Sweden has been investing in the development of green steel production under state leadership for years. That's why it was natural that the giant investment went to Sweden, writes HS financial editor Anni Lassila.
Swedish-Finnish steel giant SSAB said on Tuesday that it will invest 4.5 billion euros to convert the Luulajan steel mill into a factory producing so-called green steel. The company's Raahen factory also competed for the investment.
It is about big things in both countries. Lulea's transformation reduces Sweden's carbon dioxide emissions by up to seven percent. Raahe's share of Finland's emissions is even larger, around nine percent in good production years. The Raahe plant produces almost as much carbon dioxide emissions as all passenger cars in Finland.
From the point of view of the earth, it is funny to compete for the reduction of emissions, because from the point of view of the atmosphere, it doesn't matter where the emissions are reduced. However, Finland has promised to be carbon dioxide neutral by 2035.
A lot was counted on Raahe in Finland. If Raahe's emissions can't be eliminated, other, perhaps more expensive, measures must be found instead. That's why the previous government took ownership of SSAB under the direct control of the Prime Minister's Office.
It it did not help. The billion investment will go to Sweden. It wasn't very surprising.
In Sweden, government-led investments have been made for years in the development of fossil-free steel production and its prerequisites. The state-owned energy company Vattenfall and the mining giant LKAB together with SSAB have developed iron ore hydroreduction technology, which is to be used in Lulea.
In Lulea it is even built in the old Storage space in LKAB's mine shaft for hydrogen, which can be produced with cheap wind electricity and stored for the steel mill.
LKAB holds 16 percent of the voting power in SSAB. The Finnish state controls eight percent. So it was “characteristic” in every way that the factory investment went to Sweden.
Eventually the news may not be as depressing as it first seems. Of course, losing billions of investment euros stings. The much-advertised avalanche of green industrial investments has so far remained a very shaky promise for Finland.
However, Raahe is next on SSAB's investment list. If the green steel market develops as expected, Raahe's turn will also come before long.
According to the company, the reason for Luulaja's victory was also that Raahe makes traditional steel more profitably than Luulaja, because the equipment is newer. Lulea would have demanded a billion-dollar renovation in the next few years anyway.
Raahella so there are better conditions to compete in the traditional steel market. That's what Raahe does with slightly fewer emissions than many less developed factories in the world.
The technology for producing fossil-free iron, i.e. based on hydrogen reduction, is still in the development phase on a large industrial scale. You can learn from Lulea, and when Raahe's time comes, you will already know the technique.
The schedule of Raahe's investment is of course also affected by the development of the green steel market. In turn, it is affected by political regulation, which is always accompanied by uncertainty.
Correction 2.4. 12:50 p.m.: Contrary to what was written in the article, the emissions from the Raahe steel factory do not affect Finland's EU obligations, because the factory belongs to the emissions trading sector. Luulaja is SSAB's second investment in fossil-free steel. The first was Oxelösund.
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