17 October 2024 – Malben Engineering, an established Level 4 BBBEE supplier of stampings and welding components to local vehicle original equipment manufacturers (OEMs) for over five decades, is the first South African automotive component manufacturer to trial ‘green’, low-carbon steel. This distinguishes the company as a pioneering industry trailblazer, in the ongoing drive towards long-term environmental solutions, a key focus area for the automotive sector.
Speaking at the milestone handover of the first-ever green steel coil at the company’s Nigel manufacturing facility, Operational Director Luca Smargiasso points out that the increased use of green steel – and the decarbonisation of the local steel supply chain – will be game-changers for the steel and automotive sectors in the years to come.
The green steel coil delivered to Malben Engineering was produced by leading German steel and technology group Salzgitter AG as part of its SALCOS (Salzgitter Low Carbon Steelmaking) programme, and imported via local value-adding steel processor and merchant, Allied Steelrode.
Salzgitter Mannesmann International GmbH facilitates the supply of high-end steel coils from Salzgitter Flachstahl GmbH to core industries such as the automotive sector in overseas markets. The company also sees it as their responsibility to make decarbonised steel available to their international partners, including a calculation tool, to ensure the Co2 footprint traceability and transparency of products and logistics supplied.
Following Germany’s commitment to becoming carbon neutral by 2045 after signing the 2015 Paris Treaty with the European Union, Salzgitter AG achieved ‘first-mover’ status amongst its European counterparts, investing €1 billion of public funds and 1.3 billion of its own funds to become that country’s first steel mill to invest in a green plant, to supply the aggressively growing demand for green steel.
A ‘green’ partnership forged in steel
The three companies – Malben Engineering, Allied Steelrode and Salzgitter AG – have formed a strongly aligned, synergistic partnership over the past few years: “Malben Engineering was founded on a passion for supplying customers with a world-class product, through its agile decision-making and authentic, people-centric values – all of which are still hallmarks of the company today. In a nutshell, we strive to maintain our values while embracing innovation and new technologies. In Allied Steelrode and Salzgitter AG, we have found supply chain partners with a similar ethos and commitment,” Smargiasso comments.
“As pointed out in the Salzgitter AG strategy, decarbonisation of value chains will only succeed by joining forces. Our partnership with Allied Steelrode and Malben Engineering is a great example of exactly this,” explains local Salzgitter AG agent Shane Barnard of United Steel.
The partnership has worked tirelessly over the past 15 months, with its efforts culminating in the importation and processing of the first-ever green steel coil on the African continent.
This will afford all three partners the opportunity to evaluate the mechanical and chemical performance of green steel, to compare all the quality-related aspects – from formability to welding, and the identification of potential corrosion issues during transportation – with that of conventional ‘grey’ steel.
Smargiasso believes that any discrepancies are unlikely, as the steel-making process rather than the end-product is what changes, in order to reduce carbon emissions. According to Barnard, emissions vary from 2.2 to 2.4 tonnes of CO² emitted for every tonne of grey steel produced versus 0.48 tonnes of CO² for each tonne of green steel.
Another sustainability ‘first’
Smargiasso goes on to describe the decision to use green steel as “very serendipitous” given Malben Engineering’s increased focus on environmental sustainability and supply chain management.
The company recently scored an impressive 98% in an international Responsible Supply Chain Initiative (RSCI) supply chain audit initiated by Ford – another ‘first’ in South Africa.
Smargiasso believes that global demand for green steel will grow considerably, given the growth trajectory for steel consumption in the future. A recent study shows global steel usage increasing from 1,800 million tonnes per annum in 2020 to 2,800 million tonnes per annum by 2050. Barnard, however, believes that the growth will be far more aggressive than this:
“This exponential growth – factoring in the differences in CO² emissions between conventional steel and green steel – will fast track the uptake in demand for green steel,” he observes.
Furthermore, Barnard believes that the current price gap between grey and green steel will close in the near future, given the prevailing regulation landscape – a view firmly supported by Lee-Ann Geyser, Chief Marketing Officer (Automotive and Contracts) from Allied Steelrode:
“In Europe, which is South Africa’s main automotive trading partner, moves to tax consumers for goods – such as vehicles which have high carbon footprints – will ultimately negate any cost difference, and eventually see green steel being the more cost-effective solution,” Geyser comments.
“Companies such as ours are at the forefront not only of understanding this change, but ensuring that we are a market leader in the usage of green steel, which in the future will be as sought after as white gold,” Smargiasso maintains.
Sustainable sourcing is here
“The road to sustainability has been shorter than initially expected! When we started looking at green steel, it was as a concept only – expected sometime during the next generation only. To the contrary, it has developed so fast – and we see the rising global demand for green steel impacting the entire supply chain,” comments Geyser.
She says local automotive (and other) exporters should view the inevitable carbon taxes and border taxes proactively: “This is no longer just a moral or environmental choice, but a strategic business decision, which incorporates sustainability mandates and corporate sustainability goals. International regulations are pushing all manufacturers, including OEMs, to actively seek more sustainable manufacturing materials.”
Geyser recommends early market engagement going forward – with the Malben Engineering, Allied Steelrode and Salzgitter AG partnership as industry forerunners: “As a ‘green steel partnership’, starting now puts us ahead of everyone else. Yes, the price of green steel is currently higher than conventional steel – however collectively, we decided to absorb this, so we could introduce green steel into the local supply chain. We know this will ultimately be beneficial for us and our customers.”
NAACAM commendation
Renai Moothilal, CEO of NAACAM (National Association of Automotive Component and Allied Manufacturers), the custodian and voice of the South African automotive component industry, explains that the South African Automotive Masterplan 2035 (SAAM35) creates a future vision for the industry, setting specific development targets which include greater localisation, of which decarbonisation and sustainable sourcing have become important deciding factors.
“All local OEMs have global commitments to reduce supply chain emissions in the next two decades. Carbon emissions will become an important element in sourcing decisions. First movers and early adopters such as Malben Engineering should be well placed when these decisions are made – as their emission reduction strategies have been tried and tested, removing risk from sourcing. Beyond this, early adoption also demonstrates a level of proactiveness from the supplier to de-risk their own, as well as the OEM’s market strategies,” he adds.
“We commend Malben for procuring and trialling the automotive component sector’s first green steel. The company has demonstrated a firm commitment to technology innovation, investment and a new production approach – while successfully growing partnerships with its own supply and raw material chains. NAACAM is proud of our association with Malben Engineering!” Moothilal concludes.
