The steel industry is one of the most important foundations of modern society, with the equipment used in virtually every other industry, including steel components. Today, it's unimaginable to go through an entire day without using something made of steel. The earliest steel artifacts date back to 1,800 BCE, and it is theorized that the Industrial Revolution would not have been possible without the use of this very valuable metal.
However, the steel industry is also a significant contributor to carbon and greenhouse gas emissions, which drive climate change. The steel industry accounts for approximately 7% of global CO2 emissions due to its use of fossil fuels, such as those in coal-powered blast furnaces. While various industries are beginning the process of decarbonization or reduction of carbon dioxide emissions through the use of low-carbon sources of energy, the steel industry is lagging. Decarbonizing their steel industries is an important component for countries meeting their net zero goals, but the global industry is behind on its targets. That exposes it to stranded asset risks totaling USD 518 billion.
Within the steel industry, there are several companies leading the way to decarbonization and reducing their negative environmental impacts. One of these is Metrading International AG, a Swiss-based company operating on a global scale as a distributor and trader of steel, aluminum, and raw materials, including critical minerals such as graphite and lithium. Aside from using renewable energy whenever possible and sourcing steel from producers that use low-carbon production methods, Metrading, in partnership with Arborify, is one of the few companies in the steel industry to utilize carbon credits to offset the carbon dioxide emissions within its supply chain.
Metrading, led by Jose Gasca, Ricardo Gasca, and Gokalp Atabek, places huge importance on environmental sustainability in its operations. It is dedicated to complying with all applicable environmental standards and continually monitors and assesses its operations to ensure they align with current environmental requirements. Metrading emphasizes the principles of pollution prevention, sustainable resource management, energy efficiency, and continuous improvement throughout its operations.
Jose Gasca, who has more than 30 years of experience in the steel industry, says, "We believe that we have a responsibility to contribute more to the decarbonization of the steel industry worldwide, which is why we have gone down this avenue. There needs to be a change in the industrial world, especially in the steel industry, which is a few steps behind aluminum - another major metal industry - with environmental sustainability."
He is also the Board Chairman of the Institute of American Metal Supply Chain Institute, based in Washington, DC.
Arborify, a leading organization in the carbon removal space, specializes in creating forests that capture carbon dioxide and managing them until they are self-sustaining and capable of storing vast carbon stocks. To date, it has planted millions of trees throughout Latin America and Africa, resulting in a pipeline of tens of millions of carbon credits registered with Gold Standard. Arborify is a truly beneficial partner for anyone to gain within the carbon credits space.
According to Jose, one of the main driving factors behind the decarbonization of the steel industry is evolving governmental requirements, which include declarations of environmental impact and other reporting regimes. Producers need to comply with these regulations to export to particular markets, such as the US and the European Union.
One of these mechanisms is the EU's Carbon Border Adjustment Mechanism (CBAM), which is a carbon tariff imposed on various carbon-intensive products, such as steel, cement, and fertilizers. CBAM requires producers and importers to submit very detailed information on raw materials, production practices, transportation, and various other operational aspects, to assess their environmental impact.
However, Jose observes that many steel producers are unprepared to supply the necessary information and take action to reduce their carbon emissions. Metrading seeks to work with these companies to get them up to speed by designing strategies to allow them to meet current low-carbon environmental requirements, which are only going to become more stringent in the future, especially those being implemented by developed markets such as the EU and the US. Metrading can provide advice to companies about trading carbon credits and bringing other value-added products to the market. Recently, Metrading invested in Urbix Resources, a US-based graphite purification company that focuses on graphite components for electric vehicle batteries – another major component in reducing carbon emissions.
"Many people mistakenly think that investing in solar panels is enough to decarbonize a company's operations," Stefano Borghi, Chairman of Arborify, says. "While solar doesn't increase your carbon emissions, it doesn't reduce the emissions coming from other aspects of operation. As an environmentally minded company, we utilize carbon credits and help other companies in the steel industry to do the same, allowing them to reduce carbon emissions and meet targets, which are becoming increasingly important in doing business in our changing world."
The partnership of Metrading and Arborify is truly set to change the global landscape, not only offering carbon credits but also providing tailor-made solutions and investment opportunities to different metal producers from all over the world.
Jose and Stefano share that they met while training for an Ironman race, making it apt that this chance encounter would make such a huge impact, not just in the steel and iron industry, but the entire world of metals.
