MINEX Forum

Tag: carbon emissions

  • Kazakh Exporters Face Rising Costs Under EU Carbon Border Mechanism

    Kazakh Exporters Face Rising Costs Under EU Carbon Border Mechanism

    The European Union’s Carbon Border Adjustment Mechanism (CBAM), which came into force in 2026, is creating new compliance challenges for Kazakh металлургical exporters supplying the European market.

    CBAM is designed to account for carbon dioxide emissions generated during the production of imported goods and serves as an environmental standard for both European and foreign manufacturers. Kazakh exporters are now required to maintain detailed carbon reporting in order to preserve access to EU markets.

    More than half of Kazakhstan’s aluminum exports are destined for the European Union. In addition to the aluminum sector, the new rules also apply to ferrous metallurgy products.

    Kazakhstan’s Ministry of Trade and Integration, the International Trade Centre (ITC) and QazTrade conducted an assessment of CBAM’s impact on local businesses and prepared practical recommendations for metallurgical companies adapting to the new framework.

    According to the study, exporters of raw aluminum, ferrochrome, steel bars and rods could face annual CBAM-related costs of around €114 million if export volumes remain at 2025 levels.

    QazTrade Deputy Chairman Nurlan Kulbatyrov said Kazakh industrial exporters have already begun adapting to the new EU requirements. Support measures are being introduced to help companies reduce financial pressure and maintain the competitiveness of Kazakh products in the European market.

    During a June 3 seminar, representatives of business, government and international organizations discussed methods for monitoring and verifying emissions, as well as opportunities linked to greener industrial production.

    One of the report’s authors, ITC expert Joost Pauwelyn, noted that Kazakhstan exports more than €600 million worth of steel and aluminum products to the EU annually. He warned that European greenhouse gas regulations could increase annual costs for Kazakh exporters by more than €100 million. Approximately 90% of the additional burden is expected to fall on steel bars and rods. In some cases, CBAM-related expenses could exceed the value of the exported product itself.

    Pauwelyn outlined several measures that could significantly reduce the financial impact on producers, including:

    • Monitoring and declaring actual emissions rather than relying on default values
    • Accrediting Kazakh verification bodies
    • Reducing greenhouse gas emissions at production facilities
    • Developing domestic carbon pricing mechanisms in Kazakhstan
  • Ferroglobe PLC Suspends Silicon Metal Production in Europe, Citing Market Pressures and Need for Fair Competition

    Ferroglobe PLC Suspends Silicon Metal Production in Europe, Citing Market Pressures and Need for Fair Competition

    Ferroglobe PLC, a leading producer of silicon metal, has revealed plans to temporarily halt all silicon production in France and Europe beginning this October. This decision follows severe challenges impacting the European silicon industry, as highlighted by Benjamin Crespy, Chief Operating Officer at Ferroglobe PLC, in a recent interview with Les Echos. The suspension is driven by collapsing demand from key sectors and falling prices, which are largely attributed to less constrained and more carbon-intensive low-cost imports.

    Benjamin Crespy emphasised the critical need to restore fair competition in the European silicon market. Without immediate and decisive action, Europe risks losing its sovereign silicon production capacity, falling short of its carbon emission targets, and forfeiting access to a strategic material essential for the energy transition, green mobility, defense technologies, and other key industries.

    High-purity silicon metal is used by many industries. In the chemical industry it is used for producing silicon compounds as well as silicon wafers used in photovoltaic solar cells and electronic semiconductors. And aluminum manufacturers use it to improve the already useful properties of aluminum. When used with aluminum, silicon improves its castability, hardness and strength.

    Besides, aluminum demand has been growing steadily in recent years, as a reflection of the economic activity in both the developed and developing word. This demand of lighter and more economical material has triggered a growth in Silicon metal consumption by aluminum manufacturers.

    Ferroglobe PLC remains committed to producing high-quality silicon metal and collaborating with customers and partners to innovate and enhance competitiveness. However, Crespy stressed that securing Europe’s future in silicon requires collective efforts and decisive measures to address the current market pressures and restore a level playing field. The company’s decision serves as a stark reminder of the challenges facing the European silicon industry and the importance of safeguarding its strategic interests.

  • Kazakhstan’s Modern Coal Power Plants May Require Trillions in Investments

    Kazakhstan’s Modern Coal Power Plants May Require Trillions in Investments

    Kazakhstan’s plans to construct modern coal-fired power plants could demand billions of dollars or trillions of tenge, according to Zhakyb Khairushev, Managing Director of the Atameken National Chamber of Entrepreneurs.

    Speaking with LS, Khairushev assessed President Kassym-Jomart Tokayev’s directive to build innovative coal power plants in the country. He emphasized that these efforts aim to bolster energy security, ensure sustainable development, and integrate advanced technologies.

    While these modern stations could enhance fuel efficiency and reduce emissions, they remain among the most carbon-intensive forms of electricity generation. According to Khairushev’s Telegram channel, Haırýshev energy, this complicates Kazakhstan’s ability to meet climate goals.

    Additionally, these projects could lead to higher electricity costs, factoring in environmental payments and renovation expenses. Given the global shift toward decarbonization, Khairushev stressed the importance of evaluating both the economic feasibility and environmental impact of such projects.

    The implementation of “green coal” technologies, including supercritical and ultra-supercritical (USC) steam systems with carbon capture, utilization, and storage (CCUS), could mitigate emissions. However, their construction is highly expensive. Initial investments in such advanced units could be 40-60% higher than traditional coal plants, with costs potentially reaching hundreds of millions or even billions of dollars for 500-1000 MW energy blocks.

    Operating costs would also rise due to emission control systems, as well as CO2 transport and storage under CCUS, making electricity 30-50% more expensive compared to standard coal plants. Khairushev noted that state support and preferential financing mechanisms would be crucial for economic viability.

    Replacing aging coal plants is a long-term process, taking 4-7 years per station and up to 20 years for full-scale replacement. However, Kazakhstan is already working on implementing USC technology at Ekibastuz GRES-2 and planning for GRES-3.

    To accelerate modernization, Kazakhstan must develop a national energy infrastructure plan, attract investors, and localize equipment production. If executed efficiently, the first modernized coal plants could be operational within 5-7 years, with full coal sector modernization projected by 2040.

    Khairushev highlighted the multiplier effect of clean coal projects, stimulating domestic engineering, attracting foreign technology partners, and creating regional jobs. The initiative could also reduce technological lag, foster local expertise, and strengthen Kazakhstan’s eco-technology market presence.

    International development institutions and private investors could be drawn to such high-potential projects, increasing access to long-term financing. Additionally, reducing power outages would stabilize industrial production, lowering maintenance costs and improving Kazakhstan’s global competitiveness.

  • EU Requests Profit-Based Backstop for Germany’s €1.75 Billion Coal Shutdown Payout

    EU Requests Profit-Based Backstop for Germany’s €1.75 Billion Coal Shutdown Payout

    The EU is urging Germany to include a profit-based backstop in its €1.75 billion ($1.9017 billion) payout for the early shutdown of the operations of its second-largest coal miner. A state payment of up to €1.2 billion to an entity of Czech billionaire Daniel Kretinsky’s EPH Group AG has been preliminarily approved by the European Commission, according to Germany’s economy ministry. The remainder of the payout will depend on the future profitability of the assets.

    The approved sum, as reported by Bloomberg on May 31, is intended to cover costs for mine rehabilitations, closures, and the impact on jobs. To prevent overcompensation, Lausitz Energie Bergbau AG (LEAG) will be required to provide proof of future costs and will be compensated from the remaining sum of €550 million, according to a letter from the EU’s Competition Commissioner Margrethe Vestager.

    Germany is working to accelerate the phaseout of coal in its power generation mix after failing to meet its emissions reduction targets. In 2020, the government agreed to pay billions of euros in compensation to LEAG and RWE AG to shut down coal-fired power plants by 2038. Now, to cut carbon emissions faster, the state is negotiating to advance the coal exit by eight years.

    In 2022, RWE agreed to a 2030 phaseout and will receive €2.6 billion in state payments. LEAG is still negotiating, aiming to continue burning coal beyond the end of the decade. Fossil fuel plants have to pay for carbon permits, and rising costs could squeeze coal profits. The backstop measure is designed to address this—if LEAG shuts down plants early due to unprofitability, the subsidy would be reduced. LEAG maintains that coal will remain profitable until 2038, the current legal exit date.

    “This is a bet on the future,” economy minister Robert Habeck said at a press conference in Berlin, noting the difficulty in calculating foregone profits for 2038. The European Commission still needs to give its final decision on the payment.

  • Decarbonizing Asia’s Steel Industry: A Long Road Ahead

    Decarbonizing Asia’s Steel Industry: A Long Road Ahead

    According to Reuters, it’s time to scrutinize the feasibility of decarbonizing Asia’s vast and expanding steel sector. Reducing carbon emissions is possible but requires a phased approach over a longer-than-ideal period and only if incentives are provided. The steel industry, the world’s largest industrial source of carbon dioxide emissions, accounts for about 8% of global emissions, making efforts to decarbonize this sector crucial for achieving net-zero carbon goals.

    This week, representatives from Asia’s iron ore and steel industries gathered in Singapore, revealing both encouraging and discouraging news about decarbonization efforts. The good news is that nearly every market player, from mining companies to steel mills, is taking the issue seriously, investing time, effort, and capital in finding solutions. The bad news is that achieving net-zero emissions by 2050 in Asia seems unattainable with current and foreseeable technologies.

    Another significant obstacle is the current steel pricing structure. There is no real premium for producing low-carbon steel in Asia, and little indication of this changing soon. As it stands, mining companies and steel mills are mainly undertaking decarbonization efforts under voluntary commitments to reduce carbon emissions, driven by shareholder pressure, some government directives, and public demand to mitigate the expected negative impact of climate change.

    While this is positive, it means that any costs incurred for decarbonization are effectively excluded from company profits since there is no financial reward for producing cleaner steel in Asia. The challenge is how to implement incentives for decarbonization, from relatively simple and low-cost initial steps to much more complex and capital-intensive ambitions for zero-emission steel production.

    One potential approach is a multi-tiered incentive system. For example, the base level of carbon emissions might be set at 2.1 metric tons per ton of steel produced using the current method of smelting iron ore fines in a blast furnace followed by a converter. If a steel plant could reduce emissions by one-third, it might be rewarded with a carbon credit or avoid paying a carbon tax of a set amount per ton of reduced emissions.

    Suppose this initial reduction costs $60 per ton, roughly the price of a carbon credit in the European Union. If a steel plant can cut emissions by another third through investments in new processes like using direct reduced iron (DRI) or its transportable equivalent, hot briquetted iron (HBI) in an electric arc furnace (EAF), this reduction could be rewarded with a higher carbon price, say $120 per ton.

    The final steps towards fully decarbonizing steel production using green hydrogen to produce HBI, clean electricity to run EAFs, and eco-friendly shipping fuels like methanol for transporting materials might attract even greater carbon credits to offset the substantial capital required to achieve this.

    STIMULI NECESSARY

    Presentations at this week’s Green Steel Forum in Singapore made it clear: without incentives, only the initial and relatively simple steps towards decarbonization will become a reality. These include maximizing the efficiency of basic oxygen furnaces, increasing the use of higher-quality iron ore and agglomerates like DRI and HBI, boosting the use of recycled steel in EAFs, and decarbonizing iron ore mining by limiting diesel power at remote mines and electrifying vehicles and trains.

    The problem is that these efforts are likely to reduce only about 20% of global steel emissions. Further steps include using natural gas to process low-grade iron ore into DRI and HBI for use in more advanced converters or even EAFs, then transitioning this process to green hydrogen. This is where costs become significant, and shareholders are likely to question the benefits.

    Ultimately, to push steel decarbonization beyond the low-hanging fruit, a pricing incentive is needed, and the market alone is unlikely to provide this, as costs will likely outweigh climate concerns for most consumers. This necessitates implementing policies like carbon taxes or carbon credits, ideally coordinated across many countries, particularly the largest iron ore exporters—Australia, Brazil, and South Africa—as well as China, which produces half of the world’s steel, and new major producers like India.

  • G7 Nations Set 2035 Deadline to End Unabated Coal Use

    G7 Nations Set 2035 Deadline to End Unabated Coal Use

    In a significant move towards combating climate change, the Group of Seven (G7) nations declared on Tuesday their commitment to terminating the use of “unabated” coal by 2035. This resolution, reached after deliberations among energy, climate, and environment ministers in Turin, Italy, marks a breakthrough in G7 negotiations that had previously stalled over several years. The communiqué released following the talks stipulates the intention to “phase out existing unabated coal power generation in our energy systems during the first half of 2030s.” However, by specifying “unabated” coal, the agreement offers flexibility for countries to continue employing this fossil fuel post-2035 if they implement measures to capture carbon emissions before release into the atmosphere. Furthermore, the accord allows countries the option to adopt a timeline aligned with maintaining a limit of 1.5°C temperature rise, in accordance with their net-zero pathways. Several G7 members, representing major economies in the developed world, have made substantial progress in reducing coal dependency. Notably, the UK, Italy, and Canada generate less than 6% of their electricity from coal, while France relies minimally on it. Conversely, coal still constitutes a significant portion of electricity generation in Japan (32%), Germany (27%), and the US (16%), according to data from the think tank Ember. This announcement follows closely on the heels of the US Environmental Protection Agency’s unveiling of new regulations mandating coal-fired power plants to either capture the majority of their climate pollutants or cease operations by 2039. Italian Environment and Energy Security Minister Gilberto Pichetto Fratin defended the agreement, emphasizing that the language assures a phased reduction of coal usage across G7 nations while safeguarding economic and social stability. Although some climate experts view the agreement positively as a step forward after years of impasse, others criticize the 2035 deadline as insufficient for limiting global warming to 1.5 degrees Celsius. Climate Analytics contends that to achieve this goal, all coal usage in G7 countries must cease by 2030 at the latest, with natural gas use ending by 2035. Jane Ellis, head of climate policy at Climate Analytics, underscores the necessity for a swifter transition to renewables, particularly highlighting concerns regarding ongoing investments in domestic gas facilities by G7 governments. Notably, while the resolution addresses coal, it omits any mention of a phase-out plan for gas, despite its significant contribution to CO2 emissions. The G7’s leadership in climate policy often influences broader international efforts, including those within the G20, where decisions impact major emitters and fossil fuel producers alike.