Commitment for Steel 2017 by Wirtschaftsvereinigung Stahl

Commitment for Steel Annual Report 2017

Contents

Commitment for Steel Annual Report 2017 2

Contents

Editorial

Short facts

20 Networks make steel companies more efficient Steel Institute VDEh

German Steel Federation

22 Metallurgy: focusing on cutting CO2 emissions

Stahl trägt uns alle – a new campaign

25 Every kilo counts – light construction with steel

Foreign trade challenges for the German steel market

28 Digitalisation in the steel industry 30 100 years of the MPIE

11 Digital transformation in the steel value-creation network 14 Climate protection – still no worldwide approach 17 The circular economy – from raw material to recyclable material

Imprint

Editor: Public Relations, Stahl-Zentrum

Stahl-Zentrum Sohnstraße 65 40237 Düsseldorf Germany Tel. +49 (0) 211 6707-0 Fax +49 (0) 211 6707-676 www.stahl-online.de info@stahl-online.de

Translation: richarddennis@t-online.de

32 Priorities of the German Steel Federation in 2017 33 Priorities of the Steel Institute VDEh in 2017 34 Steel – Highlights 2017

Layout, typesetting: etcetera Werbeagentur, Aachen Photo, title page: ©istock, blackcatimaging Copyright: Steel Institute VDEh, German Steel Federation Düsseldorf, November 2017

Commitment for Steel · Annual Report 2017

Contents

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Foreign trade challenges for the German steel market

The circular economy – from raw material to recyclable material

Dillinger

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Metallurgy: focusing on cutting CO2 emissions

worldsteel / Gregor Schläger

Digitalisation in the steel industry

Commitment for Steel · Annual Report 2017

Editorial

This report documents the organisations’ initiatives and services in 2017, as well as the positions and interests of the steel industry they have represented this year. The responsible personnel would be pleased to provide more detailed information on these topics. The steel industry in Germany continued to operate within a complex economic and political environment in 2017. Despite a brightening economy the industry’s concerns are unchanged: the future of steel production in Germany and Europe remains dependent on external political decisions. Our attention remains focused on the major upheavals in global trade, the escalation of European climate protection efforts with the reform of the EU Emissions Trading Scheme, and the energy transition in Germany. We have

value-creation chains in the digital age was clearly demonstrated by the study “Potentials of steel’s digital value-creation networks” (carried out by IW Consult) in August. With the “Stahl trägt uns alle” campaign we publicly communicate the topics of central importance for the sector.

presented these topics to both the public and political decision-makers during this election year of 2017. The core demands of the steel industry were presented in political debates in the run-up to the Parliamentary elections. Apart from the topics mentioned above, these also included sustainability, infrastructure and traffic, as well as the creation of the prerequisites necessary for digitalisation of the value-creation chains. We believe that a new government must urgently attend to these points in order to give the steel industry in Germany a future, and to strengthen the value-creation chains that originate with steel.

Like the companies and other associations, the organisations operate within a dynamically changing environment. They must react flexibly, appropriately and quickly to changed needs. Corresponding measures are currently being implemented. These include the introduction of a matrix structure at the German Steel Federation with the setting up of the Sustainability, Economy and Communication cluster, and the strengthening of the external offices.

That steel is of central importance as a technology provider for industrial

Best regards

Commitment for Steel · Annual Report 2017

Hans Jürgen Kerkhoff President German Steel Federation Chairman Steel Institute VDEh

Short facts

Short facts 2017 Steel companies in Germany produced

42.1 m. tonnes of crude steel:

Technology supplied to other sectors by the steel industry in Germany was worth

number 1 in the EU, 7th in the world.

169 m. euros.

11 CEOs, together sent an open letter to political decision-makers in Berlin and Brussels appealing for the structure of the EUâ€™s Emissions Trading Scheme to take into account the competitiveness of the steel industry.

70 per cent Steel companies engage in

in 7 energy efficiency networks.

of crude steel (29.5 m. tonnes) was produced via the integrated route (blast furnace/converter). 30 per cent (12.6 m. tonnes) via the electric furnace route.

About 40 companies from Europe, Asia and the USA committed themselves to exploiting the light construction potentials of hybrid vehicles and trucks as part of the Lightweight Forging Initiative.

400 visitors attended the Steel in Cars and Trucks (SCT2017) conference in Schiphol (Amsterdam), organised by the Steel Institute VDEh.

300 guests attended the Berlin Steel Dialogue and heard, among other things, talks by Brigitte Zypries (Minister for Economic Affairs and Energy) and Prof. Udo di Fabio. Commitment for Steel Âˇ Annual Report 2017

Communication

Stahl trägt uns alle A new campaign

Illustrative short films have been produced for each motif. Visit www. stahl-traegt-uns-alle.de to see these, and for further information on the campaign.

Five major issues of our time – and five people for whom the steel industry in Germany is more than just an employer. The new campaign, organised by the German Steel Federation and its member companies, has been running on numerous channels since early October and combines the two aspects under the slogan “Stahl trägt uns alle” (Steel supports us all). The steel industry in Germany is innovative, efficient and at the forefront of environmental protection. The various motifs and formats of the campaign transport this message. They also pick up on the threats facing the steel location of Germany. Incorrect political decisions, particularly regarding energy and climate policies, seriously overshadow the sector’s future prospects. Fair and dependable conditions are therefore called for to ensure that steel will still be produced in Germany in future.

Nikolaus Henrici, active in the steel industry for more than 30 years, knows the strengths of his sector and the material steel. Threats such as dumped imports, increasing protectionism, and the one-sided burdens resulting from climate policy make him worry about the future.

Kerstin Wrede, a young steel engineer, loves sporting competition – in her private life and in her career. She supports innovations, efficiency and sustainability. Unfair competitive conditions in international trade, dumping, and protectionism endanger the success of her work and her company.

Commitment for Steel · Annual Report 2017

German Steel Federation Âˇ Communication

Frank Windisch, a steel engineer for plant technology, is particularly concerned about topics such as environmental protection and sustainability. He promotes these every day â€“ just like his colleagues in the steel-producing companies in Germany. The steel producers have achieved a high standard of environmental and climate protection by making considerable investments. This accomplishment must not be endangered by an intensification of the European Emissions Trading Scheme.

Michael Linnepe, a technology and innovation engineer, is passionate about energy-related topics. The particularly efficient use of energy is as much a matter of course for the steel industry as its own generation of about 50 percent of the electricity it requires. Steel is an indispensable component of the energy transition, e.g. with wind turbines, hydroelectric power or electricity grids. Steel stands for a secure supply of energy.

For Marcel Ahrens, a measurement and regulatory engineer, precision and quality are the central demands of his daily work. The steel products whose properties he monitors support buildings and bridges. They secure our mobility and infrastructure. They are necessary for transport activities in an economy based on the division of labour. Bridges made of steel enable the rapid and long-lived replacement of many bridge structures that are no longer sound.

Commitment for Steel Âˇ Annual Report 2017

Trade policy

Foreign trade challenges for the German steel market The current situation: an improved steel economy The economic conditions for the steel industry improved appreciably during the first half of 2017: global crude steel production rose by 5 per cent in the first six months of this year compared to the same period last year. In addition, worldwide capacity utilisation has moved off its low-point and is approaching the 80 per cent mark (last achieved six years ago). The phase of considerable under-utilisation of capacity that has characterised the situation in the global steel industry since the second half of 2015, in particular, has thus not yet been overcome – though the low-point has clearly passed. This development is driven by the robust improvement of steel demand in China, in turn supported by the continuing fiscal and monetary stimuli ahead of the party congress in autumn of this year. Total market supply of rolled steel is expected to rise by 3 per cent in 2017, and thus increase three times as strongly as expected at the start of the year. Improvements in the steel economy are also apparent in Germany and Europe: according to the latest forecast from Eurofer, rolled steel demand in the EU is set to rise by 2 per cent this year – and thus increase for the sixth year running. Crude

Commitment for Steel · Annual Report 2017

steel production in Germany increased by 2 per cent during the first half of the year. Capacity utilisation, at 90 per cent, is at a high level. The prospects for the second half of the year are also respectable: although orders received for rolled steel fell in spring, the backlog of orders is at a solid level in terms of the average of all products. In particular, the very good condition of the most important steel-processing sectors gives grounds for confidence – they have once again coped well with the difficult economic situation this year. Crude steel production in Germany may therefore expand this year. A rise of 1.5 per cent, to 42.7 m. tonnes, was already forecast at the start of the year.

The worldwide structural crisis remains unsolved – the global steel forum must now deliver The continuing high import pressure on the EU steel market – despite the improved worldwide economic situation – is a reflection of the fact that the structural problems in the global steel industry remain unsolved. Worldwide overcapacities are still in the region of several hundred million tonnes, according to the OECD. This is a major contributor towards unfair

German Steel Federation · Trade policy

China remains the focus of the global structural crisis affecting steel, despite the country’s leaders having undoubtedly taken steps in the right direction. After reducing capacity by 65 million tonnes, a further 50 million tonnes should be closed down this year. Moreover, there have been widespread closures of illegal induction furnaces. Overall, the government appears to be on path to reducing steel capacities by 150 million tonnes by 2020. Furthermore, Chinese steel exports have fallen appreciably this year, by about one-third. One solution to the ‘Chinese problem’ in the steel sector has not, however, been affected by all this: firstly, overcapacities in China are still at a high level and, secondly, steel exports are still exceeding the level of 2013 by about 30 per cent. In addition, the high point of the reform drive may be over and, given the forecast downturn in the Chinese steel economy in coming years, steel exports can be expected to rise again. Alongside China, other countries with excessive capacity expansion plans also contribute towards the possibility of structural problems becoming an ongoing problem in the worldwide steel industry. Against this background, China must now be more constructive regarding the work of the Global Forum on Steel Excess Capacity (GFSEC) set up in late 2016. Up to now, the results of this committee’s work have been modest. Though the G20 summit in Hamburg, at which all the attending countries

agreed to meet their information commitments, has provided new momentum. In addition, a progress report is to be published in November, in which concrete steps for solving the global structural crisis have been agreed. From the point-ofview of the steel industry in Germany it is of decisive importance that governments commit themselves to not providing competition-distorting subsidies – and that these commitments can also be monitored internationally. It was also important that the G20 summit succeeded in finding a trade policy compromise which referred to the justifiable role of “legitimate trading instruments” to combat unfair trade. These undoubtedly include, for example, the instruments anchored in the WTO – above all antidumping, but also anti-subsidy, measures – particularly because they are both aimed at overcoming existing distortions in international competition. The measures used to protect national security currently being examined by the new US administration act in a different way. There is no conclusive verdict on this as yet. The introduction of such measures would risk igniting a worldwide protectionist wildfire.

Modernisation of the EU’s trade defence instruments There are great differences in the form and use of trade defence instruments around the world. Each WTO member may decide for themselves the details of how such instruments are to be designed and applied. The WTO simply provides guidelines, within which WTO members have a great deal of leeway. The EU has not yet exploited this sufficiently. Its trade defence instruments are among the world’s weakest. It is therefore of great importance for the steel industry in Germany and Europe that the EU trade defence instruments are

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trading practices spreading far beyond China, particularly dumping in international competition for example. In addition, worldwide trading in steel has long been burdened by numerous tariff and non-tariff trade barriers. The risk of a trade war has increased with the change in course sought, and partially achieved, by the new administration in the US. The consequences would be severe for the open EU steel market, and an especially serious threat for the steel location of Germany.

Commitment for Steel · Annual Report 2017

Trade policy

adapted and modernised to take into account the changed realities of international trade. Such modernisation plans, however, have often been brought to a stop because no consensus could be reached between all the member states of the EU. It is therefore already a major success that there is the possibility of an agreement between the European Commission, the Council and Parliament. In fact, a range of measures that would improve European trade defence are currently being discussed. For example, the procedures for antidumping and anti-subsidy actions are to be streamlined, and design faults in the EU system ironed out. Even if the steel industry in Germany had desired a more courageous step, such as abandonment of the Lesser Duty Rule for countries that behave enormously unfairly, it would nevertheless be an important step towards strengthening EU industry in its defence against unfair market practices. The steel industry therefore hopes that agreement can be reached during the current negotiations on the European level.

Far more important than the structure of the rulebook, however, is its implementation in practice. The EU trade defence instruments should therefore be employed more consistently and more predictably. This alone would represent a major improvement. We are very disappointed to note that the EU Commission is only half-heartedly exploiting its possibilities for protecting its domestic industry. It is finding it difficult to send a clear signal against unfair trade, particularly regarding proceedings against Iran, Brazil, India, Serbia and Russia.

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In addition to modernisation of the EU’s trade defence instruments, there is also the question of how WTO members that do not conform to market economy principles should be treated in future on the EU level. At heart, this involves China. China has been a member of the WTO since 11 December

2001. After 15 years, the accords in China’s WTO accession contract expired in late 2016. European steel producers saw the great danger that China would then simply be recognised as a market economy. The consequence would have been that the EU steel industry would hardly be capable of defending itself against dumped Chinese imports. In November 2016, the European Commission presented a proposal on reworking the antidumping regulation which, however, left many questions unresolved. The steel industry in Europe doubts whether this would ensure comparable protection against unfair imports and has called for improvements. Whether the EU will also be in a position to effectively exploit its trade defence instruments against the country in future is yet to be seen.

Commitment for Steel · Annual Report 2017

German Steel Federation · Digitalisation

Digital transformation in the steel value-creation network The ongoing digitalisation process promises high growth potentials for German industry. A study carried out by IW Consult GmbH, commissioned by the German Steel Federation, examines the role played by the steel industry in the digital transformation of the German economy. The central finding is that the already major significance of the steel industry for value creation in Germany will be increased: digitalisation further enhances the sector’s special strengths, such as its close interactions in research and development and its supplier relations. The steel companies are driving digitalisation forward strongly, but also face considerable challenges. The study was based on a wide-ranging corporate questionnaire carried out as part of IW’s spring survey.

The study’s main findings: › The steel industry already plays a central role in the value-creation networks of German industry. › The digital transformation is being driven forward strongly in the sector. › The role of the steel industry in the value-creation chain will become more important as a result of digitalisation. › The digital transformation strengthens existing supplier structures.

The study describes numerous fields and cause & effect chains via which the steel industry’s digitalisation opens up innovation and growth potentials among steel processors. According to the study’s conclusions, digitalisation of the steel industry ranges far beyond its own sphere of action and contributes towards strengthening value-creation chains within the entire economy. As a result, the role of the steel industry in the value-creation chain will become even more important as a result of digitalisation. One example of digitalisation in the steel industry is the ‘intelligent coil’ that carries a so-called ‘digital twin’ dataset. Thus every production step is accompanied by the entire production history in addition to information on the current state of the product. The digital twin can also be used for data exchanges between producers and customer sectors. Data from steel production can therefore be combined with data from the processing steps, showing further optimisation potentials within the processes.

Important developments: › Digital networking: steel companies will be more intensively integrated in processors’ development processes. › Vertical and horizontal networking: optimisation of value-creation processes and shortening of production and product cycles.

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› The industry faces considerable challenges as a result of digitalisation.

Steel opens up innovation and growth potentials

Commitment for Steel · Annual Report 2017

Digitalisation

› The steel industry’s digital product and process descriptions: steel customers can thus optimise and accelerate some of their own processes. › Simulations of entire process chains: products can be developed virtually, without having to be produced in advance.

The steel industry will become even more important in the steel valuecreation network The importance of the steel industry ... ... will (probably) become more important ... will (probably) become less important 100 | in %

... will remain unchanged

2.4

3.7

69.3

63.5

80.8

28.3

32.7

19.2

Total

SMEs

Large Companies

80 60

Existing supply structures will be strengthened

20 0

N = 197 (customers of the steel industry); sales-weighted results

Investments in the digital transformation 0%

1-5%

6-10%

100 | in %

More than 10%

1.5 7.5

13.3

Steel is becoming digital

23.4

60 40

The digital transformation is being driven forward strongly in the companies of the steel industry. Four out of five companies in the steel industry (80 per cent) assume that the digital transformation will have a positive effect on their competitiveness. For this reason, almost all steel companies are investing in this transformation. Both the sector itself and its customers have major development potentials in this area.

77.4

69.0

IW Future Panel 2017, Wave 28

The survey shows that customers that already consider physical proximity important will continue to do so in future, and that one-third of companies believe it will become even more important. This principally applies for digitally similar companies who say that the purchase of smart products from the steel industry is important for their competitiveness. In contrast, however, digitalisation will also lead to more standardised supplier relations requiring even less physical proximity than now. Overall, the digital transformation thus cements existing supplier structures.

IW Future Panel 2017, Wave 28

20 0

0.1

7.9

Now

In five years

N = 48 (left); 56 (right); sales-weighted results

Effect on competitiveness Positive 100

Neutral

| in %

Negative

0.1

0.3

19.7

43.4

14.2

80.2

56.3

85.8

Total

SMEs*

Large companies**

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Commitment for Steel · Annual Report 2017

20 0

* companies with less than 250 employees ** companies with at least 250 employees

IW Future Panel 2017, Wave 28

German Steel Federation · Digitalisation

of steel companies are investing in the digital transformation – all companies will have invested in digitalisation projects within five years.

92.1%

One-third of steel customers require digital products and services from the steel industry to ensure their future competitiveness.

Digitalisation as a challenge The industry faces considerable challenges resulting from digitalisation: on the one hand, these must be solved by the companies themselves, e.g. regarding the necessary cultural changes. On the other hand, politicians must also get involved, e.g. in the expansion of the broadband infrastructure, or the establishment of uniform industry standards. In addition, politicians must take into account that greater digitalisation will increase the intensity of competitiveness on the markets, and that the companies must remain in a position to make the necessary investments. In this regard, the study also sends a signal to limit the burdens faced by the industry in order to ensure that the digital transformation can be achieved.

These challenges must be addressed by industry and politicians: › The digital transformation requires a cultural change and must be anchored in corporate strategies.

According to

› The new requirements for specialists must be anticipated – both in the companies and by politicians.

63.5%

› Creative leeway must be created and strengthened in order to try out digitalisation concepts in the form of pilot projects and test laboratories.

of customers of the steel industry, their own competitiveness is influenced by the steel industry achieving a successful digital transformation.

› The digital transformation must be jointly shaped through a strong culture of innovation and collaboration. › The necessary infrastructural and technical conditions must be created.

of steel companies expect the digital transformation to have a positive effect on their competitiveness.

80.2%

Commitment for Steel · Annual Report 2017

Climate policies

Climate protection – still no worldwide approach In the Paris climate accord that came into force a year ago, on 4 November 2016, the nations of the world agreed to keep the global average temperature rise at well below two degrees Celsius (compared to the pre-industrial level). Worldwide greenhouse gas neutrality is to be achieved during the second half of this century. This was an important success for climate diplomacy, but should not mislead regarding one major point: the new climate protection agreement did not define any comparable and binding targets for all signatories. Instead, individual states could decide on their climate policy contributions for themselves – and are in no way obliged to link them with recognisable reduction commitments for industry. Thus China, for example, intends to further increase its emissions until 2030. It is therefore necessary to ensure that

Commitment for Steel · Annual Report 2017

the global competitiveness of the steel industry remains intact when implementing European and national climate strategies. This has become all the more important since the USA again declared that it would withdraw from the agreement. The European Emissions Trading Scheme is a central climate policy instrument that greatly affects the future prospects of the steel industry. Technically and economically realistic benchmarks without additional cutbacks, and full compensation for electricity price increases resulting from emissions trading, are important prerequisites for the steel industry to be able to continue to assert itself in international competition. Despite important improvements compared to the EU Commission’s original proposal, the agreement reached between

German Steel Federation · Climate policies

the Council, Parliament and the European Commission on 8 November is still inadequate in this regard. In particular, nothing was done to meet demands to correct the technically impossible benchmarks. The international competitiveness of the steel industry remains under threat. The necessary solutions must therefore now be found in the implementation provisions and on the national level. A long-term climate protection strategy was adopted in Germany on November 2016 – the Climate Protection Plan 2050. It also contains sector-related targets: industry is to contribute a 30 per cent reduction in greenhouse gases by 2030. Implementation of this plan will be a major emphasis in the new legislative period. It will be based on an impact assessment commissioned by the German government due to take place next year. The German Steel Federation repeatedly points out that the process-related limits of CO2 reduction have been reached in the established processes. It has, however, drawn up a statement on the contribution made by the steel industry in Germany towards a low-CO2 economy, describing the conceivable long-term approaches leading to a considerable reduction in CO2 emissions resulting from steel production1) – Carbon Direct Avoidance (CDA), the capture and storage of CO2

(CCS), or Carbon Capture and Utilisation (CCU). It was made very clear to politicians that the results of associated research activities were open-ended and that they could not be expected before 2030. Whereby, it is also always necessary to draw attention to the associated political challenges. CCS, for example, faces problems regarding its public acceptance and the creation of a reliable approvals basis. This approach will therefore remain unrealistic in Germany for the foreseeable future. In the case of the other processes the question of costs, above all, is of existential importance for the steel industry – given that it faces international competition. The regenerative electricity necessary for producing hydrogen will draw many interested parties, and thus usage competitors from industry and traffic. In addition, given the current market situation of natural gas and electricity (worsened in Germany as a result of burdens from the Renewable Energy Sources Act (EEG), in particular) hydrogen production via electrolysis, and iron ore reduction with natural gas or H2, is today simply uneconomical in Europe. Furthermore, if a phase of research and development should result in new processes achieving the maturity necessary for large-scale implementation, considerable investments will

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1) see pp. 22-24 for explanations of the technical approaches

Commitment for Steel · Annual Report 2017

Climate policies

then be required, which could be somewhere in the order of the total current stock of steel-making facilities. From today’s point-of-view, such a profound upheaval would therefore be impossible to finance from a company’s business investment budget. For this reason it is necessary to make the necessary decisions now, to ensure that the legal, economic and infrastructural conditions that could permit the realisation of such concepts are in place in good time. Investment and planning security, a reliable affordable electricity supply in sufficient quantity, and a clear approvals basis are the essential cornerstones for this. Above all, it is important to maintain the sector’s freedom to make further research and development efforts – and not to burden and constrict it through restrictive energy and climate policies.

This perspective was intensively raised in consultations with the various departments of the German government, and within the framework of a study by the Confederation of German Industry (BDI) on industrial climate paths, and will also form the basis for further political work on implementation of the Climate Protection Plan.

Sector targets in the Climate Protection Plan 2050 1990 500

2014

2030

| In m. tonnes of CO2 equivalents 466

400 358 300

283

209

200

<183

181

163 160

<143 119

100

<98 <72

<61

0 Industry

Construction

Trafﬁc

Agriculture

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Energy sector

The Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety, BMUB (2017). Climate Protection in Figures 2017.

In 2017 the EU Institutions decided about the future of the European Emissions Trading Scheme.

Commitment for Steel · Annual Report 2017

German Steel Federation · Sustainability, environment, transport and education

The circular economy – from raw material to recyclable material Steel is a sustainable material with extremely wide-ranging properties and application potentials. It is often the decisive enabler, without which hightech solutions would be impossible. It closes recycling loops, permits the use of environmental protection technologies or brings about increases in efficiency. The environment, the economy and society profit from this. Sustainability, however, also means that all direct and indirect properties must be taken into account and weighed up against one another. In terms of steel, this means that environmental effects during production are often balanced by steel’s recycling potential as a permanent material1). Several studies now show how (scrap) steel can be recycled at the end of each product life-cycle (multi-recycling2)), resulting in a new life-cycle for the material. Every tonne of scrap steel that is collected is recycled. In addition, steel also scores many points when it comes to the reuse of products and components, or repairs for continued use.

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Recycling still offers optimisation potenn of tials, however, e.g. in the acquisition material for recycling, particularly in EU member states where there are no colneflection systems or they operate inef-

ficiently. Optimisation potentials also arise through ever-improving analysis and preparation methods that will, in future, assist in further reducing material losses, e.g. in the case of alloys or undesirable constituents. The energy transition (“Energiewende”) brings particular challenges. These are not only infrastructure-related (e.g. involving the expansion of electricity or gas networks), but are also found in the dismantling of power stations. The resultant scrap steel should be returned to the circulatory systems wherever possible. Scrap contaminated with radiation, however, must be reliably combed out. Even if these steels are fundamentally recyclable, ‘safety first’ must apply here. Steel is thus a perfect example of a circular economy. Nevertheless, this receives insufficient attention and consideration when politicians lay down new legal principles in order to further develop the circular economy.

A recycling society as a political goal The European Commission is using numerous measures to achieve its aim of harmonising economic and ecological growth, e.g. the EU Action Plan for the Circular Economy. This is to be based on a political framework jointly set up by EU member states. It includes, for example, the promotion of product designs aligned upon the circular economy, support for research, or the mobilisation of investment funds for recycling-oriented solutions. From the point-of-view of the steel industry local, regional and state tendering should also be further developed with a view to achieving environment-oriented public procurement. Thus permanent materials and sustainably used by-products should have priority. At the same time,

The planned national Substitute Building Materials Ordinance Steel mill slags as by-products are an example of the circular economy and resource efficiency in action. About 14 million tonnes are used every year as a secondary raw material in cement production, as a high-quality building material, in internal circulatory systems, or as fertilizer. With the planned Substitute Building Materials Ordinance, the government now wants to create nationwide regulations on the use of mineral by-products and recycled building materials. This would be unique and is to be welcomed. However, it is evident that the currently intended excessive weighting of soil and water protection will significantly shift certain material flows – with negative consequences for resource consumption and land use, as well as nature conservation and climate protection3). It can therefore already be seen that a review and adaptation will soon be necessary if politicians do not want to go to absurd lengths to achieve their goals on resource efficiency on both the European (see above) and national levels (see also ProgRess4)).

the Commission is also modernising waste and product policies. Instead of final disposal, waste should in future be more often used as a resource. In order to achieve this, the package of measures includes proposals to review a wide range of legal principles, above all the Waste Framework Directive (2008/98/EG), the Landfill Directive (1999/31/EC) and product-specific regulations regarding, for example, packaging, old vehicles and electrical/electronic devices. The steel industry supports these goals and processes in principle. On closer inspection, however, improvements are necessary in some areas. With regard to the amendment of the Waste Framework and Landfill Directive, for example, discussions are necessary regarding landfill bans, the exclusion of hazardous materials, or the use of market-based instruments (such as taxes and levies administered as steering instruments) that create prohibitions instead of incentives. Additionally, there is – as yet – no prospect of the uniform practical application of regulations by member states. Furthermore, sustainability and the circular economy should also be taken more into account in the provisions for products. A material like steel, and its industry, makes a considerable contribution towards this.

Selected sustainability topics Amendment of the Technical Instructions on Air Quality Control (TA Luft) Since 1964, the Technical Instructions on Air Quality Control (TA Luft5)) have stipulated, among other things, uniform national legal regulations regarding installations requiring a permit and, above all, important air pollutants. They are now to be adapted to take into account, if necessary, technological developments. Whereby it is of considerable importance that the future ambitious demands to be met by industrial plant are oriented upon what is technically possible and economically feasible. From the point-of-view of the steel industry, it is essential to lean heavily on the European process for determining the best possible technology. Standards for an environmentally relevant operation of industrial plants in Germany should comply with the EU requirements. Supplementary and improved modifications of existing manufacturing plants must continue to be officially approvable, and must not be prohibited by any excessive protective demands in the TA Luft. Industry leads in reducing reactive nitrogen compounds

1) Dinkel, F.; et al.: Permanent Materials. Carbotech AG, Basel 2014 2) Neugebauer, S.; Finkbeiner, M.: Ecobalance according to ISO 14040/44 for the multi-recycling of steel. Final Report. TU Berlin, Berlin, 2012 3) Clausthaler Umwelttechnik-Institut GmbH (CUTEC): ‘Assessment of the substitution of industrial by-products of steel production through primary raw materials for use in the construction of roads and paths’, commissioned by the Building Materials Institute (FehS); Clausthal-Zellerfeld; 16 February 2017 4) German Resource Efficiency Programme II. A programme for sustainable use and for protecting natural resources. www.bmub.bund.de 5) First General Administrative Provisions for Germany’s Federal Immission Protection Act (Technical Instructions on Air Quality Control, TA Luft) of 24 July 2002

Commitment for Steel · Annual Report 2017

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Against the background of discussions on reactive nitrogen compounds, a report on nitrogen emissions into the environment in Germany was published in May 2017. This described the government’s aims of reducing such emissions to an environmentally friendly and healthy level using a cross-sector approach. The report also described the consequences of releasing nitrogen compounds – such as nitrates, ammonia and nitrogen oxides – into the atmosphere. Increasing amounts of these materials are endangering ecosystems, according to the urgent warning. The consequences can be seen in the quality of groundwater and water bodies, and could adversely affect biodiversity. There are also considerable health and economic consequences.

At the same time, the German government has acknowledged that, above all, the emission-relevant industrial sectors (including the steel industry) have had considerable success in reducing the amounts of such emissions thanks to the use of the best available technologies. The emissions of reactive nitrogen compounds only represent 6 per cent of all nitrogen emissions here, and have fallen by 15 per cent since 1990. Now the German government is planning to develop an action programme for integrated nitrogen reduction with a cross-sector and cross-media approach. While measures already undertaken in many sectors will take effect in the future (c.f. TA Luft), the largest – as well as most cost-effective – reduction potential can be found in agriculture. Description of best available technology (BAT) on the basis of the Industrial Emissions Directive (IED, 2010/75/EU) According to the IED, so-called BAT reference documents must be created for the listed industrial activities to describe the best available technology. They must also be periodically reviewed. The steel industry is seriously affected by this because many BAT reference documents are applicable for its activities – from steel production, through steel processing and large combustion plants, to waste treatment plants and the surface treatment of metals. BAT conclusions and EU implementation decisions that are used as minimum requirements for approvals in EU member states, and with which industrial plants must comply, are derived from these reference documents. An intensive participation of the affected industrial sectors in the conception process is essential for practical development of the BAT reference documents. This is the only way to ensure that new environmentally relevant requirements regarding steel industry processes are developed properly – i.e. on the basis of technologies that are actually utilised – and made binding throughout Europe.

German Steel Federation · Sustainability, environment, transport and education

By-products are used sustainably, e.g. the steel industry produces about

27,000

Almost WIND TURBINES are part of the ENERGY TRANSITION in

80%

Germany. About of a wind turbine is made of STEEL.

TWH OF ELECTRICITY FROM WASTE GASES ANNUALLY – as much as Hamburg’s annual electricity demand (12.2 TWh, 2015).

STEEL is LASTING and CREATES INFRASTRUCTURES. The CONSTRUCTION INDUSTRY

35%

covers about OF STEEL DEMAND in Germany.

Steel is not used up, but RE-USED AGAIN

STEEL PROTECTS and helps reduce environmental impacts.

AND AGAIN. About MILLION TONNES OF STEEL ARE RECYCLED in Germany every year. Equivalent to

70 million tonnes

57 million tonnes

CO2

3,000 EIFFEL TOWERS.

1990

2014

Specific CO2 emissions for finished steel products have FALLEN by more than

22%

since 1990.

80%

Steel: an industry and a material for a sustainable future

Steel companies are currently involved in

ENERGY EFFICIENCY NETWORKS committed to SUSTAINABLY REDUCING ENERGY CONSUMPTION.

of transports are carried out using ENVIRONMENTALLY FRIENDLY INLAND WATERWAYS AND RAIL.

Innovative steel products SAVE an average of

TIMES MORE CO2 than is emitted during their production.

STEEL’S LONG LIFE enables its REUSE and CONSERVES RESOURCES.

Steel can always be

100% RECYCLED.

4 86,000

About MILLION PEOPLE work in steelintensive sectors. The steel industry employs about PERSONNEL.

2,500 STANDARDISED STEEL GRADES make numerous applications possible.

Primary energy consumption for finished steel products has FALLEN by more than

19%

since 1990.

Sustainability and sustainable management are the guiding principles for corporate activity and social action by the steel industry in Germany. The Stahl-Zentrum in Düsseldorf has been publishing cross-company Sustainability Reports for the steel industry in Germany since 2001. The dimensions of sustainability have undergone constant improvement. Our tenth report enumerates the sector’s sustainable development in Germany and supports the reporting of the member companies from a sector-wide perspective. It examines selected indicators and key data on the work of the steel companies in Germany. Together with the publication “Stahl – Der Nachhaltigkeit verpflichtet” it forms the basis for the dialogue with all interested parties and for constant further improvement.

Commitment for Steel · Annual Report 2017

Initiative Energieeffizienz-Netzwerke

Networks make steel companies more efficient The German Steel Federation and the Steel Institute VDEh have been providing support to the companies of the steel industry in Germany in their networking activities since the “Initiative Energieeffizienz-Netzwerke” began in December 2014. The steel companies are currently organised into seven networks undertaking energy-efficiency measures.

More than 90 per cent of steel production in Germany is participating in energy-efficiency networks.

ArcelorMittal Hamburg Participation in the Energy Efficiency Network of Hamburg’s Industry Hamburg ArcelorMittal Bremen Participation in the Bremen Efficiency Board

Bremen

Steel energy+ Hoesch Hohenlimburg Hüttenwerke Krupp Mannesmann thyssenkrupp Steel Europe thyssenkrupp Packaging Steel thyssenkrupp Electrical Steel KBS Kokereibetriebsgesellschaft Schwelgern

Salzgitter Eisenhüttenstadt

Duisburg

Düsseldorf Electric Steel Energy Efficiency Network ArcelorMittal Hamburg Benteler Steel/Tube BGH-Edelstahl Deutsche Edelstahlwerke ESF Elbe-Stahlwerke Feralpi Georgsmarienhütte Lech-Stahlwerke RIVA Stahl Schmiedewerke Gröditz Stahlwerk Bous Stahlwerk Thüringen

Dillingen

ESTA – energy efficiency with steel Dillinger Hüttenwerke ROGESA Roheisengesellschaft Saar Saarschmiede Freiformschmiede Saarstahl Zentralkokerei Saar

ArcelorMittal Eisenhüttenstadt Participation in the VIK-EEN Brandenburg

EηERGY – Salzgitter’s energy-efficiency network Salzgitter Flachstahl Salzgitter Europlatinen Salzgitter Mannesmann Stahlservice Ilsenburger Grobblech Salzgitter Mannesmann Grobblech Peiner Träger DEUMU Deutsche Erz- und Metall-Union EUROPIPE Mülheim Pipecoating Salzgitter Mannesmann Line Pipe Salzgitter Mannesmann Großrohr Salzgitter Mannesmann Precision Salzgitter Mannesmann Rohr Sachsen Salzgitter Mannesmann Stainless Tubes Deutschland Universal Eisen und Stahl KHS Verkehrsbetriebe Peine-Salzgitter Hansaport Hafenbetriebsgesellschaft TELCAT MULTIKOM Salzgitter Automotive Engineering Salzgitter Hydroforming

About 1,300 companies are currently active in 131 networks organised under the umbrella of the “Initiative Energieeffizienz-Netzwerke”, supported by the German government and 22 trade associations. The administrative office is run by dena (the German Energy Agency) and financed by the Federal Ministry for Economic Affairs and Energy and the Federal Ministry for Environment, Nature Conservation, Building and Nuclear Safety.

Commitment for Steel · Annual Report 2017

German Steel Federation · Initiative Energieeffizienz-Netzwerke

The companies of the steel industry are constantly trying to improve efficiency because the provision of energy for the sector’s processes is a decisive cost factor. Energy requirements for finished steel products have fallen by 20.6 per cent since 1990. The measures implemented for this purpose range from the use of energy-saving LED technology for illuminating works halls to the wide-ranging utilisation of waste heat for electric arc furnaces.

About 90 per cent of German steel production is organised into energy-efficiency networks Even if energy efficiency is a major priority for each individual company, they are pleased to take advantage of the possibility of further developing this topic within networks. One of the first steel networks involved in this initiative was created when eleven electric steel producers came together in November 2015. The participants in the network were able to discuss

in detail potential efficiency measures in meetings organised by the Steel Institute VDEh. After the agreed duration of two years with five network meetings, the Electric Steel Energy Efficiency Network will end in December 2017. Comprehensive monitoring is being undertaken to check whether the intended target of 100 gigawatt-hours of energy savings will be met. Other companies in the steel industry have selected different forms of network activities. thyssenkrupp Steel Europe AG, Salzgitter AG and the companies of the steel industry in Saarland have set up their own group network. The ArcelorMittal sites in Bremen, Hamburg and Eisenhüttenstadt, on the other hand, are participating in regional cross-sector networks. The domestic steel industry is thus currently represented in seven energy-efficiency networks. What initially sounds modest becomes more impressive when one looks at the production covered by these companies: about 90 per cent of steel production in Germany is organised into energy efficiency networks.

High satisfaction levels among participants Participants are largely positive about work in the networks, as the market research institute mindline energy has found out in a study commissioned by the “Initiative Energieeffizienz-Netzwerke”. Three out of four companies in energy efficiency networks are ‘very’ to ‘extremely’ satisfied with the results achieved by the work of their particular networks. 94 per cent would actively advise other companies to participate in a network. Most participants (83 per cent) assess the cost-benefit ratio as ‘good’ to ‘very good’. Even if the steel industry in Germany has already achieved a high level of organisation into energy-efficiency networks, the commitment of the companies and the steel organisations within the Initiative will continue. In addition to expertise for the member companies, the Steel Institute VDEh also offers workshops in partner associations in order to encourage companies there to set up or participate in energy-efficiency networks.

94 %

74 % Satisfaction

of participants are ‘very’ to ‘extremely’ satisfied

of companies would recommend participation

Cost-benefit assessment

83 %

of participants evaluate the cost-benefit ratio with ‘good’ or ‘very good’

Source: Initiative Energieeffizienz-Netzwerke

Recommendation

Commitment for Steel · Annual Report 2017

Metallurgy

Metallurgy: focusing on cutting CO2 emissions Specific CO2 emissions for finished steel products have FALLEN by more than

22%

D linger Dil lin i ge in gger e

since 1990.

Commitment for Steel Âˇ Annual Report 2017

Steel Institute VDEh · Metallurgy

60 per cent of steel production in Europe is via the integrated blast furnace/converter route and 40 per cent uses the electric furnace route. In the case of steel production via the so-called integrated route, molten hot metal is first produced in the blast furnace by reducing iron ore. A small amount of scrap is added to the hot metal and the mixture is then processed into steel in converters. The reduction process is mainly carried out by carbon in the form of carbon monoxide (CO), whereby CO2 is inevitably created as a reaction product. CO2 emissions via this route amount to 1,725 kg/tonne of crude steel. For process-related reasons, the alternative reduction agent hydrogen can only replace carbon in blast furnaces to a very limited extent, so that the resultant cut in CO2 emissions with the blast furnace process – through the injection of hydrogen or hydrogen-rich media such as oil, natural gas or coke oven gas – is also limited. CO2 emissions are also created during steel production using electric arc furnaces to melt scrap steel. In this case the CO2 emissions are mainly indirect because they correlate to the particular electricity generation mix and the resultant CO2 burden of the electricity – in Germany, the CO2 emissions of electric steel total about 400 kg/tonne crude steel.

Technological approaches for reducing CO2 emissions during steel production There are fundamentally four approaches that could contribute towards any considerable reduction of CO2 emissions in the steel production process. If one wants to retain modern integrated-route plants then end-of-pipe technologies would be necessary to prevent the CO2 in the process gases entering the atmosphere: i.e. capture of the CO2 behind the power station – after exploiting the process gases for electricity generation – and storage of the CO2 (CCS), or chemical conversion and use of the carbon (CCU). The other two approaches involve replacing the integrated route: the change from carbon metallurgy to hydrogen metallurgy during the reduction of iron ore requires a change in the process route from the blast furnace/converter to the direct reduction electric arc furnace (Carbon Direct Avoidance, CDA). Alternatively, the blast furnace/converter route could theoretically be partially or completely replaced by the pure scrap-based electric furnace route. The ratio of ironore-based to scrap-based process routes, however, is due to the limited occurrence of scrap steel as well as the demands made of the steel itself, e.g. the necessary purity of the steel. This fourth approach will therefore not be examined in further detail below. CO2 Capture and Storage (CCS) About 60 per cent of the process gases (coke oven gas, blast furnace top gas, and converter gas) are currently exploited in the power stations of integrated steel mills to generate

electricity and steam to enable them to cover their electricity requirements more sustainably, and achieve economically optimum operation that is as independent as possible. This use of steel mill gases means that all carbon carriers are emitted in the form of CO2. The CO2 in the waste gas of these cupola gas power stations could theoretically be captured for permanent disposal, as at a coal-driven power station. The advantage of this technological step lies in the lack of any impairment of the energy network at the integrated steel mill. But the investment and operating costs, as well as the expenditure on pipeline infrastructure, are considerable – and impossible for the steel industry to achieve economically. There is also a fundamental need for CCS technology to gain public acceptance and for the creation of a secure official approvals basis. Any CO2 capture requires additional energy and would thus lead to reduced effectiveness or lower efficiency. Carbon Capture and Usage (CCU) Most of the integrated steel mills in Germany and throughout Europe have been optimised in terms of energy. Further potentials for improving this process route regarding CO2 reduction are conceivable if, for example, the particular potentials from the various sectors are combined in an industrial alliance and consolidated in a cross-sector network. In order to achieve a reduction in CO2 emissions in the steel industry within such a cross-sector network, the export gases from integrated steel mills – together with the hydrogen from regenerative production (and, to a lesser extent, from its own production) – would be used for the production of chemicals such as methanol, ethanol, synthetic fuel or urea. There is, however, a long way to go until the corresponding synthesis processes are available on an industrial scale. Further considerable research activities will be necessary for the CCU process to become technically mature and economically feasible, and for it to offer large-scale applicability. Carbon Direct Avoidance (CDA) The use of hydrogen produced using CO2-free electricity could become one of the key future technologies for low-carbon steel production. Iron ores would not then be reduced in the blast furnace, but in a shaft furnace direct reduction plant with a considerable proportion of hydrogen, and the direct reduced iron thus produced would be converted to crude steel in an electric arc furnace using CO2-free electricity. The sensitivity of the water vapour in the reduction gas formed from reduction of the iron ores with H2 is high during hydrogen reduction. In the HyL process, in the infeed gas (hot gas introduced in the shaft furnace) up to 80% of the H2 content in the reduction gas is already at about 1,050°C. Inhibition of the reduction speed by water vapour at temperatures over 650°C is not completely understood. Major investments are required to change the process route, and the operating costs would also rise con-

Commitment for Steel · Annual Report 2017

Metallurgy

siderably due to the increased conversion costs. This path is uneconomical, or only economically feasible with state support. In addition, given the current market situation for natural gas and electricity (worsened in Germany, in particular, by burdens arising from the Renewable Energy Sources Act, EEG), hydrogen production via electrolysis, and iron ore reduction using natural gas or H2, would be uneconomical in Europe.

The 3rd ESTAD (European Steel Technology and Application Days) 2017 The 3rd ESTAD 2017 took place in Vienna on 26 - 29 June 2017. It was organised by ASMET in collaboration with the Steel Institute VDEh (as the initiator and creator of ESTAD), together with the sister associations AIM (Italy), Jernkontoret (Sweden) and A3M (France). The 9th ECCC (European Continuous Casting Conference) took place parallel to the ESTAD. Among others, Franz Rotter (President of ASMET), Dr. Wolfgang Eder (CEO of voestalpine) and Hans Jürgen Kerkhoff, (Chairman, Steel Institute VDEh and President German Steel Federation) spoke in the joint opening session.

Commitment for Steel · Annual Report 2017

A total of 421 presentations were given at the two events, covering the entire process chain of steel production from raw materials to steel grades and their application. The number of participants was satisfactory – about 1,100 from 35 countries. The participation of steel producers represented about one third of the total. 45 per cent of participants came from plant construction and the supplier industry, 16 per cent from research and universities. A trade fair with 49 plant constructors and suppliers took place alongside the conferences. The fiftieth trade fair stand was booked by the Steel Institute VDEh and also advertised the 4th ESTAD 2019 – which will take place as part of METEC, in Düsseldorf on 24 - 28 June 2019. The 3rd ESTAD and 9th ECCC in Vienna in June 2017 can be considered a success – with 1,100 participants, 50 exhibitors and 421 presentations.

Steel Institute VDEh · Lightweight construction

Every kilo counts – light construction with steel Light construction is a vital prerequisite for sustainable and competitive products. It is especially indispensable for vehicles or for components in machine and plant construction to conserve raw materials and energy – not only during production, but also during use. Light construction is an important field for the steel industry. New high-strength or density-reduced steels, steel-based composite materials, and modern processing technologies such as hot forming make it possible to create lighter, energy-saving and resource-efficient products.

The increasing use of high-strength steel grades in the chassis will also be stimulated by new processing technologies, because the particular optimum component solution can only be achieved with an intelligent combination of material-, production- and design-related light construction. Current examples include flat components made of multi-stage rolled and then press-hardened plates or profile components, whose final geometries are created through press hardening and hydroforming – such as the slender A-pillar that won the Steel Innovation Prize in 2015. Such process combinations still offer

ArcelorMittal

There is anyway no alternative to steel – for economic reasons. A kilogram of weight saved using high-strength steel in vehicle construction seldom costs more than EUR 5, even for complex structural assemblies. These light-construction costs may well amount to EUR 15 - 20 with aluminium, and even up to EUR 50 with CFC. This explains why more than 90 percent of a vehicle chassis in price-sensitive segments (such as the compact class) is made of steel.

Nevertheless, there will be a clear shift in material proportions in automotive construction during the next 15 years. It can be assumed that the proportion of simple steel will fall, while strong to ultra-high-strength steel grades will gain in importance. It has been predicted that the proportion of these materials will rise from the current average of 15 percent to up to 40 percent. In addition, non-grain-oriented electric steel will experience strong growth, and take on a key role for all-electric vehicle drives.

There is no way around high-strength steel grades for e-mobility.

Commitment for Steel · Annual Report 2017

Lightweight construction

considerable light-construction potentials because only a fraction of the theoretically conceivable variants have so far been investigated for practical implementation.

Salzgitter AG

Given the current debate, and the slow but steady growth in the proportion of electric drives on the road, it can be expected that ecological evaluations of vehicles will in future more strongly focus on the entire life cycle. It is precisely here that steel offers undisputed advantages. Of all the chassis materials used, steel is produced with the lowest energy input and, when the vehicle is scrapped, the steel is 100 percent recyclable without any downgrading. Steel-based construction using the broad bandwidth of available steel grades and product forms offers definite advantages. Because the use of steel does not involve any complicated separation of materials at the end of the service life and the steel products have not undergone any previous complex joining.

Light construction is considered a pillar of modern industrial policy. Initiatives to promote light-construction solutions are supported by universities, institutes and companies both at the federal level and in almost all Germany’s states. The Steel Institute VDEh is involved in many different ways in clearly pointing out the importance of steel for light construction. As is the Lightweight Forging Initiative which, together with the German Forging Industry Association, has been highlighting light-construction potentials for products made of steel bars and wire since 2013, using examples of current vehicle concepts. In Phase III, about 40 companies from Europe, Asia and the USA are actively investigating light-construction potentials in the powertrain, chassis and gears of hybrid vehicles and heavy trucks. The results of the study will be available in early summer 2018.

Innovative light-construction concepts made of steel – economical solutions for lighter vehicles.

Commitment for Steel · Annual Report 2017

Ra ner Rai neer Sc Schro h oeer e

Steel Institute VDEh · Lightweight construction

Commitment for Steel · Annual Report 2017

Industry 4.0

w rllds wor ddsstee t el / Gr te Greegggoor Scch chl hhläg äge geer

Digitalisation in the steel industry Digital technologies are increasingly changing our society, and thus also the economy. Digitalisation accelerates innovation cycles whilst requiring new forms of collaboration between companies. It also, however, increases competition. Machinery and plant for steel production are already highly automated. Networking will contribute further to improvements in quality and productivity, causing the virtual world of IT and the real world of steel production to become more closely intertwined. Production sites will become increasingly complex structures consisting of networked production plants, digital control systems and intelligent logistical processes. Financial and economic transactions will increasingly be processed via digital internet services. At the start of the year, the Committee for Plant Technology published its report “Steel 4.0 – An Interpretation of Industry 4.0 for the Steel Industry”, which describes current development trends in detail. Steel companies have meanwhile defined their individual paths to Industry 4.0 in strategy papers and guidelines. Those responsible for the digital transformation process have been appointed and given appropriate competences. There is not, however, any generally valid procedure for handling digitalisation. Each company must develop its individual solutions taking into account its own technical and economic conditions.

Industry 4.0 – the steel industry on the right course The steel industry is particularly suitable for implementing Industry 4.0 applications because of the special conditions it operates under, e.g. very long production chains distributed among several sites, batch and continuous processes, parallel single-part production, as well as heterogeneous IT and automation structures. In addition to the production processes – with differing speeds and levels of complexity, as well as their many parameters and variables – the individual production levels have many interfaces. The steel industry therefore faces very great challenges regarding future production systems and new technical developments. Research projects have initiated a range of important developments in recent years:

Commitment for Steel · Annual Report 2017

• complete material tracking (logically or via RFID technologies), • cross-process-level and lengthoriented data archiving, • the use of data mining for cause & effect analyses, • model-based and cross-processlevel optimisation of process chains, • improved communication paths along the entire production chain, and • the development of new paradigms to replace automation pyramids

The steel industry remains innovative The steel industry has already presented or implemented numerous digitalisation projects. An ‘intelligent’ coil, for example, can ensure decentralised self-optimisation of production steps. Every production step is accompanied by the product’s entire history,

in addition to information on the current state of the product. The ‘digital twin’ can also be used for exchanging data between producers and the customer sectors. Thus data is not only available on steel production, but also on the further processing steps – enabling further optimisation measures. For example, thyssenkrupp has networked its machine park in the Materials Division with a new digital platform that allows plants to communicate with one another. This is intended to predict the need for servicing in the form of predictive maintenance. In another project, Salzgitter Flachstahl is working intensively on the virtual optimisation of micro-alloyed steels in the hot rolling process. A simulation tool that is capable of predicting the internal structure of micro-alloyed steels, even after several forming and temperature steps, is being developed in a collaborative project. Other simulation programs will assist the engineering and optimi-

Steel Institute VDEh · Industry 4.0

sation of components for the automotive industry, or simulate joints in largediameter pipe.

Digitalisation leads to new research emphases Constantly increasing digitalisation requires ever-greater availability of the IT infrastructure. The quantities of incoming data can only be evaluated to corporate advantage when there is a sufficiently accurate digital representation of both process and product. Modelling and simulation are therefore constant challenges on the path to digital production. These are based on suitable descriptions for productionrelated objects, workpieces, components, assemblies, machines or plants, as well as processes and employees. It is necessary to make relevant information on these ‘objects’ accessible for processing in computers in the form of parameters, state variables and process variables. This, in turn, is the vital prerequisite for forecasts, trend analyses and optimisation strategies. The objectives are:

Focus on customer benefits The following developments are of particular importance from the point-ofview of the steel industry: • Cross-company coupling of engineering, production, service, logistics and sales functions along the value-creation chain. • The integration of information flows for energy management with those from production and quality data in order to achieve workswide optimisation of production regarding the main components of resource and energy consumption, minimisation of production costs, increased product quality, and the meeting of delivery periods. • Far-reaching solutions for tracking all kinds of intermediate and endproducts along the steel production chain need to be developed for complete implementation of the Internet of Things in the steel industry. • Integration and optimisation of the entire product creation process

(including a detailed description of interfaces). • Cross-process expansion of communication networks. In this way it will be possible to fulfil ever-increasing demands made of product quality, flexibility, and the processing capability of production. Our companies will become intelligent learning factories as products, processes, and production chains will have to be constantly analysed and optimised with the aim of making them more flexible, more effective and more efficient. The combination of data from different sources, e.g. production and process databases, will enable new evaluations and visualisations for employees, customers and partners. Continuous process and product optimisation, as well as feedback information from the market, will result in digital products that meet customer demands better and better. On this basis, new capabilities that will lead to greater flexibility, higher quality, and more efficiency will be created, particularly in production.

• the examination of critical process states, • the design and optimisation of processes and plant, and • regulation and control in real-time.

Current challenges

The following research emphases result from digitalisation and IT networking:

› adaptation of standards and legislation to the new techniques,

• the use of big data analytics for production processes and material behaviour, • the development of smart products and services, • security aspects and legal conditions, and • the demands made of the personnel and the workplace by Industry 4.0. This is the basis for creating new capabilities that lead to greater flexibility, higher quality and improved efficiency, particularly in production. The data captured by sensors and IT systems serves to adapt and optimise production processes – if possible in real-time – and predict process and product data.

Political and legal conditions require rapid development:

› efforts to strengthen and further develop network infrastructure, › activities in the work environment of Industry 4.0 must be adapted to the demands of digitalisation, › further education and training on the new forms, structures and content, › development of concepts for data and data traffic security.

Commitment for Steel · Annual Report 2017

Research

100 years Max-Planck-Institut für Eisenforschung This year, the Düsseldorf-based Max-Planck-Institut für Eisenforschung (MPIE) has been looking back on one hundred years of research. The MPIE, partly-funded by the Steel Institute VDEh, enjoys worldwide recognition for its basic research in metallic materials, and particularly steel. The scientific institute for Iron and Steel Research was founded on 19 June 1917 following negotiations between representatives of the German Association of Iron and Steel (Verein Deutscher Eisenhüttenleute – today the Steel Institute VDEh), the Kaiser Wilhelm Society (KWG) and the Prussian Ministry of Culture. Whereby it was intended that the industry, the KWG and the Prussian state would participate in it directly. An idea that is still a vivid example of strong connections between industry and science. While doing basic research the Institute nevertheless bears potential applications in mind.

Commitment for Steel · Annual Report 2017

Events during the jubilee year From January to October of this jubilee year of 2017, the Institute has enabled a broad public to gain impressions of its research work. In the ‘KopfSalat’ (HeadSalad) series of events, sought-after researchers from various scientific disciplines gave talks that were understandable for all. Topics from a variety of fields (such as medicine, or the natural and social sciences) were presented. Research work was vividly illustrated to children and youths with a ‘Pupils' University’ in March and a ‘Children’s Laboratory’ in September.

Frank Vinken, MPIE

Steel Institute VDEh · Research

“Steel is the basic material of the future” The peak of the jubilee celebrations took place on 6 October 2017 with a grand ceremony at the Areal Böhler in Düsseldorf. The material scientists of the MPIE celebrated the end of the jubilee year with more than 500 guests, including State Premier Armin Laschet, Parliamentary Secretary of State Thomas Rachel, and Düsseldorf's Lord Mayor Thomas Geisel.

Selected developments by the MaxPlanck-Institut für Eisenforschung (some in collaboration with industrial companies): › TRIPLEX light construction steels for vehicles

Professor Martin Stratmann, President of the Max Planck Society and former Director of the Institute, and Hans Jürgen Kerkhoff, Chairman of the Steel Institute VDEh, praised the research of the MPIE. “Germany is a strong industrial location founded on steel-intensive value-creation chains. In the digital age the success of steel products ‘Made in Germany’ is based on the innovative power of the companies and the research and development environment within which they work,” Kerkhoff said. Professor Dierk Raabe, who gave a welcoming address not only as Director of the MPIE but also as host of the official ceremony, pinted out that: “Scientific excellence is not inherited – it is newly developed every day.”

› Corrosion-resistant TWIP steel

The guests of honour included Annette Storsberg, Secretary of State at the NRW Ministry for Culture and Science, and the Principals of Bochum, Duisburg-Essen and Düsseldorf Universities, with whom the MPIE maintains a closely knit research network.

› Intelligent corrosion-protection

The Max Planck researchers look forward to the challenges of the next hundred years!

› Duplex TRIP steel › Cold-formable structural steels › Iron-aluminium, titanium-boron, and titanium-aluminium alloys › Rail steels for tracks for high-speed lines and railway traffic with heavy axle loads

› Further development of Kelvin probe for corrosion measurements › DAMASK material simulation software

The jubilee year had a lot to offer – even for the very young. For example a Children’s Laboratory and a Pupils University

The social part of the ceremony offered a lot of time for a get-together of former and active colleagues and friends of the Institute.

Katja Velmans, MPIE

Yasmin Ahmed Salem, MPIE

› Phase angle measurement circuitry

“Steel is the basic material for everything that we will undertake in the future. And here the Institute – located near steel-producing sites and in collaboration with the state's universities, plays a key role,” according to NRW State Premier Armin Laschet.

Commitment for Steel · Annual Report 2017

Priorities

German Steel Federation 2017 In 2017, political conditions again had a decisive influence on the steel industry’s prospects. Political developments in Berlin and Brussels, as well as the work of the Steel Global Capacity Forum, for example, were therefore followed closely. The EU is currently amending its trade defence instruments. In addition, reform of the EU Emissions Trading Scheme for the period after 2020 will soon be completed. The steel industry in Germany is intensively involved in both processes.

Steel Communication Initiative, the cross-media "Stahl trägt uns alle" campaign was initiated in order to emphasise the importance of the steel industry as the basis for strong industrial value-creation chains. The importance of steel in the digital transformation of the industrial business model was highlighted in a study carried out by IW Consult on the ‘Potentials of steel’s digital value-creation networks’. It also raises the profile of steel innovations in the area of Industry 4.0.

Political debate in Germany has revolved around elections to the Bundestag and in several of the states including North Rhine-Westphalia, the Saarland and Lower Saxony – where the steel industry is strong. The German Steel Federation has therefore raised the core concerns of the steel industry in Germany in the political debate in order to restore the status of industrial value creation.

The steel industry in Germany is well aware of its responsibility for sustainable production and products. This is demonstrated by its wide-ranging contributions towards a low-CO2 economy, underlined in a publically available brochure. The updated Sustainability Report will also be presented this year.

The industry’s challenges and prospects were also topics at this year’s Berlin Steel Dialogue in May 2017, with Economic Affairs Minister Brigitte Zypries as the guest speaker and a discussion panel made up of high-ranking representatives of the parliamentary parties in the Bundestag. As part of the

In addition to these priorities, our work in 2017 has also involved numerous other topics of relevance to our sector. Monitoring distortions on the raw material markets; Germany’s Federal Transport Plan for 2030; and national implementation of the Directive on Industrial Emissions are just a few examples that demonstrate the impressive depth and breadth of the topics discussed by the German Steel Federation.

Election year 2017: ensuring political debate includes our core concerns

Energy & climate policies: structuring emissions trading efficiently and cost-neutrally

EU resource policy: uniform legislation and legal interpretation

Steel’s contribution to a CO2-neutral economy

Broadening argumentation in the Steel Communication Initiative

National steel policy & international conditions

Global Steel Capacity Forum/ structural problems in China

Publicising steel-related innovations

Digitalisation in the valuecreation chains – making clear the indispensability of the steel industry

Stakeholder dialogues

Assuring and implementing effective trade defence

Monitoring distortions on the raw material markets

Commitment for Steel · Annual Report 2017

Priorities

The Steel Institute VDEh 2017 Core topics regarding steel production processes included: further efficiency increases and the reduction of energy consumption, the potentials of CCU and CCS, the reduction of iron ore with hydrogen instead of coke and coal, the creation of energy-efficiency networks, and the implementation of digitalisation and Industry 4.0. Another very important area for steel, the further development of steel qualities, was documented on the basis of work on the qualification of high-strength steels, the standardisation of cyclical inspections of electric strip, and the light-construction potentials of steels for massive forming.

The Standardisation strategic working group takes a uniform approach towards steel standardisation in Germany. The working group continued its activities during 2017, and projects of immediate relevance to Germany’s steel-producing industry were identified and tracked. These included standardisation projects on energy management systems, plant and machine construction, and quality management systems. With the aim of encouraging up-and-coming engineers to join the steel industry, the Steel Institute VDEh analysed requirements and the current supply by means of talks with universities in feedback with the works.

The Steel Research Agenda was reworked and is now in its third edition. It forms the basis for negotiations on new funding programmes and for initiating research projects.

Potentials of CCU and CCS

The Electric Steel Energy Efficiency Network

The Steel Research Agenda: influencing funding programmes and deriving projects

Qualification of high-strength steels with improved toughness

Standardisation of cyclic inspection of electric strip

Light-construction potentials of steels for massive forming

Organisation and implementation of conferences: ESTAD, SCT and Materials Week

Technical aspects of Industry 4.0

Health and safety at work in the steel industry

Implementation of the standardisation strategy

Intensified university contacts/ analysis of promotion of up-and-coming engineers

Process technology in iron & steel production/ potentials of iron ore reduction with hydrogen

Commitment for Steel · Annual Report 2017

Events

16 - 21.01.2017: The German Steel Federation presented steelrelated developments for the construction industry with a joint stand at the world’s leading trade fair for the sector: BAU in Munich.

Dirk Heckmann

Steel Highlights 2017

16.05.2017: “We need fair access to international markets and fair competitive conditions,” said guest speaker Brigitte Zypries, Germany’s Minister for Economic Affairs and Energy, at the Berlin Steel Dialogue – underlining the position of the steel industry in Germany. The atrium of the Deutsche Bank played host to about 300 guests.

18 - 22.06.2017: About 500 visitors from 21 countries were interested in the varied programme of presentations on topics affecting the automotive and supplier industry at the 5th International Conference on Steels in Cars and Trucks (SCT2017).

09.11.2016: About 3,000 visitors used the STAHL 2016 annual event for detailed discussions on steel-related technical and economic topics.

Commitment for Steel · Annual Report 2017

TEMA AG

Dirk Heckmann

16.02.2017: Hans Jürgen Kerkhoff, President of the German Steel Federation and Chairman of the Steel Institute VDEh, used a speech at the 21st Handelsblatt Annual Conference Steel Market in Düsseldorf to warn the sector about political risks despite its apparent economic stabilisation.

Events

27 - 29.09.2017: The Steel Institute VDEh and the German Materials Society (DGM) organised Materials Week 2017 in Dresden. The event focused on additive production and light construction.

25 - 29.06.2017: The European Steel Technologies and Application Days (ESTAD), co-organised by the Steel Institute VDEh, took place in Vienna. About 1,100 participants found out about a wide variety of steel production and application topics in 350 presentations.

26.0 6. 2017: The steel industry in Germany used an open letter to political decision-makers in Brussels and Berlin to make clear that the current plans on the EU Emissions Trading Scheme, involving billions in additional costs, threaten the very existence of the sector.

07 - 8.07.2017: The steel industry in Germany used a poster c a m p a i g n a n d n ews p a p e r adverts to call for the participants of the G20 summit in Hamburg to create conditions for a free and fair world market in steel.

Information EU-Emissionsrechtehandel

Juni 2017

Europäischer Emissionsrechtehandel Umweltfreundlicher Stahl sichert die Zukunft Wir brauchen eine nachhaltige Klimapolitik – jetzt! An die politischen Entscheider in Brüssel und Berlin industrie, die andere Hersteller in der Welt nicht zu tragen haben. Stähle werden von diesen aber oftmals zu schlechteren Umweltbedingungen hergestellt und massiv in den europäischen Markt exportiert. Das hilft nicht bei der weltweiten CO2-Reduktion und widerspricht dem Geist des Pariser Klimaabkommens.

Stahl ist Basis des industriellen Lebens und Wohlstands in Deutschland. Stahl trägt unsere wirtschaftliche Entwicklung und sorgt für Innovation und Fortschritt. Nur mit Stahl gelingen Klimaschutz, Energiewende und die Erneuerung der Infrastruktur. Der Wohlstand in Deutschland hängt von industriell tief verﬂochtenen Wertschöpfungsketten ab, an deren Anfang die Stahlindustrie steht. Bricht sie weg, ist die wirtschaftliche Basis Deutschlands und Europas gefährdet. Genau das droht aus Brüssel.

Die Zukunft von Stahl in Deutschland und Europa entscheidet sich in diesen Wochen. Bleibt unser Stahl wettbewerbsfähig oder wird die Innovationsfähigkeit einer gesamten Branche dem EU-Emissionsrechtehandel geopfert? Wir appellieren an die Bundesregierung, für die Interessen des Industriestandortes Deutschland und ein wirtschaftlich starkes Europa einzutreten. Der Emissionsrechtehandel muss so ausgestaltet werden, dass wirksame Anreize zum Klimaschutz mit wettbewerbsfähigen Rahmenbedingungen für die Industrie verbunden werden. Er darf nicht zu milliardenschweren Zusatzkosten für die Stahlindustrie in Deutschland führen. Das würde die starken industriellen Wertschöpfungsketten gefährden – und mit ihnen zahlreiche Arbeitsplätze.

Die aktuellen Pläne zum europäischen Emissionsrechtehandel ab 2021 nehmen keine Rücksicht auf die industrielle Wirklichkeit – technische Grenzen und wirtschaftliche Zusammenhänge. Stattdessen verbauen sie Planungs- und Investitionsperspektiven und sind damit für die Stahlindustrie in Deutschland und Europa existenzbedrohend. Die notwendigen ﬁnanziellen Mit tel für Innovationen und Forschung, auch um völlig neue Wege bei der CO2-Reduzierung zu beschreiten, würden den Unternehmen massiv entzogen. Denn die Politik in Brüssel will sogar die efﬁzientesten Anlagen mit hohen CO2-Kosten belasten. Dies wären Kosten für die heimische Stahl-

Jetzt ist die Zeit, Weichen für die Zukunft richtig zu stellen! Für die Stahlindustrie in Deutschland Dr. Gerhard Erdmann Mitglied der Geschäftsführung Hüttenwerke Krupp Mannesmann GmbH

Dr. Heinrich Hiesinger Vorsitzender des Vorstands thyssenkrupp AG

Frank Koch Vorsitzender der Geschäftsführung Georgsmarienhütte Holding GmbH

Dr. Oliver Richard Picht Vorsitzender des Vorstands Outokumpu Nirosta GmbH

Prof. Dr. Heinz Jörg Fuhrmann Vorsitzender des Vorstands Salzgitter AG Stahl und Technologie

Clemens Iller Chief Executive Ofﬁcer SCHMOLZ + BICKENBACH AG

Fred Metzken Sprecher der Vorstände AG der Dillinger Hüttenwerke und Saarstahl AG

Frank Schulz Vorsitzender der Geschäftsführung ArcelorMittal Germany Holding GmbH

Andreas J. Goss Vorsitzender des Vorstands thyssenkrupp Steel Europe AG Vorsitzender Arbeitgeberverband Stahl e. V.

Hans Jürgen Kerkhoff Präsident Wirtschaftsvereinigung Stahl

Dr. Michael Müller Vorsitzender der Geschäftsführung SHS - Stahl-Holding-Saar GmbH & Co. KGaA

Geert Van Poelvoorde Chief Executive Ofﬁcer ArcelorMittal Europe - Flat Products Präsident EUROFER

Offener Brief an die Politik, erschienen am 26.06.2017 in deutschen Tageszeitungen

16.08.2017: The German Steel Federation presented the results of the IW Consult study on the “Potentials of the Digital Steel Value-Creation Network”. The main finding: the already major importance of the steel industry for value creation in Germany will increase further in the wake of the digital transformation.

Commitment for Steel · Annual Report 2017

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