The New Zealand government has announced a major decarbonisation project that is predicted to enable the country to become self-sufficient in the production of “green” steel.
The government is to form a NZ$300m (US$188m) partnership with New Zealand Steel to shrink the carbon footprint of the Glenbrook steel mill – the country's main steel production plant.
As part of the deal, New Zealand Steel will build an electric arc furnace at the Glenbrook works within the next three years.
Installing an electric arc furnace will allow the plant significantly more flexibility in terms of production and will enable it to reduce its carbon footprint by 800,000 tonnes.
The government will contribute NZ$140m to the project through its Government Investment in Decarbonising Industry (GIDI) fund.
New Zealand Steel will provide the remaining NZ$160m.
Robin Davies, the company’s chief executive, said the CO2 emissions reduction would amount to a cut of more than 45% in New Zealand Steel’s emissions – or a total of 1% of the country’s total annual emissions.
“These reductions will come from replacing Glenbrook’s existing oxygen steelmaking furnace and two of the four coal-fuelled kilns,” said Davies.
“An electric arc furnace makes sense when there’s enough affordable renewable energy and scrap steel available, a way to get that scrap steel to site, and the right policy settings.”
A partnership with Contact Energy will ensure the company has a stable and affordable energy supply.
Davies said this was a crucial part of the deal. Electric arc furnaces – though cleaner than coal-fired furnaces – are more expensive to power.
The company said the next step would be to seek regulatory approval for the changes.
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