Ternium's Global Sustainability Senior Director explains the current state of the company's Decarbonization roadmap, the recently updated target released in the Sustainability Report, and how the Brazilian flat-steel producer Usiminas is being integrated into Ternium's global approach.
What is Ternium's current situation regarding its commitment to CO2 reduction by 2030?
According to the plan announced in 2021, we are still expecting to see improvements in our indicators as our main projects will only begin to show their impact in 2025 and beyond. We can mention, for example, the initiative to increase the use of scrap in Brazil, which is currently being executed, and we'll see substantial results next year with an increase from 11% to 16% in the scrap share. The new steel mill we are building in Pesquería, Mexico, will be the most sustainable in Latin America, with the lowest carbon footprint for automotive steel, scheduled to start operations in 2026. In Argentina, we are building a 99-MW capacity wind farm that will begin operations by the end of 2024 and replace up to 90% of Scope 2 emissions produced by all Ternium Argentina's operations.
However, we are facing some economic constraints as well as other issues. For example, we have noticed that sustainable charcoal for the partial replacement of coal is far more expensive considering actual potential suppliers in the region, which undermines our competitiveness. The high costs of carbon storage and the lack of technical regulation or incentives (like those in the US) are pushing this initiative to post-2030.
How will the new Pesquería steel plant impact Ternium's sustainability goals?
The new 2.6 million-ton capacity steel mill in Pesquería is based on natural gas as a reduction agent for a DRI module equipped with carbon capture technology to enable us to market CO2 as a co-product. The plant will also be fitted with a state-of-the-art Consteel® EAF which preheats the scrap. These and other energy efficiency initiatives will be a game-changer in our path toward decarbonization. As announced, we expect the new plant to be operational by the second half of 2026, running on 50% renewable energy. This plant will offer steel that meets our customers' decarbonization expectations while "insourcing" steel production that today is being produced or purchased from third parties using the blast furnace route with a higher carbon footprint (avg. 2.33 ton CO2e/ton steel).
What role does Usiminas play in this process, and how has its integration into Ternium been so far?
Given the recent integration, we have yet to incorporate Usiminas into Ternium's scope in the current Sustainability Report. We plan to do so by 2025, as 2024 will be a full year.
However, we are working together on a common strategy for the energy transition to achieve the objectives outlined for the decarbonization process. Given this integration, we decided first to update Ternium's target according to the GHG Protocol Methodology and set an expanded boundary ranging from crude steel up to hot-rolled steel, as well as strengthen our approach to Scope 3 emissions. This includes the upstream emission from raw materials and steel purchased from third parties. We also updated the baseline year to 2023. To summarize, the new target is a 15% reduction in emissions intensity for hot-rolled steel by 2030, compared to a 2023 baseline, covering Scopes 1, 2, and Scope 3 Categories 1 and 10 (there is more information inTernium’s 2023 Sustainability Report).
In line with Usimina's Decarbonization Target announced this year, we are working on a combined vision of Ternium and Usiminas aligned with Ternium's recently announced target.
Are you taking advantage of the synergy of the Techint Group's companies in Ternium's global sustainability goals?
Yes, of course, with Tecpetrol’s Energy Transition Unit, we’re working on three main axes: Renewable energies, CO2 storage, and Low-carbon hydrogen production. The idea is to make the most of its considerable experience and know-how in these matters. In the case of renewables, we’re constantly seeking out and evaluating projects in Argentina and Mexico to help us meet the commitments assumed in our Decarbonization Roadmap. Once these are defined, the Tecpetrol team takes over project management.
Regarding CO2 storage, we’re taking advantage of Tecpetrol's experience in the Burgos Basin in Mexico, where it has oil & gas operations. Here, we’re carrying out pre-feasibility studies for the underground storage of the CO2 we’ll be capturing at our new Direct Reduction Plant in Pesqueria.
Together with Tenova and the Energy Transition Unit, we are evaluating the construction of a pilot plant to produce hydrogen with low carbon intensity, with a capacity of 10 kg/h. In the future, this will eventually allow us to obtain H2 at competitive prices.
What are the challenges for Ternium and the industry in general regarding reducing greenhouse gas emissions in the future?
In the many international forums in which we participate, we have noticed that decarbonization is slowing down. First, because it is an expensive process that forces us to rethink our ambitions. Furthermore, Latin American industries do not receive subsidies as do their peers in the United States or Europe, so the pace of decarbonization will be slower. In this context, we need to be pragmatic, and our policy is to maintain complete transparency throughout the process.
What is the importance of the Sustainability Report for Ternium, and how does it reflect the company's commitment to social and environmental responsibility?
The Sustainability Report reflects, describes, and summarizes our massive effort in the ESG axes (Environment, Social, and Governance). It’s an overview of our actions and results that presents objective, clear, and transparent information so that everybody, from employees, stakeholders, customers, and suppliers to institutions, NGOs, and investors can understand it, including those people who are not involved in the day-to-day operations of our plants. It’s an excellent piece of work and an invaluable tool. However, it’s also becoming increasingly complex because we are obliged to follow the European Union’s new Corporate Sustainability Reporting Directive (CSRD). This requires us to migrate to a new structured way of presenting information. It’s an enormous challenge moving forward, but we plan to develop it for the next year, including Usiminas.