OYAK Aims for a $1.1 Billion Investment in Steel within a Year
Erdemir, which outlined its green transformation roadmap in January, is completing the first year of its green steel journey with strong performance as it aims to reduce carbon emissions in crude steel production by 25% by 2030, 40% by 2040, and achieve net-zero emissions by 2050.
This year, Erdemir successfully executed hydrogen injection into its blast furnace, marking a first in Turkey, and has started developing alternative fuels to coal with the launch of its pilot Pyrolysis Facility. In line with its roadmap, the 4th Coke Battery is set to be operational at the beginning of 2025.
Emphasizing their commitment to "investing in the future," OYAK General Manager Süleyman Savaş Erdem stated, “We are aware of our responsibilities to our country and the world. Despite the challenging conditions prevailing in the global economy and steel markets, we continue our transformation investments while preserving employment and production."
As Turkey's first and largest integrated flat steel producer under OYAK Mining Metallurgy Companies, Erdemir has accelerated its investments in accordance with the Net Zero Roadmap announced at the beginning of 2024. The company plans to close 2024 with an investment spending of $1.1 billion, having successfully completed hydrogen injection into the 1st Blast Furnace in October and launched a pilot Pyrolysis Facility with an annual biochar production capacity of 7,000 tons.
A cautious outlook for 2025 in the steel industry was shared during the press conference held at Erdemir's facilities in Karadeniz Ereğli, elaborating on the activities within the first year of green steel production. In his evaluation of the steel sector in Turkey and globally, General Manager Süleyman Savaş Erdem stated that Erdemir, as a global steel powerhouse, would complete this year with significant advancements in green transformation investments despite the adverse conditions in the global steel industry. He emphasized that Erdemir leads with a vision of "investing in the future" and conveyed this message:
“2024 is expected to be a challenging year globally. Pressure on global growth continues. During this period of slowing demand and escalating trade wars, uncertainties prevail regarding 2025. Especially in steel production, global developments determine the balance. The decline in China’s steel demand raises expectations for a cautious stance regarding the global steel sector in 2025.
All fluctuations and losses in the world economy and global steel sector inevitably affect our country, which is the eighth-largest steel producer in the world, and domestic steel producers. However, Erdemir has managed to keep the contraction in profitability margins relatively limited in this environment. While some producers report production reductions and even indefinite halts due to the severe drop in global steel demand and rising operational costs, Erdemir continues its investments resolutely by protecting production and employment, maintaining its stability.
Despite uncertainties, we aim to preserve employment and production in 2025 with our high adaptability and past experiences, continue our investments in innovative solutions as part of our commitment to the future, and contribute to the Turkish steel sector by steadfastly advancing on our green transformation journey.”
Regarding sustainable steel, Mustafa Serdar Başoğlu, a board member of Erdemir and İsdemir, noted that all investments made in the last eight years, including green transformation, are aimed at preserving the country's steel capacity and ensuring sustainable production. Başoğlu stated, “Steel production in an integrated facility is a different and significant matter for producers around the world. The average investment period in an integrated facility is 4.5 years. The total investment expenditure of OYAK Mining Metallurgy Group has reached approximately $4.5 billion since 2016. Due to the pandemic in between, $3.4 billion of this occurred in the last four years. The pelletizing facility investment ongoing in Bingöl Avnik is an essential part of our green transformation roadmap. Once this investment is completed, we will become self-sufficient by 80-85%.”
Emphasizing that improvements in production processes are harmoniously aimed at gradually reducing both energy consumption and coal usage, Başoğlu stated, “We have planned a transformation investment of $3.2 billion by the end of 2030. We will close this year with an investment expenditure of $1.1 billion. Green transformation investments play a significant role in this."
Serdar Başoğlu expressed that Erdemir's capacity utilization rate currently stands at 95%. He mentioned, “We are aware that we need to produce the steel that Turkey requires domestically,” adding that the exports have exceeded 20%, with shipments to 54 countries.
Critical steps in transformation were further articulated by Erdemir's General Manager, Niyazi Aşkın Peker, who indicated that they are leading the steel sector in Turkey with their Net Zero Roadmap announced at the start of this year, aligned with environmental and sustainability responsibilities. Peker stated:
"In line with the European Green Deal, we aim to reduce our carbon emissions per ton of crude steel by 25% by 2030 and by 40% by 2040, ultimately achieving net-zero emissions by 2050. Through improvements in our processes, we strive to maximize energy efficiency while reducing our dependency on external resources, thereby maintaining our competitiveness in global markets.”
Expressing that they have surpassed a significant milestone this year in accordance with their roadmap, Peker shared the following information:
“By implementing innovative solutions and a vision of investing in the future, we accomplished hydrogen injection into the 1st Blast Furnace, marking a first in Turkey. As one of three steel producers in Europe to perform similar applications, we are thrilled to bring this technological infrastructure to our country. Additionally, by launching our pilot Pyrolysis Facility, aimed at producing fuel and carbon sources from biomass with an annual capacity of 7,000 tons, we have begun developing alternative fuels to coal. This facility will allow us to replace certain portions of the fossil fuels we use in our production process, thereby reducing our emissions and costs. Our next step is to get the 4th Coke Battery operational at the beginning of 2025. This investment will replace the continuously operational first and second batteries since Erdemir's establishment. Furthermore, the new 4th Coke Battery, with an annual capacity of 800,000 tons, will feature many high-tech characteristics, including dust collection filtration systems and high-level automation. This new battery will enhance our environmental performance and quality of coke production while facilitating a reduction in imported coke purchases.”
Regarding sustainability investments, Peker remarked that solar energy plant projects are ongoing, stating that Erdemir plans to produce 3,170,215 megawatt-hours annually at 17 different locations across 12 provinces with a total installed capacity of 2,036 megawatts—775 megawatts under Erdemir and 1,261 megawatts under OYAK Mining Metallurgy.
Some of Erdemir's investments aimed at both green transformation and efficiency include:
- 4th Coke Battery investment
- Blast furnace investments
- Steel mill investment
- Hot rolling mill investments
- Cold rolling mill investments
- Energy investments
- Other investments: Structural improvement of Erdemir Port and modernization of domestic wastewater treatment facility
- Green transformation investments: No.1 Blast Furnace hydrogen injection, pilot Pyrolysis Facility, pilot Briquetting Facility, gas injection into blast furnaces, electric arc furnace investment.
Turkey produces approximately 13.5 million tons of flat steel annually, with an installed production capacity of around 25 million tons. Turkey’s annual flat steel production is around 13.5 million tons, with an average annual consumption of about 19 million tons, partially met through imports (19.5 million tons of consumption in 2023). Erdemir and İsdemir, operating under OYAK Mining Metallurgy Companies, meet a significant portion of Turkey's steel needs with an annual production of about 7 million tons of flat steel.
Steel, an indispensable product due to its high strength, flexibility, and lightness, serves as a fundamental input for many sectors, including construction, automotive, white goods, pipe and profile manufacturing, general manufacturing, electrical-electronics, machinery, energy, heating equipment, shipbuilding, defense, packaging, and renewable energy.