Nippon Steel takes one step forward, two steps back in US
As part of Nippon Steel’s takeover, U. S. Steel has trumpeted a new USD 1.9 billion investment in direct reduction of iron ore (DRI) at Big River Steel Works, Arkansas, to feed its existing electric arc furnace (EAF). While the news is a potential bright spot of progress in a mammoth acquisition, it falls short of being a truly “green transition” (it’s going to use fossil gas as a reductant with no announced plans for a transition to green hydrogen).
That is, until you put it in context with Nippon Steel’s other recent investment plans: USD 3.1 billion for Gary Works, Indiana has committed, of which USD 350 million will be spent relining Blast Furnace (BF) 14. The facility is one of the largest polluters in the US, and with a 90% utilisation rate and 20 year life extension, it would produce more than 100 MtCO2 of cumulative CO2 emissions over its extended lifetime.
Production of lower-emissions iron is essential to steel decarbonisation. So while the boost to Big River could be a welcome bit of progress if green hydrogen plans are made, local communities are questioning why they are seemingly second class citizens since Nippon Steel is taking the opposite approach at Gary Works.
The Indiana University Environmental Resilience Institute and 5 Lakes Energy mapped several practical pathways to transition Northwest Indiana steel mills to modern steelmaking technologies, estimating costs to be roughly USD 1.5–2.2 billion per facility for partial modernisation, and USD 2.8–3.6 billion for full modernisation. This is well within the scope of recent capital investments, and would save USD 75 million in healthcare costs annually, along with hundreds of respiratory emergency room visits and tens of thousands of lost work and school days each year.
Investing in clean production at Gary Works facilities could see Nippon Steel drive the creation of an estimated 59,000 new jobs, while cutting the site’s ironmaking emissions by over 4 million tonnes per year (4.1Mt). Furthermore, shifting from coal-based blast furnaces to production driven by green hydrogen at the site could halve cancer-causing air pollutants in the area.
The decision to reline BF14 leaves the communities with continued decline and severe health impacts, while a new generation of clean technology is rolled out in the southern state.
Choosing to keep coal going at Gary Works is sadly in line with many of Nippon Steel recent decisions to keep or expand its coal dependence. With all of the problems and continued decline that entails, the people of Indiana could be forgiven for thinking that Nippon Steel is squeezing the last drops of life out of their communities before abandoning them.
Nippon Steel has to start making better decisions. That would not only mean allocating part of the USD 3.1 billion earmarked for Gary Works to a DRI transformation so the people of Northwest Indiana have hope for a cleaner and future-fit industry, but planning a proper transformation out of coal in its global operations so it can responsibly become “the best steelmaker” it wants to be.
