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Digital Steel - Driver for Transformation and Innovation

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The European steel industry is currently undergoing rapid digital transformation. From artificial intelligence to digital twins to fully digitalized trading platforms - the sector is utilizing cutting-edge technologies to increase efficiency, reduce costs, and pave the way for decarbonization. Digitalization is far more than just technological modernization - it is increasingly becoming a decisive competitive factor and leverage point for the industry's green transformation.

For centuries, the steel industry was regarded as a traditional sector where proven processes and craftsmanship set the tone. The iron times of "everything stays as it is" are over: Today, the industry is the scene of one of the most exciting digital transformations in European industry. Driven by increasing competitive pressure, sustainability requirements, and the need for efficiency improvements, European steel manufacturers are increasingly relying on digital technologies. From production to quality control to trade - digitalization now permeates the entire value chain of the steel industry and fundamentally transforms it.

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Digitalization (Source: Adobe Stock / Coloures-Pic)

Digital Twins and AI Platforms: The EU Project DiGreeS as a Guide

At the forefront of the digital transformation of European heavy industry is the EU research project DiGreeS (Demonstration of Digital Twins for a Green Steel Value Chain), launched in November 2024. Under the leadership of the Fraunhofer Institute for Non-Destructive Testing IZFP, eleven European partners from research and industry - including leading steel manufacturers such as Saarstahl, Tata Steel Nederland, and voestalpine - are working on a user-friendly digital platform for networked steel production. The European Union is funding the three-and-a-half-year project with approximately 5 million euros.

At the heart of the project is the testing of digital twins, AI-based models, and advanced sensor technologies, which are intended to optimize the entire value chain of steel production - from raw material processing through production to finishing and steel recycling. The goal is ambitious: The digital platform aims to reduce CO₂ emissions from the European steel industry by up to 6 million tons per year and save annual costs of up to 800 million euros.

The practical applications of the project are diverse and address concrete challenges facing the industry: Tata Steel Nederland, for example, focuses on scrap analysis and optimizes the use of recycled material in steel production. The company is researching innovative approaches to quality control and classification of steel scrap to significantly increase the recycling share - an important measure for reducing the carbon footprint. Saarstahl is researching CO₂ reduction in electric arc furnaces through the use of AI-based digital models, while voestalpine is working on energy efficiency and savings in the processing of steel plates.

Jonathan Weber, Board Member for Transformation at Saarstahl AG, emphasizes the strategic importance of the project: "With DiGreeS, we want not only to increase the efficiency of our production but also to contribute to the sustainable development of the steel industry. The support of the European Union underscores the significance of this project and enables us to optimize processes through the intelligent use of data and AI technologies and make a significant contribution to reducing CO₂ emissions."

Artificial Intelligence in Production: From Theory to Practice

However, DiGreeS is only the current spearhead of AI research at the Saarland steel manufacturer. Since 2017, the company has been systematically expanding the AI & Digitalization division and pushing forward the digital transformation of the company.

The variety of practical applications and areas of use is impressive: AI is used for automated incoming inspection, for predicting expected steel analysis, and also for charging optimization. For scrap classification, an image recognition AI was trained that automatically distinguishes scrap types and significantly reduces manual effort in both incoming and deployment inspection of steel scrap. Temperature control in the steelmaking process - crucial for product quality - is now also optimized by AI-supported systems.

Similar AI activity is taking place at almost all other European steel manufacturers. ArcelorMittal, for example, is pursuing a comprehensive digitalization strategy in Germany with its "Plant of the Future" concept to pave the way for the "autonomous (fully automated) steelworks." Andreas Dalchow, Board Member for Finishing Technology at ArcelorMittal Bremen, describes the vision: "Already today, nine production employees can operate an entire hot rolling mill per shift." The automation includes automated cranes, coordinated cooperation of various conveyor systems, and increasingly remotely controlled workplaces.

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A particularly innovative AI application example is provided by the cooperation between SMS group and AI specialist Noodle.ai: In collaboration with Big River Steel in the USA, the world's first so-called "learning steelworks" was created. The AI platform analyzes historical data and high-frequency signal series from more than 50,000 sensors. It additionally uses external data sources, records and forecasts production processes, and suggests corrective measures. The jointly developed MPV (Mechanical Properties Variability) application helps steel manufacturers get a handle on the variability of mechanical material properties - particularly yield strength, tensile strength, and elongation - and thereby reduce costs and improve product quality.

Process Automation and Predictive Maintenance: The Intelligent Factory

Digitalization is no longer limited to individual production steps but increasingly encompasses the entire process chain. Modern steelworks rely on comprehensive automation solutions: CNC machines and robots handle automated cutting processes, real-time monitoring systems continuously collect machine data, and predictive maintenance solutions enable forward-looking maintenance.

The key to success lies in data integration. ArcelorMittal pursues the concept of "Single Source of Truth": All data is made centrally available so that all employees can rely on the same data basis. Andreas Dalchow explains: "Today, it is still sometimes the case that data and information are transmitted through various media and then processed locally with standard office solutions - this often creates additional work and errors. Our goal is to create solutions that make all data centrally available."

A particularly interesting aspect is solving so-called "blind spots" in production: Even when all parameters appear to be in the green zone, the produced steel may still be outside the required quality corridors. Modern AI tools can identify such previously undetected anomalies in the production process - which reduces scrap and sometimes saves immense costs.

Innovative Measurement Technology as a Foundation for Digitalization

Modern measurement and inspection systems are an indispensable foundation for comprehensive digitalization. An example of this is the strategic cooperation between Kocks Measure + Inspect and LAP Measurement Technology. The two companies have developed a hybrid measuring system called "4D EAGLE S" that combines surface inspection and profile measurement in one system. The device uses advanced laser triangulation technology combined with high-resolution cameras and AI-supported image processing to precisely detect and classify rolling defects while simultaneously measuring the complete profile of long products.

"Rolling mill teams benefit from extensive transparency and the ability to sustainably optimize process and product quality," explains Fabian Beck, Director Global Sales at LAP Measurement Technology. The associated SMART CORE X software offers user-friendly access to profile data, 3D imaging of defects, detection of periodic errors, and individual statistics. All relevant data can be retrieved via an OPC-UA interface, enabling data-driven insights that can be used to unlock diverse potentials in rolling mill operations.

Danieli also relies on comprehensive digitalization via intelligent sensor technology: The company's digital bar finishing system is designed as a platform for Digital Factory 4.0. It captures relevant data from machines and transforms it into actionable information through reports and dashboards. The system includes modules for data acquisition and processing, production optimization through management of optimal recipes, process control with dedicated sensors, continuous condition monitoring of critical components, and predictive maintenance for optimizing preventive maintenance.

Digital Steel Trade: Platformization Advances

Digitalization has also progressed rapidly in steel trade in recent years. While traditionally telephone, fax, and email determined communication, digital B2B trading platforms have now established themselves as a forward-looking solution and are continuously gaining importance.

A pioneer in this development is the Düsseldorf-based company Metalshub, which has been operating as a digital B2B trading platform for metals and ferroalloys since 2017. The platform digitalizes the entire procurement process - from tendering through supplier qualification to contract processing. More than 1,100 companies have now registered on the platform, and trading volume has grown impressively: from 20 million euros in 2018 to around 400 million USD in 2024.

The most important trading product is scrap. Leading steel manufacturers such as the SHS Group (Saarstahl and Dillinger), but especially electric arc furnace specialists such as the GMH Group and Swiss Steel Group, now rely on Metalshub for their procurement processes to further digitalize operations.

The advantages of digital trading platforms are manifold: They increase transparency in the supply chain, enable faster procurement processes, facilitate compliance with regulations, and provide access to a larger supplier network. Especially in times of volatile markets and uncertain supply chains, digital platforms offer the flexibility that companies need.

An important aspect here is also the role of the Product Carbon Footprint (PCF). Nicole Voigt from Boston Consulting Group explains in her article in stahl (Issue 5-6/2023): "Those who invest in the production of green steel in time now have the opportunity to realize larger market shares and higher profits. A prerequisite for this is also proof of how many CO₂ equivalents have been generated in the value chain of a product." AI-based tools help determine and make the Product Carbon Footprint transparent - a function that is increasingly being integrated into digital trading platforms.

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Digitalization also encompasses the infrastructure of steel production itself. SMS Group, for example, is building its own "private 5G Campus network" for research and development at the Hilchenbach site. Together with partner companies Mugler and Ericsson, a private 5G infrastructure was created that enables testing of the currently highest available mobile communications standard.

According to SMS, the environment offers a unique opportunity to test use cases internally and present them to potential customers in a clear manner. Tests are being conducted on applications in the areas of mobility and automated vehicles (AGV), Industrial Internet of Things (IIoT), and lone worker applications. "With its 5G connectivity, SMS Group bridges the gap between physics, sensor technology, OT, and IT," says Jens Petri, Head of Technologies and Partnerships at SMS digital. The 5G Campus Network represents an important step in evaluating advanced digitalization technologies and their applications in the steel industry.

Sustainability Through Digitalization and Electrification: The Path to Green Steel

Digitalization is not an end in itself but an indispensable instrument on the path to decarbonization of the steel industry. Digital technologies make it possible to optimize production processes so that energy is used more efficiently and CO₂ emissions are systematically reduced.

A concrete example: Through AI-supported process optimization, blast furnaces can be operated significantly more efficiently. Tim Eschert, CEO of Fero Labs, puts it drastically: "Every day that blast furnaces run without AI-based process optimization is unnecessarily expensive and dirty." The potentials are considerable: Through optimized temperature control, better scrap utilization, and more precise alloy addition, energy consumption and emissions can be significantly reduced.

However, recycling offers the greatest decarbonization leverage - melting scrap via electric arc furnaces, which requires up to ten times less energy than the classic blast furnace route. The environmental bonus of recycled green steel resulting from rising CO₂ prices will boost demand in the future: Compared to production from iron ore via the blast furnace route, recycling saves an average of 1.67 tons of CO₂ per ton of steel - equivalent to the amount of CO₂ that a car emits over a distance of 9,000 kilometers.

The pricing of the CO₂ component is also being driven forward by regulatory requirements such as the EU CBAM system (Carbon Border Adjustment Mechanism). From 2026, companies must transparently demonstrate the carbon footprint of their products - a requirement that can hardly be met without digitalized processes and data integration.

The Challenges of Digital Transformation

Despite all successes, digital transformation continues to pose significant challenges for the steel industry. The integration of various IT systems, the construction of "data lakes," and the development of AI-based solutions require substantial investments and qualified personnel. Especially small and medium-sized enterprises often face major hurdles: They lack the appropriate data foundation, qualified specialists, or sufficient experience and trust in the new methods.

Cybersecurity is also a central challenge: The more networked production becomes, the larger the attack surfaces and entry points for cyberattacks. Companies must therefore invest significantly in IT security and continuously train their employees.

Outlook: The Steel Industry of Tomorrow

Digitalization of the steel industry has made rapid progress in recent years but simultaneously faces further major development steps. The vision of a fully networked, AI-supported steelworks is moving closer, but a completely autonomous plant will not exist in the foreseeable future. Andreas Dalchow from ArcelorMittal puts it realistically: "No, not completely autonomous. But it is quite astonishing how few people are needed for the actual operation of a plant."

The future lies in the intelligent combination of human expertise and digital technology. AI will not replace humans but will expand their scope of action and put decisions on a better data basis. Modern analytics makes visible what was previously hidden and enables optimizations that were not possible before.

For European steel manufacturers, digitalization is more than a nice-to-have - it has become a matter of survival. In a global competitive environment where cost efficiency and sustainability are equally demanded, digital technologies offer the key to competitiveness. Companies that invest in digitalization now secure advantages for the coming decades. Those who hesitate risk losing connection to the global elite.

The European steel industry has set the right course: With innovative research projects like DiGreeS, bold pioneers in AI application, and established digital trading platforms, the foundation for successful digital transformation has been laid. Now it is important to consistently continue this path and fully exploit the potentials of digitalization. Many roads lead to Rome. However, all of them are signposted with "AI."

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Industry 4.0 Wheel (Source: Adobe Stock / arrow)

Further Information and Sources

Online Sources:

Magazines:

  • 5-6/2023: Interview mit Dr. Sebastian Kreft (Metalshub): „Gamechanger Carbon Footprint", S. 22-25.
  • 5-6/2023: Nicole Voigt (Boston Consulting Group): „Mit KI grünen Stahl als Wachstumschance nutzen", S. 33-36.
  • 5-6/2023 – Spezial Schrott: „Schrotthandel: Umweltbonus beflügelt Nachfrage", S. 38-41.
  • steel 01/2024: "Kocks and LAP introduce innovative hybrid measuring system", Kocks Measure + Inspect GmbH & Co. KG und LAP Measurement Technology GmbH, S. 45-47.
  • steel 01/2024: "Danieli & ABS: Setting Things Straight", Danieli, S. 41-44.
  • steel 01/2024: "SMS group builds 5G Campus network for research", SMS group, S. 10.
  • steel 01/2024: "Swiss Steel and AddUp present Printdur HCT", Swiss Steel Group, S. 50.
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