Behind the RIGI-backed project that will produce ‘green’ steel

In northeast Argentina, a new US$300 million steelworks is being built in the riverside town of San Nicolás de los Arroyos. The facility, spearheaded by Sidersa, aims to produce 360,000 tonnes of lower-emission steel annually, beginning operations in late 2027. This project, backed by Argentina's Large Investment Incentive Regime (RIGI), marks a significant shift in the country's steelmaking tradition, which has long been linked to the industry's environmental impact.

Sidersa, an Argentine company specializing in steel marketing and distribution, plans to create over 300 direct jobs and 3,500 indirect jobs in the region. The company describes the plant as a symbol of "green" steel that the world will want and Argentina can offer. With the steel sector responsible for 7-9% of global CO2 emissions, transitioning to greener processes has become crucial for the industry and policymakers.

The steel production process at Sidersa's San Nicolás plant utilizes electric arc furnaces, which reduce emissions by around 70% compared to traditional methods involving iron ore in coal-fired blast furnaces. However, the sustainability of this approach depends on the source of the electricity and the necessary scrap metal. Using an electric furnace only as clean as the grid that powers it, and the availability of scrap metal is crucial.

Argentina's electric grid is currently dominated by gas-fired thermal power stations and at capacity, making it challenging for Sidersa to power the facility directly from renewable sources. Additionally, the global scrap metal market is facing shortages and export restrictions, posing another challenge for the plant's sustainability. Sidersa aims to draw up a supply plan that takes into account both large suppliers and collaboration with local authorities to establish collection points for scrap metals.