie, Ontario, it is shutting down the blast furnaces and coke ovens that were used for this.
Instead, it is shifting entirely to “secondary” steel production, which recycles scrap steel or uses refined iron instead of iron ore. This still needs to be heated to very high temperatures, but this can be done using an electric arc furnace (EAF) without the use of fossil fuels.
Algoma announced in July this year that the first production of steel was made using this technology.
CEO Michael Garcia told CBC In the north This is expected to reduce the plant's carbon emissions by up to 70 percent, while allowing production to increase by a third. It also requires fewer workers than operating a blast furnace or coke oven, Garcia said.
10:17Algoma Steel produces first steel in its new environmentally friendly electric arc furnaces
Algoma Steel in Sault Ste. Marie says she produced her first steel using an electric arc furnace. This comes amid unprecedented uncertainty for Canada's steel industry. CEO Michael Garcia talks to host Jonathan Pinto about the significance of the event.
Last week, the company estimated the final cost of the EAF project would be $987 million.
Electric arc furnace technology has been around since the 1960s but has made tremendous strides, Garcia said. Initially, the plant could only produce low quality steel, such as construction reinforcement. Now, “you can really make any grade of steel you want,” he said, and 70 percent of steel in the U.S. is made this way.
One type of steel that is “very challenging” is extremely clean steel because it requires very clean scrap or virgin pig iron as a raw material, Garcia said.
Of course, secondary steel production is limited by access to sufficient raw materials such as scrap. It also depends on whether the plant's customers can handle recycled steel products exclusively, Linden-Fraser said.
McMaster University engineering professor Giancarlo Dalle Ave explains how green steel is produced using direct reduction and electric arc furnaces and why it's such a big change from traditional methods.
ArcelorMittal Dofasco: replacing coal with natural gas and hydrogen
University of Alberta researcher Mohd Adnan Khan said not all steel demand can be met through recycled steel production alone.
One way to continue producing steel from feedstocks that have a lower carbon footprint is to replace coal and coke with hydrogen.
Like coke, hydrogen can react chemically with iron ore to form pure iron. This process is called direct reduced iron (DRI). It is already successfully used in Europe for production thousand tons clean iron without fossil fuels from 2021.
This is the technology ArcelorMittal Dofasco's Hamilton plant is counting on.
Khan is a co-author of the 2023 report on decarbonizing steel with hydrogen, commissioned by the Canadian Steel Association and Transition Accelerator, a non-profit organization focused on decarbonization strategies.
He initially said the Hamilton plant would have trouble getting enough green hydrogen available. But a “hydrogen-ready” plant could also use natural gas or methane—just with a higher carbon footprint. And hydrogen can be gradually mixed with natural gas.
“Once you have the economics right,” Khan said, “you can move to 100 percent hydrogen.”
(In fact, adding the 0.05–0.5% carbon needed to harden steel will always require a small amount of natural gas.)
Initially, ArcelorMittal Dofasco sought demolish the coke plant to make way for the DRI plant in 2023. The DRI plant will produce iron to feed the electric arc furnaces that will also be installed. The company estimates that this will allow the company to phase out coal and cut emissions by 60 percent, or three million tons per year, by 2028, the equivalent of taking 725,000 gasoline-powered cars off the road.
The project was expected to cost $1.8 billion, with the Ontario and federal governments committing to cover half.
However, as of end of August 2024The coke plant was still standing, and the required supply of natural gas to the plant had not yet been approved. CBC News reached out to ArcelorMittal Dofasco for an update but had not yet received it at the time of publication.
Ontario also has a third major steel mill, operated by Stelco (bought by American company Cleveland-Cliffs in 2024) in Haldimand County. Linden-Fraser said it had not yet decided on a decarbonization strategy.
What does it take to keep going during difficult times?
Linden-Fraser said the government was still balancing short-term support for the industry in difficult times with a long-term focus on decarbonizing the steel industry.
He said industrial carbon pricing has incentivized these clean steel projects, and the federal and provincial governments have offered financial support.
In addition, this year the federal government updated its environmental procurement standards For construction projects, give preference to steel produced with low emissions.
“This is a huge step,” Linden-Fraser said, given that the federal government is the largest buyer of goods and services in Canada.
“It seems very clear that the future of competitive steel is green,” he said. “And so having policies that keep the industry on track to that long-term goal is really important.”
