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Green Steel as an Investment Opportunity

 

October 20, 2017 (Investorideas.com Newswire) As the evidence for global warming continues to mount, finding ways to reduce carbon emissions from traditional manufacturing becomes paramount. Steel manufacturing is responsible for 5 percent of the greenhouse gases produced around the world every year – not just carbon dioxide, but also carbon monoxide and methane. When you consider that steel is used from everything as small as a simple wear plate to things as large as the keels of new cargo ships, this number may not be that surprising.

In Germany alone, the steel industry made 42.9 million tons of steel in 2014 and produced just over 61 million tons of carbon dioxide the same year. Comparatively, in Australia, 6 million metric tons of steel were produced in 2016, creating 14 million metric tonnes of carbon dioxide. On average, worldwide production of steel creates roughly 2 tons of carbon dioxide for every ton of steel produced.

In response to this pressing environmental concern, steel companies are investigating new methods of steel production that reduce the carbon footprint that making steel creates. This drive to create new "green steel" production isn't just good for the environment; it also represents a unique and multi-tiered opportunity for investors.

Investment Opportunities

The demand for new steel isn't declining anytime soon. Whether it's making new car frames or supporting new buildings and developments around the world, steel making is a steady growth industry.

One method of creating green steel involves renovating existing plants to make use of new technologies. These renovations can be expensive and offer an advantage for investors. Whether it's by purchasing low-risk, medium-yield corporate bonds offered to offset the costs of the renovations or by simply purchasing stock in a company that's investing in itself for growth, the opportunity for net returns is huge for an investor.  

Renovation of existing plants isn't the only opportunity. Newer methods of manufacturing are geared toward smaller plants that can produce smaller amounts every year. Traditional plants must make millions of tons of steel to remain profitable, but the smaller plants can be profitable with yearly yields of only a few hundred thousand tons. By using new smart business intelligence software, these small plants can adjust their output quickly to match current needs.

Third Party Investments

Newer methods of steel manufacturing will need different types of infrastructure to support them. For example, Siemens is manufacturing electrolyzers that may help develop zero-emission steel mills in the future. The electrolyzers will, in theory, be able to produce useful compounds from smelting gases. These devices have proven successful in practice producing hydrogen on a large scale at an electrolysis plant in Mainz, Germany. This represents a unique opportunity to make a two-tiered investment into green steel, realizing returns on both the actual production and their supporting businesses.

The other methods of making steel will also reduce the amount of slag that is produced. As the steel is purified, a mixture of silicates and oxides is separated out and forms a rocky granular structure. For every million tons of steel made, about 300,000 tons of slag is separated. Slag cooling uses an enormous amount of water, with much of it lost during the cooling process. In the quest for greener methods of steelmaking, there is an incredible opportunity to develop new methods of slag cooling.

One new method is a dry method of cooling slag which uses the heat from the slag for steam and electricity generation onsite, saving water and energy that is normally used. According to an estimate by the Australian Commonwealth Scientific and Industrial Research Organization (CSIRO), implementation of this slag cooling method could create a $22 billion AUD net adjustment with only 10 percent of existing plants using it. That represents an enormous pool of wealth that could provide huge returns to an international investment fund.

About The Author:

Jane is a online freelancer who has worked on writing projects for fun and work since college. Jane's education comes from the John Cook school of Business at Saint Louis University. Whether it is writing about online business and digital marketing which she is heavily involved, Jane also likes please pieces about history and education when she can write about more open ended topics! Reach out at janebrownwrites@gmail.com anytime!

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