All this is created by refining the ore into steel. It is a dirty process that makes the steel industry one of Sweden’s, and the world’s, largest sources of carbon dioxide. For those who want fossil-free end products, there is no other way than to develop a technology for fossil-free steel, and with its clean electricity and ore-rich bedrock, there are few places where the conditions can be better to do so than in Sweden. That was also the ambition 2016 when LKAB, Vattenfall and SSAB SSAB A +4.06% Today’s development came together in the joint initiative Hybrit, with the goal of producing fossil-free steel from 2026. Their demonstration plant in Luleå has become almost as big a tourist attraction as hiking in the mountains or dog sledding in the northern lights, with visits from European commissioners and American ministers as recently as last week. The vision is admirable. But in the details surrounding the project, it is possible to discern a picture as dirty as the coal in the steel industry’s blast furnaces. For Hybritactors are far from alone in the market for a new generation of steel. The billions have absolutely rained down on the green steel in recent years. In 2021, venture capitalist Harald Mix ventured into green steel production through the company H2 Green Steel, backed by, among others, Mercedes Benz and the Wallenberg and Stenbeck families, with a planned steel plant in Boden. However, there is a significant difference between the two projects. H2 Green Steel is a private company with Vargas as the largest owner. Hybrit is an almost fully governmental project, and does not consist of any actors. LKAB and Vattenfall are market giants in the mining industry and the energy sector, respectively. Both have the Swedish state as sole owner. The largest owner in SSAB is in turn LKAB with 16 percent of the votes. It is an unusually powerful trio that has united in a common interest in fossil-free steel. That alone should set alarm bells ringing, not least in light of the conflict currently underway in the north. As Di reported on in several articles, the atmosphere between LKAB and H2 Green Steel is ice cold. Increasingly, it appears that the state giants are using their strong position in the market to curb competition. A lot is going smoothly for H2 Green Steel. The money and contracts are trickling in and on Thursday the company received an environmental permit for its steel mill in record time. But there are also obstacles. Despite the fact that Sweden relies on iron ore, and that LKAB accounts for a whopping 85 percent of European production, the state giant refuses to deliver to the private steel company. It threatens the vision of green steel production in Boden from 2025. If LKAB is to be believed, it is because the Malmbanan is full to the breaking point, there is simply no room for additional trains delivering ore. The point is that one should not rely on LKAB, which has a direct vested interest in a competing business to H2 Green Steel both through SSAB and Hybrit. It is, for example, LKAB that submitted the permit application for Hybrit’s demonstration facility in Gällivare. However, if you listen to what the Swedish Transport Administration says about the Malmbanan, it sounds different. H2 Green Steel’s demand corresponds to one ore train a day between Kiruna and Boden, and analyzes carried out show that there is capacity on the line. To Di, the Swedish Transport Administration said last year that there will be room for one or even two more ore trains on one of the routes identified as a bottleneck, between Kiruna and Gällivare. Of course, an upgrade of the Malmbanan is necessary regardless, but that is no reason to shut out new players today. Instead of delivering ore to Boden, LKAB wants to continue exporting 30 percent of its production to the Middle East and North Africa, something that is reasonably both more expensive and has a greater environmental impact. That a local company cannot take part of the ore in Norrbotten, and is instead in negotiations to buy from countries outside Europe, is not only shameful for Sweden as a mining nation. Nor can it be explained in any other way than through the state companies’ completeness of power. LKAB of course claims that their actions have nothing to do with SSAB. But the same pattern is also visible at Vattenfall. In an advertising campaign, the company has recently produced a face spray of emissions from the Hybrit plant to show how clean it is. It does not appear to be a coincidence that the two companies that H2 Green Steel has signed electricity contracts with are Fortum, which has the Finnish state as its main owner, and Statkraft, which is owned by the Norwegian state. The picture that emerges in the north is not pretty. What is best for the state is not always what is best for state-owned companies, for example a diversity of steel producers and private actors taking part of the risk instead of the taxpayers. There is a conflict here, where the state, through its ownership, sanctions the companies’ actions. How can one take political talk about change seriously if the state’s companies stifle competition? Is it possible to have such a concentration of power as Hybrit implies in a free market? H2 Green Steel’s rail access and ore deliveries from mines in Norrbotten need a solution. It is also in LKAB’s, Vattenfall’s and SSAB’s interest. Ultimately, it is the trust of the state-owned companies that is at stake.
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