Ovako: A company on its mettle when it comes to sustainable steel

My alarm went off at 6.00am. Bleary eyed, initially confused at my surroundings, I squinted around the room that was filled with bright sunlight. In May, the sun stays high in the sky for most of the day in these parts. “Ouch,” I said forlornly, as a heavy, searing pain crept across my forehead and remained there all morning. I had woken up in a hotel room provided for us by our hosts at Ovako, who the night before had put on quite a show.

Slowly, flashbacks of the night before entered my brain, and I remembered what had caused me to lay here unable to move. “Schnapps!” Shouted Patrik Olund, Group Head of R&D at Ovako. “Every time we sing a song, we take some schnapps.” And there were a lot of songs. A couple were in Swedish, one was in Finnish and was impossible to sing and others were to the tune of ABBA songs, but with the lyrics changed. Example: The CEO and I, to the tune of The Winner Takes It All. First line: “I don’t want to talk, about administration.”

Before the starter had even arrived, we’d sung at least six songs, with Patrik taking the lead with incredible vigour. Looking back, I think he may have written the lyrics to a lot of these songs himself. Sat to my right was my colleague, Lanna Deamer. “What is actually in Schnapps?” she asked, looking tentatively at the size of the shot glasses in front of us. I took a sip of mine: “Bad stuff,” I replied. “You can have mine,” said Lanna.

Then the lady sat to my left passed me her schnapps and announced, “I’m driving.” In a bid to immerse myself in the culture and to not appear rude, I saw off the schnapps from either side of me… it was a poor decision. Still lying in bed, knowing I’d eventually have to attempt sitting up, I thought back to the start of the night.

Sitting out on a balcony enjoying conversations with members of Ovako as well as a handful of UK press that had come along on the trip, John Larsson, Vice President Marketing & Sales at Ovako announced: “As well as being great at making steel, we are really good at refilling drinks.” Several times, the man dashed to grab me another beer upon noticing I didn’t have one in my hand.

Then, after dinner, and after singing our way through what felt like most of Abba’s back catalogue, we ended up in a downstairs room with loud music where I had some Swedish whiskey. Just after the point of talking utter gibberish, but slightly before offering to break dance for everyone, I decided it was time to leave the party and stumble across the road to my room.

Listen back to this episode of The Manufacturer Podcast to hear more about the madness that ensued in Sweden

A long steelmaking history

The following morning’s walk from our hotel across to Hofors Bruk, the name of the site where the Ovako steel plant is situated, was only 15 minutes or so. John Larsson had said goodbye to us at the hotel – he was very much around for the drinking, but left when it came to the sensible stuff, a decision I had great respect for.

However, Patrik was on hand to show us around and eagerly informed the group that we were in an area of engineering heritage. Evidence has been found that manufacturing was taking place in Hofors around 2,000 years ago, with some highquality forged iron being uncovered close to the site.

“This was a steelmaking facility as early as the 1500s. The Hofors Bruk site was founded in the 1600s. From then on, we’ve had a very long and continuous steelmaking tradition here,” said Patrik, whose ability to get a party going was matched only by his knowledge and passion for Ovako. “We are a steel company, specialising in what we call engineering steel, used for demanding applications. We’re perhaps most famous for the bearing steels that we produce, which we supply to companies all around the world. Bearings is a very important market for us, but we’re also involved across the whole of the automotive industry, plus we’re very active in the mining and rock processing industries.”

Sustainability before it was cool

The site was enormous. The Hofors facility is the company’s hub, with production in steel and billet rolling mills and in tube and ring mills. Demands on high-performance steel components have increased over the years, having to cope with higher loads for ever-increasing periods. Ovako’s clean steel, produced at this site, has evolved to meet these tougher requirements.

Inside Ovako’s electric arc furnace

You’re probably wanting to hear more about the ‘hydrogen steel plant,’ mentioned at the top of this article. The clean steel is a product of this, but we’ll get to that shortly. It’s important to set the scene when it comes to Ovako’s sustainable credentials as this is a company that has always had circularity at its core, going back hundreds of years. Due to the very material manufactured by the company, it realised early on that it could do more with less. Steel is 100% recyclable, which means that you can continuously remelt it while keeping the same quality.

For every newly produced tonne of steel using recycled material, 1,100kg of iron ore and 600kg of coal can be conserved as well as energy savings of 74%, compared with the same process using raw materials. “It’s an amazingly unique material,” said Vendela Stenuis, Sustainability and Communication Specialist at Ovako.

“Sustainability has been with us for our entire history,” she said. “We were using the circularity process – remelting steel scrap to make steel – here in Hofors 500 years ago. Sustainability was being practiced at Ovako before it even became a word in the dictionary.” The same steel scrap process is used today. Of course, in 500 years the process has been refined and improved upon. In 2012, Ovako started the conversion from fossil fuels to electricity in the heat treatment process.

Vendela continued: “We have a carbon neutral operation, but we do still have emissions, we know that. A year and a half ago, we decided to counterbalance our emissions with carbon offsets. We are the first steel company in the world that is carbon neutral in our operations.” When asked what has spurred the company on to become so sustainably minded, she answered: “First of all, there is regulation. Much like UK companies, we have legislation to think about in Sweden.”

The environmental policy in Sweden contains several climate goals, with companies actually having to act a bit faster than those in the UK. By 2045, Sweden is aiming to have zero net emissions of greenhouse gases in the atmosphere; five years sooner than the UK’s 2050 target. “That makes us want to push sustainability even harder to stay ahead of that legislation,” explained Vendela.

“Our success comes from a need to continually improve because we constantly want to push ourselves to be as environmentally friendly as possible.” Ovako, like every other big manufacturer globally, is building all of its sustainable practices towards the end goal – net zero. It was interesting to hear from Vendela that Ovako’s time frames are pretty similar to most others. “We want to reach zero emissions. Of course, that’s our long-term target. We’re looking at 2030 to reduce them by 80% and in 2040 to reduce them by 90%.”

It gave me the sense of measured, sensible expectations. Ambitious, of course, but not overly so. The targets aren’t flashy, just for the sake of a headline. This will be done gradually, through continuously improved processes. There is another key driver in this of course, as Vendela mentioned: “The hydrogen project will allow us to make a big step towards our targets.”

Hydrogen pioneers

That leads us on to the main event. First, we were taken to see Sweden’s largest electrolyser for the production of fossil-free hydrogen. Then, we were taken into the furnace to see the manufacturing process up close. Not too close though or your face will melt off. It was absolutely roasting in there. I mean, of course it was, but I can’t stress enough just how hot it was. Anxiety inducingly hot. On the bright side, it went a long way to knocking the hangover out of my system.

Large steel billets, so hot they were turned a molten lava shade of orange, were being lifted mechanically from the furnace across to the factory to be rolled. This is the most visually and physically exciting part of the manufacturing process. After the scrap steel is melted down in the electric arc furnace that we were standing in, it’s then cast into ingots of about four tonnes each. The ingots are heated up before being rolled.

This is the part of the process where hydrogen is introduced, making Ovako the first producer in the world to use this technology. “Once the ingots are rolled, they are then cut into pieces, before being taken further downstream in the process,” explained Mikael. “We send some of these to the rolling mill in Hällefors, (a municipality to the southwest of Hofors) where we produce smaller sized steel bars. Others we convert into hot rolled rings and tubes. The tubes can also be cold in order to have even smaller dimensions and other mechanical properties.”

Every stage of the manufacturing process is electrified. The heating of the billets before rolling, the smelting part and also the reheating that takes place after rolling. Mikael added: “We have converted almost all furnaces worldwide to electrical heating. But to heat up the billet before rolling, you need to go to incredibly high temperatures, which is almost impossible to do directly with electricity.”

The hydrogen plant in Hofors will make Ovako the first manufacturer in the world to heat steel with hydrogen prior to rolling

He continued: “So now, via electricity, we can switch from propane to hydrogen, which gives us a carbon dioxide-free fuel for the heating before rolling phase. We can now say that we’ve electrified all the steps in the steel manufacturing process and that it is fully fit for purpose. We’re not using any fossil fuels in our end products.” Mikeal told us that trials for this project were first undertaken in March 2020. Lanna, recovering from the heat of the furnace, asked Mikael: “Did COVID slow this down?” “Yes,” he replied, “COVID was picking up at this point, for sure. But still, we were able to continue the project. It felt slow, but that said, I don’t know if we could have progressed any quicker, even without COVID, because there’s a lot of preparation that needed to be done during testing.”

When quizzed on the tag of ‘hydrogen pioneers’, Mikeal added: “Have we been called hydrogen pioneers!? That’s a good one. The technology for producing hydrogen and oxygen is no secret. Electrolysers are used everywhere. The pioneering element of this is we’ll produce enough with hydrogen to supply all our furnaces. We also won’t have any storage.” He added: “There are other hydrogen factories in the world, some big ones too. But they combine other processes which use fuels like petrol and so on. This is a big hydrogen factory within a steel plant, which uses hydrogen at the same time as it’s produced; no one has done that before.”

This is a project that has gained a lot of traction in Sweden, with partnerships from key players in Nordic industry such as Volvo Group, Hitachi Energy, H2 Green Steel and Nel Hydrogen. They are supplying Ovako with different components and technical solutions for the plant. The plan is to use local hydrogen production in all Ovako’s units where steel is rolled by 2030, provided there is a good supply of fossil-free electricity. “By doing this,” concluded Mikael, “We can show the world that you can exclude carbon dioxide from this stage of the steel manufacturing process.”

Adjö, Ovako (that’s Swedish for goodbye)

This was a lesson in sustainable excellence, although, Ovako is still faced with a conundrum that UK manufacturers also regularly report – the management of Scope 3 emissions. “Scope 1 and 2 is easy,” said Vendela, chuckling. “They belong to us, but capturing and managing the upstream and downstream emissions of our customers and our suppliers is harder. “We have a great relationship with them but getting that information and then working out a calculation of those emissions is tricky. They know what their Scope 2 is, but how much of their Scope 2 is our Scope 3?”

She continued: “We’ve committed to science-based targets, and this fall, (autumn) we need to get those targets approved and that includes Scope 3 emissions. So, we have planned for that, and we will manage to capture that data.” This was almost reassuring to hear. No company is completely infallible when it comes to sustainability, how could they improve if they were? Words we heard often on this trip were ‘improve processes’, and there’s a clear trail of that when you look down the timeline of Ovako’s sustainability journey.

We bid adjö to our hosts, collected our belongings and were taken on the two-hour drive back to Arlanda Airport in Stockholm. This was an eye-opening trip to one of Europe’s genuinely inspiring examples of environmental progress. These guys make first class steel, but truly dangerous schnapps – I for one, would visit again.

Read more about the Hydrogen Plant inauguration at Ovako here.

KEY TAKEAWAYS

• This is a genuine world-first technology for the heating of steel before rolling.
• Despite the metal’s recyclable qualities, the steel industry is a historically large carbon emitter. Ovako is one of the companies bucking that trend.
• Not touched on in the article, but Ovako has similar industry-wide problems when it comes to attracting diverse talent.
• Sweden is a beautiful country to visit during the spring and summer months. Just don’t drink the schnapps.

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