13 Feb 2024

Steel Giant Invests in Envigas for Green Transition

Envigas, based in Bureå in Northern Sweden and Outokumpu have come together in an exciting partnership to drive the green transition forward. The Finnish steel giant has ambitious sustainability goals and is investing 9.9 million euros in Envigas, which is at the forefront of biocarbon development.

- When building a new industry from scratch, you need to team up with the right partners, and that's why this feels like an important milestone, says Lars-Gunnar Almryd, CEO of Envigas.

Envigas has been working on building and scaling up its operations in Bureå for several years now, while simultaneously conducting projects in the metallurgical industry, where they have tested various batches with stakeholders. The technology is based on pyrolysis, where biomass is converted into biochar through heating without oxygen. Biochar can play a crucial role in reducing carbon dioxide emissions, making it particularly interesting in the steel industry.

- Biochar will be a significant part of the green transition. Hydrogen is all well and good, but it is not a solution for Outokumpu because hydrogen cannot be used as a reducing agent in their ferrochrome smelting due to the high temperatures required. And it is chromium that makes steel stainless. In that case, biochar is the right tool for them and a crucial component in their efforts to reduce carbon dioxide emissions, says Lars-Gunnar.

Lars-Gunnar Almryd is the CEO of Envigas.

"Leading Technology"

In 2023, Outokumpu has been working on a roadmap to build up the supply of biomass-based raw materials for the future, such as biochar and biocokes. It consists of a combination of opportunities:

• Internal production.
• External procurement.
• Partnerships, actively supporting and engaging in initiatives already working on establishing biochar production.

- They are working on all three areas and also decided to invest in Envigas as it is seen as the most favorable approach in the near term. They had identified us as the company in the industry with the most prominent technology for biochar production, which feels great, says Lars-Gunnar.

In November, the investment in Envigas was completed, with a value of 9.9 million euros to acquire a 20 percent ownership stake. The partnership involves a joint effort to develop biochar technology and reduce carbon dioxide emissions. Through collaboration, both companies will benefit from each other's expertise and resources to accelerate development.

- It is very wise of Outokumpu. When building a new industry, different actors in the value chain need to take a risk and actively engage for it to happen, and they want to take on the role of an active partner, says Lars-Gunnar.

Significant Upscaling

The partnership between Envigas and Outokumpu represents a significant milestone in the journey towards a more sustainable future for the steel industry.

However, it is not just the corporate partnership that is intriguing, but also the process behind it and the potential advancements that can be made in biochar technology to meet the enormous needs of the steel industry.

- We have conducted significant tests on a smaller scale with batch sizes of around 100 tons, clearly demonstrating our capacity. But to meet the growing market demand, expected to reach 350,000 tons by 2030, we must step up to a higher level, says Lars-Gunnar.

One of the challenges the company faces is finding more partnerships with key players to enable the scaling up of operations. Offtake agreements, where a customer commits to purchasing a product for a period of time, play a central role for Envigas.

- A key component for financing the upscaling is off-take agreements, which means you have a customer who can pay for the biochar in the future. This reduces the risk on our investment in this, says Lars-Gunnar.

Establishing a Robust Supply Chain

In this regard, Envigas has found an ideal partner in Outokumpu, whose need for biochar in its operations creates a stable demand.

- They have high ambitions and a goal to reduce their carbon footprint by 42 percent by 2030 (reference 2016), and biochar is an important component of that, says Lars-Gunnar.

For Outokumpu, it's not only about reducing its carbon footprint but also about securing a stable and sustainable supply chain for biochar.

- When it comes to production and consumption, it's crucial to create a stable and cost-effective logistics chain, including packaging, delivery, and reception. Transporting large quantities requires different strategies and techniques, and it is something we actively plan to explore and develop together. When it comes to driving large projects, Outokumpu has a lot to contribute, says Lars-Gunnar.

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