Hello Friends,
My name is Ayush Agrawal. People on Twitter fondly have come to know me as The Microcap Investor, Mi or @imicrocap. I am a SEBI registered RA. My Registration number is INH000013013.
This is my first post on ValuePickr. Though I have been writing for my private substack, The Microcap Minute for over 7 months now.
Today, I would like to discuss about John Cockerill, a Case Study on Decarbonisation of Steel. This study was released originally by me on 6th July 2023 on my private substack, I could not then post on ValuePickr as I was anonymous, wanted to be defined by content and intent rather than titles, and as per Terms of Service of the Forum, being an anonymous account without a title, my application here was rejected thrice.
Overview
John Cockerill India, formerly known as CMI FPE Limited, is a global leader in designing, manufacturing, and commissioning equipment for the steel industry. With a strong presence worldwide, they offer customized solutions, prioritize employee well-being, and provide growth opportunities through training and international exposure.
Carbon Emission: Biggest Challenge
Carbon emissions from steel production pose a significant challenge due to their contribution to climate change and global warming. The traditional steelmaking process, known as the integrated route or blast furnace route, relies on coal and coke as energy sources and reducing agents. This leads to substantial carbon dioxide (CO2) emissions.
In 2018, direct emissions from iron and steel production in India reached approximately 270 MT of carbon dioxide equivalent (MTCO2e), comprising about 9% of the country’s total greenhouse gas emissions. Without intervention, emissions in the sector are projected to rise to around 563 MTCO2e by 2030, with the sector’s share in national emissions growing to 14%. These figures underscore the urgent need for emission reduction efforts within the steel industry.
In order to combat carbon emissions in the steel industry effectively, a combination of technological advancements, policy support, research and development, and international collaboration is necessary. Transitioning to cleaner and more sustainable steelmaking methods is crucial for achieving global climate goals and ensuring a low-carbon future.
Solution: Steel Decarbonisation
Director of NISST, Sh R.K Paul, highlighted the importance of decarbonization in the secondary steel sector and urged industries to actively engage with NISST and avail its services.
Steel decarbonization refers to the comprehensive efforts aimed at reducing or eliminating carbon emissions associated with the entire lifecycle of steel production. It encompasses innovative technologies, processes, and strategies that target the reduction of greenhouse gas emissions throughout the steel value chain.
These approaches include adopting renewable energy sources, utilizing low-carbon raw materials, optimizing production processes, implementing carbon capture and storage, and promoting steel recycling and circular economy practices.
Steel decarbonization is crucial in addressing climate change and achieving sustainability goals, as the steel industry is a significant contributor to global emissions of CO2. It requires collaboration among industry stakeholders, policymakers, and researchers to drive the transition towards a low-carbon steel sector.
Steel Decarbonisation Phases
To achieve its net-zero 2070 target, India must prioritize decarbonization in the steel sector. As the sector is a significant contributor to the country’s emissions, any substantial progress towards a low-carbon future requires addressing emissions from steel production. Implementing measures to reduce emissions and enhance energy efficiency in the sector will play a crucial role in aligning India with its long-term climate goals.
Apart from domestic imperatives, decarbonizing the steel sector is essential in light of the evolving international regulatory landscape. The European Union (EU), for instance, is set to implement the Carbon Border Adjustment Mechanism (CBAM) by 2026. This mechanism will charge a tariff on carbon emissions associated with steel imports, equivalent to the carbon price paid by European producers.
Given that the emissions intensity of Indian steel is higher than the global average, Indian exports to the EU could face a significant disadvantage. Under a CBAM scenario, Indian steel exports to the EU may plummet by as much as 58% in 2030 compared to a no-CBAM baseline. Hence, decarbonization efforts are vital to maintaining competitiveness in the global steel market.
Green Hydrogen as a Decarbonization Lever
In the pursuit of decarbonizing the steel sector, green hydrogen emerges as a promising solution. John Cockerill, a leading supplier of electrolysers globally, has been actively involved in advancing the use of green hydrogen in various initiatives and partnerships. The company secured an order in 2020 for 25 MW of electrolysers to be supplied to Taiwan, reinforcing its position as a major player in the energy transition.
These large-scale electrolysers, powered by decarbonized electricity from renewable sources, will convert water into ultra-pure hydrogen. By partially relying on renewable electricity, the electrolysers sold to Taiwan will help avoid approximately 20,000 tons of CO2 emissions per year.
John Cockerill’s engagement in the hydrogen field extends beyond the Taiwanese market. The company has established partnerships with research teams in France and is participating in the H2GridLab project in Belgium, validating the injection of green hydrogen into the gas grid. Additionally, collaborations with Carmeuse and Engie focus on a carbon capture and utilization project that combines CO2 from a lime kiln with green hydrogen to produce e-methane. These initiatives highlight the versatility and potential of green hydrogen as a decarbonization tool across various sectors.
Active Carbon Regeneration
Active carbon regeneration is another significant application of John Cockerill’s multiple hearth furnaces. These furnaces not only enable efficient sludge treatment but also facilitate the regeneration of activated carbon utilized in air and water treatment processes. This particular application has gained significant popularity. In 2020, the company worked on an installation, comprising a furnace, a cyclone, and a post-combustion chamber, to be delivered to Chemviron in Belgium. This installation has the capacity to recycle 1.5 tons of activated carbon per hour and is scheduled to commence operations in 2022.
The appeal of multiple hearth furnaces extends to China as well, where John Cockerill has signed a partnership agreement with the Qyept engineering office. As a result, the company has already received its first order from China, indicating the growing interest and demand for these furnaces in the region. This development underscores the versatility and effectiveness of John Cockerill’s multiple hearth furnaces in addressing diverse industrial needs and contributing to sustainable resource management.
Recent Updates (Up Until July 2023)
As per FY23 Annual Report, John Cockerill has secured significant orders from top Indian steelmakers like TATA, AMNS, JSW, and Jindal, highlighting the company’s strong reputation and customer trust. Projects with these partners, such as high-performance steel processing lines, are progressing well. 2. The company has invested in research and development, focusing on areas such as automotive industry solutions and electrical steel for the growing e-mobility market. Eco-friendly technologies like Fluidized Bed Acid Regeneration Plants (FB ARPs) are also offered to reduce environmental footprints. 3. Michael Kotas, part of the John Cockerill Group since 2018, has been appointed as the new Managing Director of JCIL. He served as the Company Manager at John Cockerill UVK for three years before moving to Cockerill Engineering Beijing in July 2021, where he held the position of General Manager. Prior to joining the John Cockerill Group, Kotas gained valuable experience working with renowned companies such as Danieli Group, Meinerzhagen, ArcelorMittal, and Sidstahl
As per rating update by CARE RATINGS as on March 17, 2023, John had shown improvement in the order book position on account of a large order of Arcelor Mittal Nippon Steel India worth Rs. 1069 crores, John Cockerill started to book revenue from the same in Q3 of FY23. Till December 22 JCIL received Rs. 158 crores towards advances and Rs. 102 crores towards basic design. Further, in May/Jun it was expected to receive Rs. 100 crores towards detailed design. JCIL has executed orders of TATA Steel and material has been delivered, currently the project is in installation and commissioning stage. Once these orders are executed JCIL has orders from domestic customers in pipeline, providing revenue visibility over medium term.
Face to Face - STEELWORLD
As per Vol. 29 No. 4, April 2023 of STEELWORLD, John Cockerill Industry, a trusted and preferred partner for steel companies, is actively working towards becoming a leader in providing high-grade electrical steel for the growing market of electric cars and electronic devices. They have a strong reputation for their products, engineering expertise, and manufacturing capabilities. Recognizing the increasing demand for electrical steel with the rise of electric vehicles and other electronic devices, John Cockerill has been focusing on developing technologies and manufacturing processes to produce efficient and high-quality electrical steel.
In India, John Cockerill Industry has been winning numerous orders from steel companies, positioning themselves as a preferred partner for steel producers serving the e-mobility industry. They aim to help the steel industry in India modernize, improve efficiency, and protect the environment. To further support their commitment to sustainability, John Cockerill Industry has recently launched a new division called Industrial Project Services (IPS). IPS specializes in providing a range of services to help organizations build sustainable facilities.
One particular area of focus for IPS is the construction of H2 Gigafactories, which are dedicated plants for producing electrolysers to generate carbon-free hydrogen. Hydrogen is recognized as a clean and renewable energy source. In the steel industry, the process of Direct Iron Reduction (DRI) requires a significant amount of energy. By utilizing green hydrogen, the environmental impact can be reduced. IPS takes care of all stages of engineering and project management, starting from the initial idea and continuing through to the final production facility, ensuring the successful construction of these gigafactories.
By venturing into the construction of H2 Gigafactories and offering sustainable facilities through IPS, John Cockerill Industry is further demonstrating its commitment to environmental responsibility and supporting the steel industry in its transition towards more efficient and sustainable practices.
Initiatives By The Ministry of Steel in India
- Steel Scrap Recycling Policy, 2019 enhances the availability of domestically generated scrap to reduce the consumption of coal in steel making.
- Ministry of New and Renewable Energy (MNRE) has announced National Green Hydrogen Mission for green hydrogen production and usage. The steel sector has also been made a stakeholder in the Mission.
- Motor Vehicles (Registration and Functions of Vehicles Scrapping Facility) Rules September 2021, shall increase availability of scrap in the steel sector.
- National Solar Mission launched by MNRE in January 2010 promotes the use of solar energy and also helps reduce the emission of steel industry.
- Perform, Achieve and Trade (PAT) scheme, under National Mission for Enhanced Energy Efficiency, incentivises steel industry to reduce energy consumption.
- The steel sector has adopted the Best Available Technologies (BAT) available globally, in the modernization & expansions projects.
- Japan’s New Energy and Industrial Technology Development Organization (NEDO) Model Projects for Energy Efficiency Improvement have been implemented in steel plants
Summary
John Cockerill India, formerly known as CMI FPE Limited, is a global leader in designing, manufacturing, and commissioning equipment for the steel industry. They prioritize employee well-being and provide growth opportunities through training and international exposure. However, the steel industry faces a significant challenge in carbon emissions, with traditional steelmaking processes contributing to substantial CO2 emissions.
To combat carbon emissions, steel decarbonization is essential. It involves adopting renewable energy sources, utilizing low-carbon raw materials, optimizing production processes, implementing carbon capture and storage, and promoting steel recycling and circular economy practices. John Cockerill actively engages in decarbonization efforts and has been involved in advancing the use of green hydrogen, a promising solution in the energy transition.
John Cockerill’s expertise in electrolysers has positioned them as a major player in the green hydrogen sector. They have secured significant orders globally, contributing to the reduction of CO2 emissions. Their involvement extends beyond Taiwan, with partnerships and collaborations validating the injection of green hydrogen into the gas grid and exploring carbon capture and utilization projects. Active carbon regeneration is another application of John Cockerill’s furnaces, facilitating efficient sludge treatment and regeneration of activated carbon.
Recent updates highlight John Cockerill’s strong reputation and customer trust, as they secure orders from top Indian steelmakers and invest in research and development. They focus on areas such as automotive industry solutions and electrical steel for the growing e-mobility market. Eco-friendly technologies like Fluidized Bed Acid Regeneration Plants (FB ARPs) are offered to reduce environmental footprints. Michael Kotas, with extensive industry experience, has been appointed as the new Managing Director of JCIL.
In addition, John Cockerill Industry is actively working towards becoming a leader in providing high-grade electrical steel for the growing market of electric cars and electronic devices. They aim to help the steel industry in India modernize, improve efficiency, and protect the environment. Their new division, Industrial Project Services (IPS), specializes in constructing H2 Gigafactories, dedicated plants for producing electrolysers to generate carbon-free hydrogen. IPS supports the steel industry’s transition towards more efficient and sustainable practices.
The initiatives by the Ministry of Steel in India, such as the Steel Scrap Recycling Policy and the National Green Hydrogen Mission, align with John Cockerill’s focus on reducing coal consumption and promoting green hydrogen production and usage in the steel sector. These initiatives contribute to the overall decarbonization efforts in the industry.
Overall, John Cockerill India is actively driving decarbonization in the steel industry through their technological advancements, partnerships, and commitment to sustainability. Their expertise, reputation, and solutions position them as a trusted and preferred partner for steel companies, supporting the industry’s transition towards a low-carbon future.
References:
- Press Information Bureau
- Vol. 29 No. 4, April 2023 of STEELWORLD
- Various Annual Report
- Rating update by CARE RATINGS as on March 17, 2023
Disclosures & Disclaimers
“Investment in securities market are subject to market risks. Read all the related documents carefully before investing.”
“Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.”
“The securities quoted are for illustration only and are not recommendatory.”
“I did not trade in any of the companies mentioned in my post thirty days before its release. Neither do I intend to take any positions in the companies mentioned in this post during the subsequent five trading days.”
“This should not be construed as a recommendation to buy or sell securities or be considered investment advice or a research report.”
“Before making any investment decisions about the companies mentioned, investors must consult with their investment advisor or undertake due diligence on their own accord. I do not assume any responsibility for any financial gains or losses that may result from any investments made based on the information contained herein.”
“All information presented is already public and errors may happen because of human oversight.”
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Ayush Agrawal
Research Analyst
SEBI Registration No. INH000013013
First Floor, B.P. Complex, Baldeobagh, Jabalpur, Madhya Pradesh, 482002
Email: themicrocapinvestor@gmail.com
Number: +91 9425412028
