BMW and Salzgitter Strike a New Deal to Source Low Carbon Steel for Car Manufacturing
A Brief Summary
The BMW Group inked a low-carbon steel delivery deal with Salzgitter AG this week. From 2026 onwards, the steel will be utilised in regular vehicle manufacturing at BMW Group European sites. The BMW Group has expanded its low-carbon steel procurement to two suppliers as a result of this move. By 2030, the company wants to employ low-carbon steel to satisfy more than 40% of demand at its European factories, lowering CO2 emissions by up to 400,000 tonnes per year.
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Salzgitter AG is progressively transitioning to essentially carbon-free production to reduce CO2 emissions from steel production on a large scale. The utilisation of renewable energy in the generation of hydrogen by electrolysis is a critical component of the shift. This green hydrogen will take the place of the coal that is now utilised in the blast-furnace process. Direct reduction facilities, which employ hydrogen to directly convert iron ore to iron in the solid form, make this feasible. After that, the solid iron is melted down with steel scrap in an electric arc furnace driven by renewable energy.
Steelmaking is one of the world's largest CO2 emitters, accounting for 7 per cent to 9% of direct CO2 emissions from the use of fossil fuels worldwide. As companies around the world work to decarbonize their supply chains, demand for steel made with non-fossil fuels is projected to skyrocket.
Following BMW's announcement last year that it would expand its efforts to combat climate change with new goals to reduce vehicle emissions throughout their lifecycles, focus on the circular economy, and increase the use of recycled and reusable materials by 50% by 2030, the new agreements were announced.
Salzgitter has indicated that it plans to progressively transition to a hydrogen-based steel manufacturing method, using hydrogen and renewable power to replace the carbon-based blast furnace process. Steel manufacturing is expected to cut CO2 emissions by 95%, according to the business.