The steel industry is in the midst of a significant transformation as it strives towards decarbonization.

Esteemed for its global economic importance, this sector also grapples with some of the most pressing challenges of our era.

The steel production process, infamous for its high energy consumption and considerable carbon dioxide emissions, stands as a primary contributor to climate change and global warming.

According to a recent report, the Net-Zero Industry Tracker, released by the World Economic Forum, iron and steel production alone account for 8% of the world's carbon emissions.

Acknowledging this urgent reality, steel manufacturers have embarked on a digital transformation journey aimed at reducing carbon footprints while simultaneously modernizing their operations to enhance efficiency, profitability, and competitiveness.

Nevertheless, this transition to a greener paradigm is rife with challenges. Modernization necessitates adapting infrastructure to accommodate emerging technologies, upskilling employees to meet new job demands, and allocating resources commensurate with the scale of these changes.

Successfully navigating these challenges demands robust strategies and decisive actions. Only by doing so can the industry hope to realise its aspirations for a sustainable and prosperous future.

The goal is more sustainability

In the pursuit of reducing carbon emissions, the steel industry has embraced various initiatives, including the adoption of green hydrogen as a substitute for fossil fuels like coal in the iron production process.

Major steel companies in Europe, China, and the United States have led advanced projects resulting in significant reductions in carbon emissions during production processes.

Another key strategy employed by steel manufacturers to mitigate environmental impact is carbon capture and storage (CCS). By capturing CO2 emissions generated during steel production and storing them underground, companies can drastically reduce their carbon footprint.

Electric arc furnaces (EAF) play a pivotal role in reducing environmental impact. Unlike coal-fired furnaces, EAFs utilise electricity to melt scrap steel and other recycled materials, resulting in a significant reduction in carbon emissions.

According to the report 'Metalmorphosis: How decarbonisation is transforming the iron and steel Industry', compiled by the market research firm Wood Mackenzie, global steel production utilising EAF is projected to rise from the current 28% to nearly 50% by 2050, necessitating an investment exceeding $130 billion.

Build the future

Technology plays a pivotal role as a catalyst for these emerging production methods. Tools like the Internet of Things, artificial intelligence, blockchain, data analytics, and robotics are vital not only for achieving sustainability but also for cost reduction and enhancing production efficiency.

Steel mills integrate artificial intelligence to optimise crucial processes like furnace loading and production scheduling. Remote monitoring systems, using Internet of Things sensors, enable real-time control and predictive maintenance, reducing downtime.

Additive manufacturing or 3D printing of intricate metal parts is gaining traction. Computer simulations aid in designing products and processes without the necessity for physical prototypes. Advanced robotics and automation are supplanting hazardous manual tasks.

In essence, these digital disruptions enhance efficiency, sustainability, and customisation in steel production.

A range of solutions

In order to undertake their digital transformation process, there are innovative technological solutions available in the market. These solutions enable steel companies to transition towards cleaner, more efficient, and sustainable production, thereby enhancing their competitiveness in an increasingly environmentally responsible market.

RISE with SAP, with its diverse range of solutions, is likely the ideal tool for steel companies, as it can accelerate their digital transformation, enhance their competitiveness, and promote more sustainable practices.

In addition to selecting a suitable solution package, it is crucial for steel manufacturers to embark on the path to modernisation with the support of a technology partner experienced in implementations.

Within United VARs, the world's largest network of SAP business partners, there are over 50 technology companies highly qualified to undertake projects of this nature. These companies boast teams of skilled professionals with extensive experience.

Towards a green future

The profound transformation underway in the steel industry demands strategic vision, significant economic investment, and a steadfast commitment to sustainability from major producers. The race to reinvent the steel industry is already underway. Decarbonisation has transitioned from being an option to an urgent necessity in a pivotal sector of the global economy. Companies at the forefront of this green revolution will not only aid in mitigating global warming but will also carve out their path to leadership in an increasingly demanding and competitive world.

About United VARs

United VARs is a global alliance of SAP implementation partners and solution providers for the mid-market. With over 70 members in 100 countries, the alliance serves all types of SAP rollouts and integrations across the world. The organization provides businesses with local expertise ‘on the ground’ charged at local rates. All United VARs members work together as one team to provide a more personalized service than other global systems integrators can, and one that is better suited to mid-market budgets.


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