[Ferro-Alloys.com]

 

Southeast Asia’s steel industry faces a long journey to decarbonization and the shift to producing “green steel,” according to Sheren Omega, head of sustainability at one of Indonesia’s leading steelmakers, Gunung Raja Paksi (GRP)

 

In an interview, Omega said that the awareness of ESG (environmental, social and corporate governance) initiatives is relatively low in Southeast Asia’s steel industry.

 

But GRP, which is based in West Java and produces more than 2.2 million tonnes of long and flat steel annually, believes that sustainability should be a fundamental aspect of every business model, rather than an afterthought.

 

“Translating ESG strategies into tangible business goals is still a challenge for many companies in Southeast Asia,” Omega said. “To tackle this issue, we believe it is essential to increase awareness of the importance of low-carbon products and sustainable production methods [throughout] our supply chain – suppliers, stakeholders and customers.

 

“By aligning everyone towards this objective, we can collectively make a real impact on decarbonization,” she added.

 

GRP had recognized even before the Covid-19 pandemic the growing importance of ESG issues to investors and their local communities, and since then had been taking steps to reduce its greenhouse gas emissions.

 

To achieve its goal of reducing greenhouse gas emissions across the entire supply chain, GRP has been working closely with its suppliers. The company is promoting transparency with its suppliers when it comes to sharing carbon emission data and methods of sourcing raw materials. By collaborating with its suppliers in such a manner, GRP is looking towards reducing carbon emissions across different stages of the supply chain. Omega said:

 

We want to ensure our suppliers meet our code of conduct for sustainable and responsible sourcing. As such, we have clear evaluation processes in place to ensure they are supplying materials in a sustainable manner.

 

Collaboration is the key

The global energy crisis has prompted greater collaboration between steelmakers and national governments.

 

“There has been a significant increase in the commitment to green energy, as demonstrated by the high priority given to green hydrogen at events such as the 27th Conference of the Parties (COP27) and the B20 and G20 summits,” Omega said.

 

The COP meetings are where the world’s nations meet to agree on sustainable environmental targets for the planet, while the G20 forum for international economic cooperation brings together the governments of the world’s leading economies – Argentina, Australia, Brazil, Canada, China, Germany, France, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the United States and the European Union – to discuss financial and socio-economic issues, and its subsidiary B20 forum brings together businesses to discuss similar issues.

 

And Omega said that, for green energy to become more accessible to all consumers, industry and governments must work together.

 

This involves finding ways to reduce the cost of green energy, because the current high prices may deter consumers from making the switch to [sustainable] energy sources.

 

To this end, GRP has been collaborating with private and government stakeholders to speed up the industry’s journey to “net zero“ carbon emissions. This includes signing Memorandums of Understanding with the Indonesian Chamber of Commerce to guide its net zero strategies and with global green energy company Fortescue Future Industries to explore the use of green hydrogen and green ammonia technologies.

 

GRP has also partnered with TotalEnergies, a multi-energy company, in a large-scale solar panel installation project and has installed solar panels at its operations in West Cikarang.

 

And the company is also working closely with the Indonesian Iron & Steel Industry Association (IISIA) to discuss decarbonization strategies for the country’s steel industry.

 

“Collaboration can come in the form of knowledge sharing and sharing best practices and insights with government players. GRP is also looking forward to seeing increased availability of funding for technology investment. At the B20 summit, many financial institutions started to announce their plans for green funding and green financing,” Omega said.

 

Regional decarbonization, sustainable development

GRP has always used electric-arc furnace (EAF) technology in its manufacturing processes, which has significantly lower greenhouse gas emissions than the traditional blast furnaces used in steelmaking elsewhere. And as part of its commitment to reducing waste and promoting the circular economy, it has been mainly using recycled scrap as feed for its EAFs.

 

As part of its drive to greener steel, in 2022, GRP commissioned a more energy-efficient light sections mill that not only increases its steel production capacity to meet the rising domestic demand for steel but reduces its energy consumption in the process.

 

Other steps GRP has taken to enhance its reputation as a responsible manufacturer include obtaining certification to support data transparency in its sustainability initiatives.

 

To monitor its progress, the company also adheres to the greenhouse gas (GHG) protocol for Scope 1 & 2 emissions in its production of steel products.

 

“The next step for GRP is to verify our internal inventory data with a reliable third party [and we are] collaborating with a recognized ESG ratings agency to establish a first-year baseline. And we are optimistic that achieving a higher ESG rating will help the company expand its reach to new markets” Omega said.

 

“During the B20 summit, energy transition was a hot topic, especially in Indonesia where the country is gearing up toward making the transition to cleaner energy sources faster [as part of] its Net Zero [ambitions].

 

“GRP is committed to supporting Indonesia’s Net Zero goal and to contribute towards a greener future for the country,” she added.