Decarbonization in Latin America: Act now or wait?

The steel industry is undergoing a profound transformation. While decarbonization is undoubtedly the most critical long-term challenge, it is just one of many pressing issues today. Amid these uncertainties, steel producers – both in Latin America and globally – face a pivotal question: Act now or wait?

In this transformative period, identifying the right pathway is essential. The decision must account not only for investment volumes but also for regional factors, market dynamics, raw material availability, and utility costs. These considerations are key to crafting a strategy that balances sustainability with economic viability.

The green transformation of the steel industry hinges on substantial investments. However, significant progress can also be achieved through operational optimizations that reduce both CO₂ emissions and costs. The convergence of automation, electrification, and digitalization is accelerating this transformation by improving energy efficiency, minimizing waste, maximizing recycling, and enhancing overall performance:

• Automation improves process control, reduces energy losses, and optimizes equipment performance.
• Electrification replaces fossil fuel-based systems with cleaner alternatives, directly curbing emissions.
• Digitalization leverages real-time monitoring, predictive analytics, and data-driven decision-making to enhance resource utilization and operational efficiency.

At SMS group, Viridis Energy & Sustainability Suite applies these principles by integrating real-time data collection, advanced analytics, and process optimization to support decarbonization in industrial environments. The solutions focus on enhancing energy efficiency by identifying performance gaps, detecting leaks, optimizing resource distribution, and forecasting energy demand. Additionally, they offer tools for tracking, managing, and reporting emissions, thus providing transparency in energy use and emissions tracking. This empowers companies to take proactive steps in reducing their carbon footprint. By combining automation, electrification, and digital intelligence, these tools enable companies to take proactive steps toward sustainability without disrupting ongoing operations.

Another standout solution is the Paul Wurth BFXpert, an integrated level 2 process control system for blast furnace operations. By optimizing fuel consumption, BFXpert delivers measurable reductions in CO₂ emissions. A recent partnership with Ternium Brazil underscores its potential: By adopting BFXpert, Ternium achieved a fuel rate reduction of over 5 kg/t of hot metal, translating a daily reduction of 130 t of CO₂ emissions for a production scale of 8,000 t/day.

SMS group has a team of specialists covering the overall production process, developing advanced tools to evaluate and compare production pathways, optimizing the carbon footprint, operational costs (OPEX), and electricity consumption. The combination of these factors enables customers to conduct a tailored assessment of possible adaptations and/or evolutions in the production route. With direct access to SMS group’s experts, clients benefit from seamless collaboration and technical expertise.

Latin America offers unique advantages compared to other regions. Brazil, Argentina, and Chile are particularly well placed to accelerate the transition to low-carbon steel production.

Brazil’s energy matrix is predominantly renewable, with almost 90% of its electricity generated from clean sources. Investments in wind and solar energy are expanding this capacity annually. Similarly, Argentina generates 36% of its electricity from hydroelectric, wind, and solar sources – outpacing major industrial nations such as China, Japan, and the United States.

The substantial availability of renewable energy, especially in Brazil, combined with existing infrastructure, is considerably beneficial in terms of the capacity to produce green hydrogen at a competitive cost. The hydrogen-based reduction of iron ore significantly reduces greenhouse gas (GHG) emissions.

SMS group has been building strategic partnerships, such as with Eletrobras, the largest electric utility company in Brazil and a leader in the generation, transmission, and distribution of electricity. The goal is to accelerate the application of green hydrogen production for industries, particularly mining and steelmaking. Partnerships with state governments, embassies, and development agencies such as CIT SENAI in Minas Gerais and GIZ (German Agency for International Cooperation) further support these efforts.

In addition to renewable energy, Latin America benefits from significant biomass availability. The substitution of fossil fuels with carbon-neutral biomass, such as charcoal, is a viable alternative in Brazil. Various players in the steel sector invest in production units for charcoal derived from sustainable eucalyptus cultivation. SMS group in Brazil has experience in designing pulverized charcoal injection installations in small blast furnaces, an interesting alternative aimed at reducing costs and the carbon footprint. There are other applications where biomass can be used for bioelectricity generation and biochar production, contributing to carbon emission reductions.

Private sector initiatives are also gaining momentum. For example, Vale, Eletrobras, and Porto do Açu are jointly developing decarbonization hubs, while ArcelorMittal is investing in renewable energy and green hydrogen projects at the Pecém complex in Ceará, Brazil.

In this complex regional and geopolitical context, Brazil has also made progress in carbon market regulation, creating a favorable environment for investment in sustainable technologies. Recently, the Federal Senate in Brazil approved a bill regulating the carbon credit market in Brazil. This legal framework establishes the foundations for a regulated carbon market, like the one currently operating in the European Union, encouraging companies to adopt more sustainable practices and contributing to lower greenhouse gas emissions. 

All these conditions present a favorable scenario for decarbonized technologies, like the Paul Wurth EASyMelt, which relies on the availability of industrial gases in a first stage and takes a gradual approach to move progressively to green hydrogen and a renewable electricity supply.

Latin America is uniquely positioned to lead the global decarbonization of the metals industry. Its abundant renewable energy resources, green hydrogen potential, and biomass availability provide an unparalleled foundation for sustainable steel production. The region’s progress in renewable energy investments and carbon market regulation further solidifies its position.

The question remains: Act now or wait? By acting now, companies can capitalize on these advantages, reduce emissions, and secure long-term economic and environmental benefits. Waiting, on the other hand, risks missing out on these opportunities.

SMS group is the ideal partner for this journey. With a comprehensive suite of digital solutions, technologies, and technical expertise, SMS group offers tailored support to help customers in Latin America achieve their decarbonization goals. The time to act is now – together, we can pave the way for a cleaner, more sustainable metals industry in Latin America.