ERG Explores Low-Carbon Steel Feedstock Production Amid Sanctions

Kazakhstan's Eurasian Resources Group (ERG) is contemplating a groundbreaking venture in the production of feedstock for low-carbon steel manufacturing, reports
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Kazakhstan's Eurasian Resources Group (ERG) is contemplating a groundbreaking venture in the production of feedstock for low-carbon steel manufacturing, reports Bloomberg. The company's iron-ore shipments to Russia were disrupted by sanctions, leading to a suspension of sales to its major customer, Magnitogorsk Iron & Steel Works PJSC. In response, ERG, with 40% ownership by the Kazakh state, is now considering the construction of a hot briquetted iron (HBI) plant to supply electric-arc furnaces, facilitating the production of low-carbon steel.

The impact of the war in Ukraine is reshaping conventional trade flows, and ERG's ambitious project is poised to challenge Metalloinvest Holding, Russia's largest producer of HBI. Metalloinvest, with billionaire Alisher Usmanov as its principal shareholder, has already redirected its sales efforts toward Asian markets like China, given the limitations imposed by sanctions and trading restrictions on exports to Europe.

Serik Zhumangarin, Kazakhstan's Deputy Prime Minister, expressed the significance of ERG's deliberations, stating, "As iron ore can no longer be shipped to Russia, we are seriously considering the project." This strategic move not only addresses the immediate challenge but also highlights the company's adaptability and commitment to innovation.

According to Serik Shakhazhanov, the general director of ERG's Kazakhstan business, the first phase of the HBI plant, with an annual capacity of 2 million tons, could commence operations as early as 2026. Preliminary agreements have been established with state-owned QazaqGas for gas supply during the initial phase, and a second phase with the same capacity may be ready by 2028.

ERG's new HBI plant could specifically target the Chinese market, as the company has already secured preliminary agreements for an offtake deal. This forward-looking initiative not only positions ERG as a significant player in the low-carbon steel sector but also demonstrates its commitment to exploring new markets and opportunities amidst challenging circumstances.

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