A secure and reliable supply of energy is critical to ensure continuity of steel production over the coming winter, when natural gas risks being in short supply.

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Creating confidence through energy security

A secure and reliable supply of energy is critical to ensure continuity of steel production over the coming winter, when natural gas risks being in short supply. At Ovako, we have put measures in place to provide this. In turn, our customers can have greater confidence that they will receive consignments of steel at their factory gates.

Typically, a steel producer needs 1.6 megawatt-hours (MWh) of energy to make one tonne of black bar. That energy has become business critical. Having converted much of our production to run on electrical power over the years, we are significantly decoupled from the natural gas market. We source around 0.9 MWh of the required energy as zero-emission Nordic electricity, generated from hydropower, nuclear and wind.Until we convert our steel

heating furnaces to hydrogen, the remaining 0.7 MWh requires fossil fuels. We have agreements in place to cover this, for our mills in Sweden and at Imatra in Finland. For the latter, the Finnish government has helped us secure capacity that has become available as other consumers have switched to other energy sources. This will fuel our production over the winter.

Working together for energy security

Having secured our energy supply, we still have the capability to add capacity available for customers who are able to act quickly and who would to secure

additional volumes or backup supplies to keep their processes running.

We are here to help and can deliver. Energy security is a huge challenge this year for everyone in the steel industry in Europe, but together we can do it.

Long-term energy resilience

In the longer term, converting our steel heating furnaces to fossil-free hydrogen will give us greater self-sufficiency. By installing hydrogen electrolysers at our mills, we will decouple steel production from the gas markets. While we made the investment to cut our carbon footprint, the energy crisis has shown that hydrogen can also provide value in terms of energy resilience for steel production and transport.

Thank you for subscribing to Strength of Steel. Please invite any of your colleagues to join us and we look forward to continuing to bring you news of interesting aspects of the steel business we are all in together.

We are also happy to receive questions and will do our very best to address them in upcoming newsletters.

All the best,

Disa Wolff
Acting Chief Financial Officer
Ovako

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