Salzgitter Flachstahl GmbH and Ferrexpo plc (LSE: FXPO) have announced the further intensification of their long-standing collaboration. The companies have now signed a Memorandum of Understanding ("MoU") for the supply of high-quality sponge iron pellets (direct reduction iron, DRI) for low-carbon steel production.
“Ferexpo and Salzgitter have been working together since 2016. We are pleased that, as part of the European transition process to more environmentally friendly steel production, we have now been able to agree on the basis for our cooperation that extends far into the future. As part of the SALCOS® program, Ferrexpo's DRI pellets can significantly reduce carbon emissions during steelmaking. The agreement with Salzgitter strengthens Ferrexpo's position as a leader in Europe and will also benefit the Ukrainian economy as a whole during this difficult period and later in the post-war reconstruction," said Yaroslavna Blonska, Chief Marketing Officer of Ferrexpo.
“We are pleased to be able to continue our long-standing collaboration with Ferrexpo and intensify these activities as part of our SALCOS® transformation program. Ferrexpo is a strong partner in decarbonizing our production processes and logistics chains. The agreement reached will help us to further reduce carbon emissions along the supply chains and advance green steel production," explains Gerd Baresch, Technical Managing Director of Salzgitter Flachstahl GmbH.
DRI pellets
Ferrexpo's DRI pellets can be used as part of the SALCOS® program, with which Salzgitter is gradually converting its steel production to hydrogen-based processes and technologies. Iron ore pellets of very high quality are required for steel production in the SALCOS® program. This MoU is an expression of Salzgitter's trust in the high quality and availability of Ferrexpo's product. From a technical perspective, the SALCOS® program will be completed by 2033.
As part of the declaration of intent, Ferrexpo and Salzgitter Flachstahl GmbH have also undertaken to identify the most suitable raw material supply strategies for hydrogen-based steel production in direct reduction plants and to optimize their logistics chains as well as freight management and warehouse management from an ecological perspective.
