Synopsis: NLMK Belgium Holdings has requested an extension of sanctions exemption on Russian slab exports in exchange for investing revenue from these exports into a steelmaking decarbonization project, which includes constructing a new electric arc furnace (EAF). The proposal, seeking a four-year extension, aims to contribute to green steel production. Sanctions against Russian ferrous metals, introduced due to the conflict in Ukraine, led to the EU implementing sanctions-deferring quotas for Russian slab imports. This initiative by NLMK Belgium aligns with efforts to address the challenges posed by sanctions while promoting environmental sustainability, reports KallanishArticle:NLMK Belgium Holdings (NBH), a conglomerate of strip and plate mills across Europe, has made a noteworthy proposal to the European Commission. The request seeks an extension of sanctions exemption on Russian exports of slabs, provided in exchange for substantial investments in a steelmaking decarbonization project. This endeavor entails the construction of a new electric arc furnace (EAF), which would become the second within the NLMK group in Europe.NBH, jointly owned by Russia's NLMK and the Belgian government-affiliated investment fund Wallonie Entreprendre, has urged for a four-year prolongation of the exemption from EU sanctions, specifically concerning the import of slabs manufactured in Russia. This quota is set to expire on September 30, 2024, and the request is part of NBH's strategy to secure the future of steel production in a more sustainable and environmentally friendly manner.Sanctions against Russian ferrous metals were initiated by the EU in response to Russia's actions in Ukraine. However, the sanctions included provisions for sanctions-deferring quotas for the import of Russian slabs and billets, amounting to 7.5 million metric tons and just over 570,000 metric tons, respectively. These quotas are in effect from October 2022 until the end of September 2024.NLMK, a major supplier of Novolipetsk-made merchant slabs, delivers a substantial portion of these slabs to NBH mills, effectively accounting for the entirety of the Russian slab quota, with an average of 312,000 metric tons per month.The request for a quota extension stems from the limited availability of slabs in Europe due to the combined impact of sanctions and the Russia-Ukraine conflict in February 2022. European rerollers, particularly those producing heavy plate steel, found themselves sourcing slabs from distant regions, such as Asia, to compensate for the material traditionally supplied by Ukraine and Russia.Market participants have expressed concerns that after the Russian quota expires in October 2024, slab volumes from alternative origins, such as Asia and Brazil, may not be sufficient to meet the EU market's demand.NLMK Belgium Holdings is now seeking a prolongation until the fourth quarter of 2028. The revenue generated from these slab supplies may potentially be directed toward the development of a new EAF for green steel production. However, detailed plans for this initiative are yet to be revealed.Notably, NBH is already engaged in the refurbishment of its existing EAF at the NLMK Verona plant in Italy, aiming to produce low-carbon steel. NLMK Verona has the capacity to produce 350,000 metric tons of crude steel and 450,000 metric tons of finished products annually. Efforts are underway to enhance the plant's capabilities and reduce its carbon footprint.In the past month, NLMK completed the sale of its Russian long-rolled steel mills to Industrial Metallurgical Holding. This business unit included EAF mini-mills in Kaluga, near Moscow, and in the Urals, with the capacity to produce up to 3.7 million metric tons of crude steel and 3 million metric tons of rolled steel products. The proceeds from this sale, while undisclosed, position NLMK to consider investments of significance in other areas.Conclusion:NLMK Belgium Holdings' proposal for sanctions exemption extension in exchange for investments in green steel production underscores the company's commitment to addressing the challenges posed by sanctions while advancing environmental sustainability. The initiative, which involves constructing a new electric arc furnace and reducing the carbon footprint of its existing facilities, is a step towards greener steel production. It aligns with the broader industry shift toward more eco-friendly practices, marking a positive development in the steel sector.