ArcelorMittal Dofasco misses key milestones in $1.8B 'green' steel project promised for 2028
Hamilton steelmaker says decarbonization is still a go
Construction has yet to begin on ArcelorMittal Dofasco's massive "green" steel upgrades, despite plans by Ontario's largest industrial carbon emitter to phase out coal at its Hamilton plant and cut emissions 60 per cent by 2028.
A CBC Hamilton investigation, which included capturing drone footage of the plant and speaking with industry insiders, indicates the project is not moving ahead as company executives publicly promised after missing key milestones in 2023 and 2024.
Those milestones include demolishing a coke plant to make room for a direct reduced iron (DRI) plant, piecing together what would become the tallest structure in Hamilton and getting approval for the construction of a 14-kilometre natural gas pipeline required for the project.
Dofasco told CBC last week it remains committed to decarbonization and there are no changes to its greenhouse gas emission reduction targets, timelines or related budgets.
The federal government was also contacted by CBC and said in a statement that Dofasco aims to hit its carbon emission goal in 2030 — two years after the announced project deadline.
In a series of high-profile announcements in 2022, the heads of ArcelorMittal and a slew of politicians, including Premier Doug Ford and Prime Minister Justin Trudeau, touted the project. Along with a DRI plant, Dofasco would add electric arc furnaces (EAFs).
"Today's event will now move us from the planning stage to action stage," ArcelorMittal chair Lakshmi Mittal told reporters at a news conference in October 2022.
Trudeau toured the plant that day, saying "right now the first major steel company in the world making a switch toward electric, away from coal, is happening right here in Hamilton."
Dofasco is the largest industrial source of carbon dioxide emissions in Ontario. The decarbonization project aims to cut its emissions by three mega tonnes (MT), or 60 per cent, and make a sizable dent in Ontario's own target to reduce emissions by 12 MT between 2022 and 2030.
And "green" steel will be in high demand, said Trudeau, as North America's electric vehicle (EV) manufacturing industry grows.
With a $900-million commitment from the Ontario and federal governments combined, taxpayers and Dofasco are splitting the cost of the estimated $1.8-billion decarbonization project.
Liberal MP Filomena Tassi (Hamilton West—Ancaster—Dundas) described the government funding as "one of the biggest and most important investments in Canada's fight against climate change."
Coke plant still stands
In January 2023, Dofasco announced on its website that construction work was about to begin.
The project manager at the time, Rob Marzetti, described it as an "enormously technical and complex task" involving up to 900 construction workers on site.
First, they would demolish a decommissioned coke plant to make way for the DRI technology fuelled by natural gas.
In 2024, "very large" cranes would be on site, piecing together a 150-metre-tall tower for the DRI plant — the tallest structure in Hamilton, Dofasco said.
But as of August, none of this work appears to be happening.
Aerial images show No. 1 Coke Plant remains standing — as it has for decades, confirmed a former Dofasco employee, who CBC has agreed not to name as they fear professional and financial repercussions for speaking out.
"Nothing has changed at all except maybe a couple of rusty bolts," the former employee said.
The former worker, who had held a management position before leaving the company in recent years, said they'd been excited about the decarbonization project because the investment signalled Dofasco would continue employing thousands of Hamilton steelworkers for decades to come.
At this rate, however, it will be "impossible" for Dofasco to complete the "major project" by 2028, they believe.
"It is so disappointing and sad. Dofasco should be doing better."
Marzetti, who was initially leading the project, quit by the end of 2023.
"The choice to leave was multifaceted, but primarily because of misalignment of the program's timeline with my personal plan," he wrote in a LinkedIn post earlier this year.
He did not respond to CBC's request for comment before publication.
When asked by CBC what the latest was on the decarbonization project, Innovation, Science and Economic Development Canada didn't mention the DRI plant, only the EAFs.
"ArcelorMittal Dofasco is working on the transition of their Hamilton facility from traditional blast furnace production to electric arc furnace production," spokesperson Andréa Daigle said in a statement on behalf of the ministry.
As of March 31, 2023, the federal government said it had dispersed less than $12.5 million to Dofasco for decarbonization. If the company does not satisfy the "terms of the agreement" — which are kept confidential — it would have to pay back the money, Daigle said.
Dofasco declined to clarify if it intends to build the DRI plant.
Natural gas pipeline delayed
Also delayed is construction of the pipeline that would deliver natural gas to Dofasco.
In February 2023, Hamilton city council heard from Dofasco's Tony Valerie that the natural gas pipeline is essential to power the DRI plant until "green hydrogen," a cleaner energy source, is more affordable and available.
Enbridge director Murray Costello told councillors the utility provider would be applying to the Ontario Energy Board (OEB) by November 2023 for permission to construct it, and would aim to have it up and running by the end of 2025.
That way, Dofasco would be ready to launch its DRI plant in 2026 and stop using coal altogether by 2028.
But as of Aug. 20, 2024, Enbridge has not filed the application, according to the OEB. That indicates the pipeline project is at least nine months behind schedule.
"The timeline presented at city council has changed, which can occur when planning for a project of this size," said Enbridge spokesperson Steve Presant in an email.
"We will update the community as soon as further information is available."
He did not respond to questions including why Enbridge hasn't applied to construct the pipeline or what the new timeline is.
Project still in design phase, Dofasco tells community
Dofasco maintains its plans are progressing.
"The decarbonization project is a highly complex, large-scale project that will determine the future of ArcelorMittal Dofasco," the company said in a statement on Aug. 28.
"ArcelorMittal will remain a thriving operation supporting the local community with jobs in Hamilton while contributing to a lower carbon economy and delivering the steels our customers require for a decarbonized world."
The company did not respond to questions about why it appears construction hasn't started.
During a routine community meeting in July, Dofasco representatives said the project is in the "pre-FEED" — or preliminary front-end engineering design — stage, according to meeting minutes.
Dofasco is "working with partners to refine the designs and engineering" by the end of the year, and "continues to refine scope and budget," the minutes said.
A January 2023 news release said the company had confirmed a vendor for the DRI plant.
Ontario's Ministry of the Environment, Conservation and Parks told CBC its expectations for Dofasco's emissions reductions have not changed.
The ministry declined to give a status update on Dofasco's project or say how much, if any, of the half-a-billion-dollar subsidy the company has spent to date.
European environmental group SteelWatch has seen ArcelorMittal — the Luxembourg-based company that bought Dofasco in 2006 — follow a similar pattern there, beginning with a "splashy announcement" about decarbonizing their plants in countries such as France, Belgium and Poland, said Caroline Ashley, a U.K.-based researcher.
Then, the project stalls in the design stage, as has happened with a DRI plant promised in Gijón, Spain, said Ashley.
"You can be in the [design stage] with no final investment decision, no shovel in the ground — apart from the one held by a prime minister for a photo-op — for a very long time," said Ashley, executive director of SteelWatch.
Transitions motivated by carbon tax: researcher
Companies across North America and Europe are eyeing DRI-EAF steelmaking to eliminate coal as an energy source and reduce global carbon emissions.
The DRI-EAF process replaces the most carbon-intensive parts of steelmaking, eliminating the need for coke ovens, coke plants, blast furnaces and basic oxygen furnaces to make iron, said McMaster University engineering Prof. Giancarlo Dalle Ave.
After the DRI process, the iron is then melted in an EAF — using electricity — to produce steel, he said.
Dofasco is already using one EAF and through its decarbonization plan, would add two more.
The amount of steel produced with DRI globally is less than 10 per cent, said Dalle Ave. About 20 per cent of the world's steel is now being produced in EAFs.
Steelmakers are becoming more motivated to begin transitioning because of carbon taxes, he said. As they increase, traditional methods become less economical.
Canada's carbon tax, or carbon pricing, under Trudeau's Liberal government is set to rise from $50 per tonne of carbon pollution in 2022 to $170 per tonne in 2030.
Conservative Leader Pierre Poilievre has vowed to remove the tax if he wins the federal election next year.
Algoma's decarbonization project nears completion
The province's second largest carbon emitter, Algoma Steel in Sault Ste. Marie, Ont., announced its own $700-million decarbonization project in 2021, backed by $420 million from the federal government.
The goal was to transition to EAFs by 2025 and reduce carbon emissions by 70 per cent. Unlike Dofasco, Algoma decided to not construct a DRI plant, but instead buy DRI steel and scrap steel from elsewhere to feed into the EAFs.
The project was ambitious and had to move swiftly, said CEO Michael Garcia in an interview with CBC Hamilton. Construction began in 2022 and has continued "furiously" ever since, even when inflation drove up costs by about $175 million.
"We've never gone quiet on this project," Garcia said.
"Our customers are more mindful of the carbon profile of what they're buying, and they're expressing more and more interest in our emissions. I think that's what drove our board to approve this project."
While the EAF process will make Algoma a more "competitive, stable and sustainable steel company" for decades to come, it will also require fewer workers, Garcia said, adding, "It could be as many as a third of our current headcount as we restructure to operate our new equipment."
In Hamilton, Lynda Lukasik, executive director of the city's Climate Change Initiatives Office, is holding out hope that Dofasco's decarbonization will still happen by 2028.
The plan will not only reduce carbon emissions. but other cancer-causing pollutants as well, making it "incredibly important" for local residents, she said.
ABOUT THE AUTHOR
