Outokumpu acquires a share of Swedish Envigas AB to reduce direct emissions with biomass-based raw material

Outokumpu acquires a share of Swedish Envigas AB to reduce direct emissions with biomass-based raw material

Outokumpu has ambitious sustainability targets and is constantly looking for options to further decarbonize the industry and the company’s stainless steel production. Switching from the use of fossil raw materials to biomass-based alternatives is a key driver in emission reduction. Value-chain integration is a key priority in our strategy to strengthen the supply chain of sustainable raw materials for the future. Therefore, Outokumpu has signed an agreement to become a shareholder in Envigas AB, a leading European producer of biocarbon*, with an ownership share of 20%.

Outokumpu produces ferrochrome on the same site in Tornio, Finland as stainless steel. The carbon footprint of Outokumpu ferrochrome is 67% smaller compared to the industry average and- a further decrease is targeted with the transfer to using biomass-based reductants like biocoke.   

“The move towards using new types of biomass-based raw materials is a concrete step forward to significantly reduce our direct emissions, which account for approximately 25% of Outokumpu’s total emissions. We have successfully carried out production tests with biocarbon and biocoke and look forward to increasing their usage in the future,” says Timo Huhtala, General Manager responsible for Outokumpu’s biocoke initiative.

With a production plant based in Skellefteå, Sweden, Envigas AB is the first large-scale producer of high quality biocarbon in the Nordics with a sharp focus on products for the steel industry to help in the shift towards zero emissions. Envigas aims to expand their production capacity by 25,000 tonnes in the first scale up phase by end of 2026 and Outokumpu has agreed to invest EUR 9.9 million into the company. With the investment, Outokumpu secures a right to 50% of Envigas’ production.  

“Collaboration and strong offtake commitments are key components in the scaling up of high quality biocarbon production. Envigas has an ambitious growth agenda, and we are excited to partner with Outokumpu, as a leading industrial actor with high sustainability targets. The partnership will be mutually beneficial, reduce risks and increase speed in the important work to reduce CO₂-emissions,” says Lars-Gunnar Almryd, Envigas CEO.

Outokumpu’s climate target is to reduce carbon dioxide emissions by 42% by 2030 from the base year of 2016, in accordance with the Science-Based Targets initiative’s 1.5 degree climate target. Outokumpu is the only producer of stainless steel with a climate target approved by the initiative.

“To decarbonize our stainless steel requires efforts in reducing emission across all scopes. Utilization of biomass-based raw materials represents an exciting new chapter in our stainless steel production. It also supports the circular economy since valuable, sustainably-sourced, forest and wood industry side streams, currently burned for low-efficient energy purposes, can be utilized to create new types of raw materials for other industries,” says Huhtala.  

Parallel to this transaction, Outokumpu continues to work on a feasibility study regarding a possible investment into a biocoke production facility of its own in the future.

*) Biocarbon, also called biochar, is a raw material produced using biomass from forest and wood industry side streams. Biocarbon can be used as such or further processed into biocoke (i.e., densified biocarbon) and it is used to replace fossil coke in ferrochrome smelting and fossil coal in stainless steel melting respectively. 

For more information:

Investors: Linda Häkkilä, Head of Investor Relation, tel. +358 40 071 9669 

Media: Päivi Allenius, VP – Communications and Brand, tel. +358 40 753 7374 or Outokumpu media phone +358 40 351 9840, e-mail media(at)outokumpu.com