According to SSAB's European director, Raahe lost the giant investment because of its better competitiveness. Ex-minister Lintilä wondered why the company's management's old speeches didn't work.
I'm dragging the steel mill lost the race for SSAB's giant investment. With an investment of 4.5 billion euros, the Luleja steel mill will be the first plant to produce fossil-free steel. At the same time, the transformation investment at the Raahe factory moved into the distant future.
The news told by the Swedish-Finnish steel giant on Tuesday morning may have come as a surprise to some, because even in the fall, the company's CEO Martin Lindqvist told In an interview with Kauppalehtithat Raahe was ahead.
The environmental permit was processed quickly in Finland, electricity transmission connections and availability to Raahe had been secured, the investment had already been prepared and planned well in advance.
in Sweden however, care was taken to ensure that Lulaja eventually pulls a longer course. In February, the Swedish state electricity company Vattenfall promised the factory an electricity line required for fossil-free production. There is no environmental permit yet, but it is promised to come by the end of this year.
Minister of Industry of the previous government, current Member of Parliament Mika Lintiläk too (center) wondered about the matter in the message service X. Lintilä wrote: “The management of SSAB told me a couple of years ago that the investment will go to the destination whose approval is in order first. Something has happened since then.”
HS could not reach Lintilä for comment on Tuesday.
Finland's previous government put a lot of effort into it. SSAB's shares were taken under the direct ownership control of the Government. In the company's ownership, however, the power relations are clear.
LKAB, owned by the Swedish state, uses 16 percent of the voting power, the Finnish state about eight percent.
The decision the background shows that steel production has been a state project in Sweden, which has been developed for years. The state-owned companies Vattenfall and the mining company LKAB have developed iron hydrogen reduction in the joint venture Hybrit with SSAB.
There is even a hydrogen storage facility under construction in the old LKAB mine in Lulea.
The investment in the Luleja steel mill has not been supported by state funds, but the development of hydrogen reduction technology has been supported in Sweden with large sums.
Water reduction replaces the biggest emission source in steel production, i.e. the blast furnace. In a blast furnace, oxygen is removed from the iron ore using coke. Huge amounts of carbon dioxide are produced as a byproduct. The production of one kilogram of steel produces 1.6 kilograms of carbon dioxide.
For hydrogen reduction, oxygen is removed from iron ore with hydrogen and water is produced as a byproduct. This is how an iron mushroom is created. If the hydrogen has been produced in an electrolyzer with emission-free electricity, hydrogen reduction has low emissions.
LKAB is building a plant in Jällivaara that uses hydrogen reduction to produce sponge iron. In Lulea, sponge iron is melted together with recycled steel in an electric arc furnace and processed into steel products.
Also The Raahe factory would have used Jällivaara iron sponge and recycled steel as raw material for steel. In other words, the first stage of steel production in blast furnaces would be completely omitted there.
Head of SSAB's European division Olavi Huhtala says that the competitive situation between the placements was really genuine. In the light of external factors, it seemed for a long time that Raahe had an advantage. Its Luulaja scribbled shut.
In the end, the fact that the Raahe factory's competitiveness with the current production is better influenced the decision in a slightly crooked way. In any case, a couple of billions should have been invested in the current production in Lulea.
“We avoid two billion investment in Luleå. In Sweden, steel blanks have also been transported 900 kilometers to Borlänge for further processing. In Finland, it's all done in Raahe,” he says.
In the Jätti investment, further processing of steel, such as a rolling mill, will also be built in Lulea. According to Huhtala, the most important customer base for fossil-free steel is currently the automotive industry, and that can also be found in Sweden.
On the other hand, according to Huhtala, the ongoing strikes have nothing to do with the decision.
“This project has been in the works for months. The events of three weeks have no effect on that,” says Huhtala.
of SSAB the announcement promises that Raahe's transition to fossil-free will be next. This is what Huhtala also says. “In any case, Raahe will be done.”
CEO Lindqvist did not agree to evaluate the schedule at all during the telephone press conference. Luulaja is supposed to be completed in 2028 and be in full production a year later.
“There has been talk that by 2030, but then we will look at it according to the resources and the experiences gained from the Luluja project,” he said.
Currently, the company is already in the process of converting the smaller factory in Oxelösund.
I'm dragging the change of the factory and its schedule also have wider national significance.
Chairman of the Finnish Environmental Panel Jyri Seppälän according to Raahe, the significance of Raahe is really big in the emission reduction goals. In 2021, Raahe's share of Finland's carbon dioxide emissions was about nine percent. In the second year, it was around seven percent.
The steel mill belongs to the so-called emission trading sector, whose emissions are not counted when looking at the Finnish state's EU emissions commitments. But according to Seppälä, achieving Finland's own carbon neutrality goal by 2035 will be difficult if Raahe is not renovated by then.
“It's not impossible, but more difficult.”
According to Seppälä, the life of a globally small steel mill would in any case become cramped in the next decade, when the distribution of emission allowances is constantly tightened and their prices will rise.
It increases the price of the steel produced and makes it difficult to compete on the international market.
Technology industry manager responsible for sustainable growth Helena Soimakallio regrets SSAB's decision. The importance of the Raahe factory in the technology industry's own low-carbon road map was also huge.
Soimakallio says that he believed for a long time that the investment was coming to Raahe. However, the overall assessment had then led to a different outcome.
“I felt great hope when the environmental permits were obtained, but it wasn't enough. Even in Sweden, the government is very passionate about the green transition and related investments,” he says.
On the other hand, Soimakallio thinks that it might be a good thing that technology and the green steel market are tested in Sweden first.
“There are always risks associated with introducing new technology. Now they are avoided in Finland. The competitiveness of green steel also depends on how customers are willing to pay for added value,” he says.
SSAB's Huhtala is trying to convince the same. We will learn from Lulea and then I will be able to implement Raahe as well as possible.
“However, let's remember that this is a good day for the company.”
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