sectoral restructuring and environmental management in the eu iron and steel sector†

European EnvironmentEur. Env. 9, 142–153 (1999)

SECTORAL RESTRUCTURINGAND ENVIRONMENTALMANAGEMENT IN THE EU IRONAND STEEL SECTOR†

Jonathan R. Barton*

School of Development Studies, University of East Anglia, Norwich, UK

The EU iron and steel industry hasundergone rapid transformation since theearly 1980s. Privatization programmes,rationalization, increased international tradein raw materials and steel products andpressures for energy reduction and improvedenvironmental protection have all led tosignificant structural changes. To remaincompetitive, EU firms have had to improveproductivity, develop niche markets andfoster client relationships. Alongside therestructuring, environmental regulations andmarket and stakeholder demands relating tothe environment have brought newpressures to bear, increasing investment andoperating costs.

This article focuses on firm responses andtwo points are made. The first is that EUsectoral restructuring is a response toincreased global competition and that steelsales are increasingly determined by price.As prices become more competitive andcosts are pared, particularly labour, there has

*Correspondence to: Jonathan Barton, School of DevelopmentStudies, University of East Anglia, Norwich NR4 7TJ, UK.†This paper is based on interviews conducted during July –August 1997 as part of a European Commission DGXII projectentitled ‘Environmental regulations, globalisation of productionand technological change’. This project involves researchers at theUniversity of East Anglia (UK), University of Oslo (Norway) andthe United Nations University’s Institute for New Technologies(The Netherlands). My thanks to them for their comments, also toGraham Funnell (UK Steel Association). The views expressed arethose of the author alone.

CCC 0961-0405/99/040142–12 $17.50Copyright ? 1999 John Wiley & Sons, Ltd and ERP Environment.

been an important relative increase inenvironmental expenditure for firms.Awareness of these costs, also the marketand public relations issues relating to theenvironment, has led to firm responses thatrange from minimal compliance to proactive‘first mover’ strategies. Scale of operationand process type are important factors indetermining these environmental strategies.The second point is that, in the longer term,there will be a need for better regulator –firm coordination in order to move beyondthe current drivers of compliance and publicpressure. To promote cleaner productionapproaches and improved environmentalperformance evaluation across the sector willrequire greater flexibility and economicawareness from regulators, and a moreinnovative and integrated approach toenvironmental protection by firms.Copyright ? 1999 John Wiley & Sons, Ltdand ERP Environment.

STEEL AND THE ENVIRONMENT

A longside the chemicals industry, pulpand paper, minerals processing, andother targeted sectors, the iron and steel

industry has been categorized as a leading ‘pol-lution intensive’ activity. However, producersargue that environmental performance has beenstrong since the 1970s, such as a 25% reduction inenergy consumption (IISI, 1998), and that now

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the term ‘potentially polluting’ is more accurate. Itis true to say that their claim for the industry (theamalgamation of the processes of iron making,steel making and the primary and secondarytransformations of steels) has some merits, butthe counter-argument, principally from the non-governmental sector and civil society organiz-ations, is that emissions should be reduced furtherand within a relatively short time frame, whetherbased on existing potential environmental impactsor a precautionary principle. The threat of acarbon tax across the EU is one example of howthese concerns are being carried to government,provoking sectoral opposition and alliances withother energy-intensive sectors (ERT, 1997). AnInternational Iron and Steel Institute (IISI) PolicyStatement (n.d.) on climate change and the carbontax stresses that

Measures that involve the introduction oftaxes on carbon dioxide emissions from thesteel industry would not result in any signifi-cant reduction in such emissions but in drain-ing the financial resources of the sector theywould impact negatively on the industry’sinvestment programme and research anddevelopment. These represent the best wayfor the industry to meet the challenge ofsustainable development in the longer term.

In the context of increasing public demands forfurther regulations and stricter requirements, firmsmust engage with the preoccupations of theircritics and move towards more ‘environmentallyfriendly’ or ‘environmentally sustainable’ oper-ations. As much as changes in actual emissionsand discharges, this requires a change in percep-tions of the industry. Engagement with thedebates began in earnest during the 1980s and hasintensified during the 1990s with the demandsof new Directives, climate change emissionstargets, environmental management certification,recycling and technological initiatives. However,there are already wide variations in terms ofresponses, from minimal ‘compliance seekers’ atone end of the spectrum to ‘first mover’ firms atthe other.

On the whole, regulatory and ‘stakeholder’ (i.e.shareholder, worker and neighbouring resident)pressures have led to increased compliance,greater environmental transparency (i.e. environ-

Copyright ? 1999 John Wiley & Sons, Ltd and ERP Environment.

mental reporting) and increased responsiveness toenvironmental protection, whilst new process andcapture technologies have not only reducedemissions per unit of output but also contributedto greater efficiency and rising total factorproductivity. New environmental managementdepartments have overseen these developments,and have also promoted environmental awarenessof workers and neighbouring communities viatraining and outreach programmes, improvedmonitoring and procedures and communicatedenvironmental performance developments withinthe firm and beyond. All these developmentsreflect a positive engagement with environmentalissues.

The issues within the iron and steel sector arewide ranging due to the scale and complexity ofdifferent plants. The most important distinctionis between integrated plants, that make pig ironto convert into virgin steel, and electric arcfurnaces (EAFs), which convert scrap steel intoclean steel. In terms of production scale, tech-nologies and pollutant releases, the two areeasily separated. In the case of EAFs, the princi-pal issue is the control of dust emissions andother atmospheric emissions, whereas integratedplants have a more extensive set of environ-mental preoccupations since it is the ironmakingphase that gives rise to greatest emissions(within the coking, sintering and blast furnaceoperations) (see Table 1).

Beyond pollutant release factors, there are alsoconsiderations of energy management, recyclingand sales of by-products (particularly blast furnaceand steelmaking slags), monitoring and controlactivities and environmental communication withregulatory authorities and other interested parties.Over time, the role of environmental manage-ment teams has become more complex as thedemands of compliance and a strategic approachto environmental protection have become increas-ingly important (for economic and public relationsmotivations), i.e. EMS, cleaner productionapproaches, recycling and attempts to close loopswithin the production system. Nevertheless, thereare considerable gaps amongst firms, betweenindependent producers, which are often smallscale and lack resources for environmental invest-ment and management personnel, and the largesteel groups, which have adopted strategicapproaches to environmental affairs and regard

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environmental R&D and communication as essen-tial components of their corporate operations.Much of the explanation as to differingapproaches to environmental management lies inthe on-going restructuring of the steel sectorwithin the EU, and the stability and resourcingimpacts that this engenders for different firms.

SECTORAL RESTRUCTURING ANDTHE IMPACTS OF GLOBALIZATION

The international recession of the 1980s markeda decline in state support for the sector andgrowing anxiety regarding the decline in demandfor structural steels, which had been so importantin the postwar reconstruction of European infra-structure and industry (see Carruth, 1989;Crandall, 1996). Two different trends were con-verging: the shift in production and consumptionto developing economies, which affected growth


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rates in developed economy production; and aslowdown in international consumption (Howellet al., 1988; Hogan, 1994). Since many steel plantswere effectively defended from market compe-tition by their national governments (for labourand regional development reasons), their capacitylevels had not responded to the consumptiondecline. The bubble burst as the imbalance in steelproduct markets could no longer be sustained,provoking restructuring during the 1980s, fol-lowed by responses to the globalization ofthe industry in the 1990s (Schuler, 1996). Thisglobalization has led to an intensification of steelproduct trade, more competitive pricing of theseproducts (with subsequent dumping accusations)and new investment patterns, including jointventures, and mergers and acquisition.

The make-up of production (in terms of own-ership, process and production) has changedconsiderably since 1980 and most leadingEuropean companies have adopted a global vision

Table 1. Pollutant releases and potential environmental impacts of steel manufacture

Process stage Potential pollutant release Potential environmental impact

Raw materials handling Dust. Localized depositionSinter/pellet production Dust (inc PM10), CO, CO2, SO2, NOx,

VOCs, methane, dioxins, metals, radioactiveisotopes, HCl/HF, solid waste

Air and soil contamination, ground-level ozone,acid rain, global warming, noise

Coke production Dust (inc PM10), PAHs, benzene, NOx,VOCs, methane, dioxins, metals, radioactiveisotopes, HCl/HF, solid waste

Air, soil and water contamination, acid rain,ground-level ozone, global warming, odour

Scrap storage/processing Oil, heavy metals Soil and water contamination, noiseBlast furnace Dust (inc PM10), H2S, CO, CO2, SO2, NOx,

radioactive isotopes, cyanide, solid wasteAir, soil and water contamination, acid rain,ground-level ozone, global warming, odour

Basic oxygen furnace Dust (inc PM10), metals (e.g. zinc), CO,dioxins, VOCs, solid waste

Air, soil and water contamination, ground-levelozone

Electric arc furnace Dust (inc PM10), metals (e.g. zinc, lead,mercury), dioxins, solid waste

Air and soil contamination, noise

Secondary refining Dust (inc PM10), metals, solid waste Air and soil contamination, noiseCasting Dust (inc PM10), metals, oil, solid waste Air and soil contamination, noiseHot rolling Dust (inc PM10), oil, CO, CO2, SO2, NOx,

VOCs, solid wasteAir, soil and water contamination, ground-levelozone, acid rain

Cold rolling Oil, oil mist, CO, CO2, SO2, NOx, VOCs,acids, solid waste

Air, soil and water contamination, ground-levelozone

Coating Dust (inc PM10), VOCs, metals (e.g. zinc,C(VI)), oil

Air, soil and water contamination, ground-levelozone, odour

Waste water treatment Suspended solids, metals, pH, oil, ammonia,solid waste

Water/groundwater and sediment contamination

Gas cleaning Dust/sludge, metals Soil and water contaminationChemical storage Different chemicals Water/groundwater contamination

Source: Ministry of Housing, Spatial Planning and Environment, The Netherlands (1997).

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to compete at an international level (see Table 2).These changes were externally and internallymotivated – through privatization, buy-outs,grouping and strategic alliances, with the resultthat the transformation and reconfiguration of theEU steel sector has taken place at various speedsdepending on the country and region. One of themost notable outcomes of this multispeed restruc-turing is criticism of continuing subsidy and stateintervention by member states in favour of theirdomestic producers, in contravention of EU law.

The outlook for European steel is closure ofless efficient sites, mergers, fewer firms in eachproduct line and concentration of productionon a few, well-located coastal sites. Thisoutcome is likely to minimise the cost ofmeeting a given level of demand, improveproduct quality and enhance the competitiveadvantage of European steel. (Aylen in SteelTimes International, May 1993, p 34.)

The future of the EU iron and steel industry asoutlined by Jonathan Aylen is already takingplace. The 1990s have been characterized byhighly competitive international steel prices andincreasing output from newly industrializing andtransitional economies (see Table 3). The EUsector has been transformed from the heavyindustrial sector of the 1960s and 1970s by the


rising contribution of electric arc furnace produc-tion and the push towards more specialized,client-oriented rather than bulk steels. To remaincompetitive, the pursuit of higher productivitylevels, improved management and firm marketingtechniques and niche market domination nowdominate the EU steel agenda. Environmentalprotection and control is also now part of thisagenda although it does not yet compare withdirectly product-related process and productivityfactors in terms of executive managementdecision-making.

Due to restructuring and increasing non-EUproduction and competition, the costs andcommitments implicit in the undertaking ofenvironmental policies have been rising relativeto total production costs. The outcome has beenthat, within the narrow profit margins of late1990s steel production (due to global over-capacity), environmental costs have become sig-nificant and have raised managerial awareness ofenvironmental issues within practically all aspectsof the steel production process, from raw materialselection and energy use through to marketingand sales strategies influenced by ‘green’ con-sumer demands downstream of the steelmakingprocess. The current situation is far removed fromthe ‘dirty’ industry image of iron and steel pro-duction in the early postwar period when demandwas high and the sector maintained a strategic

Table 2. The largest European steel producing companies, 1996 (amongst leading 60 worldproducers)

European ranking Company Origin Prod. (Mt) World ranking

1 British Steel UK 16.1 32 Usinor Sacilor France 15.0 43 Riva Italy 13.1 54 Arbed Luxembourg 11.8 65 Thyssen Germany 9.3 126 Ispat International UK 8.4 167 Cockerill Sambre Belgium 6.2 268 Fried Krupp Germany 6.2 279 Hoogevens Netherlands 6.2 2810 CSI Spain 4.2 4111 Preussag Germany 4.1 4212 Voest-Alpine Austria 4.1 4313 Rautaruukki Finland 3.6 5214 SSAB Sweden 3.4 60

Source: International Iron and Steel Institute (1998).

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role within national development, supported bythe European Coal and Steel Community (ECSC)established by the 1952 Treaty of Rome.

The impacts of environmental policies at theEuropean and member state levels have beenincreasingly influential within the cost structure ofthe steel firms, especially when examined in anEU/non-EU context. The principal factor in ironand steel competitiveness is price, although to thiscan be added flexibility, service and quality(DTI, 1995). Once one adds to this the labourdimension, changed beyond all recognition by therestructuring process, and the wholesale changesin EU domestic steel demand (quantities andqualities), the competitiveness issues becomemore apparent. Responding to low price steelsproduced in industrializing and transitionaleconomies (on the back of low labour costs andlax environmental protection, EU producersargue), firms have been forced to remain competi-tive via efficiency and productivity gains achievedprincipally via technological innovation:

The European industry . . . faces growinginternational competition from both thehighly advanced American and Japaneseindustries and new players from EasternEurope and the developing world, whichoften exploit cheap labour and materials withscant regard for the environment. A competi-tive European industry is therefore as crucialas ever. The only viable response is advancedtechnology, requiring constant research,development and innovation. (ECSC, 1994,p 1)


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The factor of environment in competitivenessconsiderations is as yet underdeveloped. It isreferred to by individuals and organizations asbeing important in competitiveness, yet this isunsubstantiated by statistics or other evidence;this is related to the lack of reliable data onenvironmental investments and compliance costs(particularly operating costs). It is likely that, asenvironmental auditing and improved valuing ofenvironmental factors becomes more widespread(with EMAS and the introduction of ISO 14.002),it will be possible to equate the environmentalfactor. However, until evaluation systems aremore widely employed, the qualitative expla-nation of the environmental impact on competi-tiveness remains the only basis for examination.

Despite the lack of accounting for environ-mental costs, environment managers maintain thatcosts are significant and increasing. The under-lying factor of their importance is that environ-mental investments and operating costs for themaintenance of environmental technologies andsystems (which are themselves significant energyusers) are a capital diversion. Instead of theseinvestments being directed into production andthe product itself, pollution abatement costs arenot explicitly product related although they areproduct cost related. This capital diversion issue isimportant to the firms; a Belgian environmentmanager noted that a firm can only use the capitalonce, and that if it is used for the environment, ithas to be taken from production, therefore it isnot invested in the product, so where is thebenefit? This attitude predominates amongstproducers.

Table 3. Major steel producing countries, 1997 (Mt crude steel production)

1 PR China 107.6Other EU member statesamongst leading 40:

2 Japan 104.53 United States 97.5 11 France 19.84 Russia 46.4 12 UK 18.55 FR Germany 45.0 17 Spain 13.76 Rep. of Korea 42.6 19 Belgium 10.87 Brazil 26.2 24 Netherlands 6.68 Italy 25.8 26 Austria 5.29 Ukraine 24.7 27 Sweden 5.1

10 India 23.7 33 Finland 3.7

Source: ISSI (1998).

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At this level, it can be said that firm managersconsider environmental factors to be significantin the overall cost structure and that this canbe extended to suggest that those firms thathave fewer environmental compliance costs maygenerate a competitive advantage. The increasedglobalization of the industry and the steelmarket has led to increasing attention to competi-tive advantages and disadvantages that arederived from different national and regionalenvironmental requirements and related pollutionabatement costs. An important considerationhowever is that these environmentally relatedcompetitive impacts associated with environ-mental investments and the adoption of environ-mental management strategies and initiativescosts should be contextualized within the overallframework of the short term imperatives in theindustry, such as total factor productivity andproduct price. Pollution abatement costs areimportant and significant, yet they are only onefactor in a complex web of competitivenessindicators.

FIRM RESPONSES

The material generated in this section is derivedfrom interviews with steel firm environmentmanagers and regulatory agency representativesin Spain, Belgium and the UK (see Table 4). Thefirms include both integrated (I) and electric arcfurnace (E) plants; the distribution is skewed byfactors of geographical concentration of process


types and interview access. There are 40 inte-grated plants and 246 EAF plants across the EU,with the integrated plants producing 65% of totalEU crude steel (1996).

Firm responses to environment issues date backto the 1970s oil crises and the ensuing energyefficiencies and reductions in CO2 and SOxemissions. Since the mid-1980s, environmentalregulations have driven business strategies withpositive environmental performance outcomes asmuch as energy factors. Aloisi de Larderel (1992)notes that most responses can be categorized asone of the following: process design; plant equip-ment; reformulating products; substituting harm-less chemicals for toxic ones and simple operatingand housekeeping changes, adding that paybackon corresponding investment is often only one tothree years. Costs of regulatory compliance andinfringements, the increasing relative costs ofenvironmental responses, and impending cus-tomer demands for environmental accreditationhave been behind these measures.

With most companies investing up to an aver-age of 10% of total investment and operatingcosts each year in environmentally related activi-ties, increased awareness of the environmentwithin production and productivity has beenachieved. However, most companies do not holdwith the ‘win – win’ approach of Porter and vander Linde (1995) to environmental investments.Compliance is the driver in almost all cases butthere is little support for the notion that proactiveresponses partly induced by regulation lead to

Table 4.

Firms Environmental authorities

Belgium Sidmar, Ghent (I);Gustave Boel, La Louviere (I);Cockerill-Sambre, Liege (I);ALZ, Genk (E);Fabrique de Fer, Charleroi (E)

AMINAL, Brussels;Dept for Clean Technologies, Namur

Spain Productos Tubulares, Bilbao (E);Marcial Ucin, Azpeitia (E);Esteban Orbegozo, Zumarraga (E);Rico & Echeverria, Zaragoza (E);AZMA SL, Madrid (E)

Ministry of Environment, Madrid;Environmental Quality Dept., BasqueGovernment – Vitoria

UK British Steel, Llanwern (I);Co-Steel, Sheerness (E)

Environment Agency, Ridings Areas

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competitive advantages derived from eco-efficiencies or innovation. ‘First mover’ or‘win – win’ tactics in environmental technologiesand management are exceptions rather than therule, for instance, the environmental technologyspecialization of Voest-Alpine (Austria) andMannesmann-Demag (Germany). A separationcan be made however between large groups ofcompanies – such as Usinor-Sacilor in Franceand British Steel in the UK – which are advancedin environmental management strategies andenvironment R&D, and smaller lone companies,which struggle to resource environmental needs,from personnel to investments. This division canalso be made along the lines of integrated plants,which are often part of a group, and electric arcplants, which have traditionally been independent.However, this situation is slowly changing asmore EAF producers enter group arrangements,i.e. four EAF producers within Spain’s GrupoMarcial Ucin.

It is clear from the larger companies and groupsthat the forthcoming demands of IPPC/BAT, LifeCycle Analysis, the ISO 14000 series accredi-tation and EMAS are being tackled vigorously inpreparation for future developments in the marketand from regulators. This is particularly evidentin terms of the cooperation of the largerEuropean firms within European steel association(EUROFER) and IISI projects, i.e. EUROFER’scommittees to mediate BAT development, andIISI’s Life Cycle Inventory (LCI) and ultra-lightweight body car (ULSAB) projects. Thisenvironmental pressure from the market place,moving upstream from consumers of steel-basedfinal products through manufacturers to the steelproducers themselves, has been an importantdevelopment in the 1990s. It is no longer solelythe regulator bringing pressure to bear on firms,but also steel customers and public pressure atlarge. In this last regard, many companies haveimproved their communications with the localcommunity and local government in recent years.In Belgium, Cockerill-Sambre maintains communi-cations within the locality as one of the keypivots of its environmental strategy, dedicating amember of staff to this work.

A problem for many companies in terms of theenvironment is the paucity of data they haveregarding the actual costs of environmentalstrategies. Environmental accounting is not


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employed outside the Netherlands and the US foriron and steel companies on a national basis. Theseparation of environmentally beneficial activitiesfrom efficiency and production activities and tech-nologies is extremely complex. By labellingenvironmental technologies and activities as thosethat first and foremost improve environmentalperformance, it is possible to remove certainelements from the complexity but there aresignificant environmental impacts from othertechnologies and activities. The EuropeanCommission is currently working withEUROSTAT in order to develop an effectiveenvironmental accounting strategy that will allowcomparative study. Until that time, firms willremain unsure of their ‘real’ environmental costs.The development of EMAS in some larger groupswill require that they confront this issue, but thecomparative use of this data from firm to firm andcountry and country may be questionable. Interms of pollution abatement costs as a percent-age of investment and operating costs (as partiallyavailable in US Industrial Census data) there is noclear EU approximation. This absence of gooddata was a major finding of an EC (1996) reporton steel and the environment which concludedthat firm level data on emissions was highlyvariable and unsuitable for EU-wide comparisons.One may assume that environmental manage-ment costs, where they exist, are similarlyunsuitable.

EU steel firms have responded to environ-mental policy pressures in much the same way asthey have the pressures of restructuring andglobal competitiveness. Technology has providedthe basis of change and the focus remains onend-of-pipe systems, especially for smaller firmswith few resources for technological innovation.Where there have been process-based technologi-cal developments, they are often not consideredas cleaner technologies. An example is the con-tinuous casting of steel, which has an importantenergy efficiency dimension, but is considered asaiding productivity and quality, almost to theexclusion of its recognition in terms of environ-mental impact. Another example is the recyclingof gases around the plant in order to reduceenergy use. Once again, the contributions toproductivity and energy costs are highlightedrather than the emissions to air. Rather more

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important in many ways in terms of environ-mental management within the sector is howtechnologies are perceived by managers andwhat the balance is in terms of production ef-ficiencies and environmental trade-offs. Scepticismsurrounding the term ‘cleaner technologies’ andwhat it should mean for a steel plant underliethese perceptions. It also reveals some of theproblems that are associated with environmentalauditing and accounting in terms of the separ-ation of process and environmental factors forcalculation.

In terms of preoccupation for environmentmanagers in the industry, air emissions head thelist, followed by water discharges, solid wastesand noise and soil remediation issues. Atmos-pheric emissions are a significant cause of concernfor producers, in order to meet regulatorystandards across a wide range of pollutants, fromSO2, CO2 and NOx to zinc, molybdenum andcadmium (IISI/UNEP, 1997). The principal strat-egy employed against atmospheric emissions con-tinues to be end-of-pipe capture. Whilst attentionto the quality of raw materials and better use ofthose materials, thus ensuring more efficient trans-formation and reduced by-product emissions, isgathering ground, air emissions controls accountfor the largest investment in environment tech-nologies. A key area of air emission R&D cur-rently under way is the way in which EAF dusts,often with a high zinc and lead content, can bereprocessed on site for reuse. Dust collectionsystems are present in all sites but these dustsrequire reprocessing in order to separate particularheavy metals from ferrous-rich material that maybe reintroduced to the furnace. The main dustreprocessing plants are in northern France, Spainand Sweden and, as technology maintenance,transport and landfill costs rise, new technologiesbecome viable and innovative responses are likelyto be introduced, breaking through a ‘technologi-cal ceiling’ that has persisted in this area. TheUK firm Co-Steel has a pilot project in operationwith Britannia Zinc in order to separate zinc fromthe dust and to return ferrous-rich material backto the furnace. For integrated plants, increasedattention is being paid to concerns regardingdioxin and furan emissions, as well as theon-going control and minimization of primaryand fugitive emissions of greenhouse gases anddust.


The focus on air emissions replaced the priori-tization of water discharges from the early 1970s.In general terms, wastewater treatment and dis-charge is well advanced amongst EU firms andnow constitutes a much reduced problem. Never-theless, firms continue to pay attention to watercontrol since regulatory authorities often chooseto penalize plants on their water dischargeinfringements rather than on air emissions since itis easier to monitor than stack sampling. Theprincipal means of water control have been two-fold: physical, chemical and biological treatmentand recycling. Treatment plants are common to allintegrated plants and performance varies little.Recycling has both decreased water input costsand also discharge levels. Water is circulatedwithin closed or semi-closed circuits across theplant, cascading from one piece of equipment toanother via cooling fans or as independent sys-tems for each major operation in the productionprocess. Water preservation with these systemscan be in the range of 95% (EC, 1995). On-sitepurification also ensures that water dischargesmeet the standards required.

Each plant has its own particular water issuesand problems, ranging from brackish water avail-ability, which impacts upon equipment efficiencyin coastal plants, to the case of the Belgian firmthat changed its use of acids in the secondaryprocessing of the steel (pickling) in order toreduce nitric acid concentrations, which wereresulting in high nitrogen emissions in its lowflow water discharge stream. This latter exampleis a good case of where regulations have led toinnovative responses within the production pro-cess rather than an end-of-pipe response. SmallerEAF firms, common in Spain, continue to utilizemunicipal wastewater plants since the volume andquality of discharge poses few problems. As waterbecomes easier to manage, the issue of by-productmanagement is rising swiftly up the environmentmanager’s priorities to challenge the focus on airemissions.

Solid waste (by-products) from productionincludes blast furnace and steelmaking slags, andprocess sludges and oils. The use of slags inconstruction and cement production is importantfor producers, providing a commercial outlet forthese by-products, although in many regions andcountries there are politically motivated decisionsregarding slag use. In areas where aggregates

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mining plays a prominent role in regionaleconomic activity, the argument for the use ofmined materials is strong. Another political issueis the extent to which construction programmesare being carried out, and how new road construc-tion relates to plant location, thus slag transportcosts. The iron and steel industry has madesignificant steps in reducing off-site deposits of itsby-products. If by-products cannot be put backinto the furnace, or useful metals separated fromdusts, these have to be landfilled at increasingcosts. These costs have led to innovativeapproaches for recycling of by-products. Cur-rently firms aim to reuse, sell or recycle over 90%of their products and by-products. In a typicalintegrated steel plant (figures for Sidmar N.V.,Ghent),

67.3% of production is steel, with the followingby-products:

21.0% blast furnace slag, sold and used in thecement industry

6.7% steel slag, sold and reused in the roadconstruction industry

2.3% inert building rubble, recycled1.2% benzol, sold1.2% other slag, sold0.3% waste products, authorized deposition in

landfill.

With landfill costs rising and uncertaintiesregarding future regulations, firms are reducingwastes to a minimum but the classification ofcertain by-products as wastes (such as certainslags) can be a significant obstacle, despite the factthat they are sold as inputs into other industries.The European Confederation of Iron and SteelIndustries is pursing these classification changesand the removal of selected by-products from‘Green Lists’ of waste products. Alongside itscompetitor products, aluminium and plastics, therecyclability of steel and its by-products gives itan advantage as LCA, recyclability and sustain-ability strategies gather pace. Across the world,the industry recycles 425 million tonnes of steeleach year, principally through EAF plants (IISI,1993), and with initiatives for greater use of steelcans, ultra-lightweight steel body cars and steelhousing, the material is being marketed stronglyin terms of recyclability and its ‘green’ credentials.

Apart from the principal pollution media,newer concerns for managers include noise and


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land remediation. In many areas, productionfacilities grew up in towns and cities during the19th century and the separation of site andresidential areas is limited. A more contemporaryissue, for two sites in Spain for example, is theencroachment of residential areas on the limits ofindustrial zones. Environmental corridors, plantedwith trees to reduce noise transmission, or thedemarcation of open spaces have not beenemployed by local authorities, resulting in firmshaving to initiate a range of strategies such aswall construction, equipment enclosure, damp-ing production plant, and equipment such asventilator fans (often environmental technologiesthemselves). Alongside noise control, landremediation is also rising up the firm environ-mental agenda. Restructuring has led to theclosure of excess capacity in many regions,e.g. British Steel’s Ravenscraig plant in Scotland.Not only has this had tremendous social impacts(see Bain, 1992), but there is also the on-goingproblem of demolition and soil remediation.Each of these issues poses a range of problemsthat are linked to environmental protection byproducers, and for which they pay the costs. Forinstance, demolition entails its own significantdust problems, and soil remediation is prob-lematic due to the longevity of productionunder conditions of very limited environmentalprotection.

Although firms have been moving ahead on allthe issues noted above, there has been a tendencyduring the 1990s for a ‘wait-and-see’ approach toenvironmental management due to the IPPC BATreference document (BREF) preparation at theEuropean IPPC Bureau in Seville. Despite the factthat BAT is for guidance and is not compulsory, itis its interpretation by regulators that will deter-mine how influential it becomes as a tool forindustrial emissions control. Nevertheless, BAT islikely to remain the most significant externaldriver in terms of environmental investment strat-egies until 2007, when it is likely that firms will bepressurized into the adoption of these techniques.When the BAT requirements become known laterin 1999, firms are more likely to establish newstrategies and plan for the longer term, includ-ing environmental management and auditing sys-tems that can run alongside the new investmentprogrammes.

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CLEANER PRODUCTIONOPPORTUNITIES

With increasing demand in Asian (currently cur-tailed) and other developing economy markets,the larger EU firms are mounting joint ventureswith producers in situ in order to be well locatedwithin these market places. Although the processof firms establishing ventures beyond theirnational bases is still in its relative infancy com-pared with other manufacturing industries, thereis progress in this direction. British Steel hasrecently set up production activities in the US andMexico, for example. Even within Europe there isan increase in mergers and takeovers acrossnational borders, such as Cockerill Sambre’s pur-chase of Eko Stahl in former East Germany, theLuxembourg Arbed group’s controlling share ofSidmar and ALZ in Belgium and WesternEuropean interest in the privatizing firms of Eastand Central Europe, such as Nova Hut in theCzech Republic and Huta Sendzimira in Poland.

The likely trend in Western Europe is forcontinued restructuring, closures, mergers andalso expansion of larger groups into production innon-EU countries to access markets of increaseddemand. Only in this way, and with productdevelopment to support changing client demands(i.e. the automobile sector), will EU producers beable to remain competitive with non-EU produc-ers over the longer term in the expanding marketsof the global economy. Another factor thathas influenced this is the development of newproducts and specialized steels, such as stainlesssteels and alloys, with some firms specializing inniche markets, e.g. FAFER (Belgium) in specializedship hulls and Productos Tubulares (Spain) inthick seamless tubes, rather than competing intraditional bulk products.

What is important in terms of European ironand steel producers and the environment is theissue of competitiveness and non-EU production(see Morris, 1993; van Moltke, 1993). Europeanproducers make environmental investments tocomply with regulations; however they are com-peting in global markets with major producerssuch as China, India, South Korea and Brazil,who are producing under significantly differentenvironmental frameworks (Hogan, 1994). Withinternational steel prices highly competitive,different national environmental costs add a


premium to the product price, especially sincethese investments do not contribute to the prod-uct directly (in terms of energy or quality forinstance). Whilst there is no evidence of capitalflight by European iron and steel producers due toenvironmental regulations, the regulatory burdenremains a factor of competitiveness. A caveathowever is that there is also a wide variation ofregulatory enforcement and pollution abatementexpenditure across Europe, as there is withincompeting non-EU economies.

There is clearly a need for effective employ-ment of international environmental agreementsand well enforced regulatory systems acrossEurope and in non-EU producing nations if theglobal market is to be environmentally ‘levelled’.The level playing field is an unattainable goal, butits pursuit is a worthwhile one in terms ofbenchmarks or baselines of global environmentalsustainability. The dilemma facing legislators andregulators is to establish minimum standardsbased on emissions levels, management systemsand technological developments, and to thenprovide flexibility in order to respond to localcircumstances (topographical, process-related etc)and to promote and credit innovation. Poorlyperforming firms must meet acceptable baselineswithout preventing leading edge firms fromcontinuing their emissions reduction investmentsand strategies. Regulatory regimes must not leadto competitive advantages for ‘dirty’ producers,whether 10 km away or in another continent;IPPC/BAT is a positive movement in thisdirection.

The European environmental regulatory sys-tem must work in collaboration with producers toreduce emissions, but also to bear in mind thethree Es of the UK Environment Agency’s strat-egy: emissions, efficiency and economics. Tech-nologies developed with all the three Es in mindare more likely to be taken up more widely andalso to contribute to positive environmental per-formance. Once these technologies are matchedwith effective environmental management sys-tems to ensure good maintenance procedures andother housekeeping practices, the capabilities ofthe firm to respond to regulatory demands andalso the demands of stakeholders will increase.The cooperation of regulatory agencies with firmsacross the EU member states will be crucial to thisprocess.

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J. R. BARTON

The European iron and steel industry hasundergone extensive restructuring during the1980s and this continues into the 1990s withfurther mergers, buyouts and closures. Theincrease in environmental concerns within theindustry, reacting on the whole to the regulatorydevelopments at the European and member statelevel from the mid-1980s, have led to significantenvironmental changes. In 1994, 30% of researchprojects approved by the ECSC related toenvironmental concerns (ECSC, 1994). Whilst it isend-of-pipe technologies that still provide theprimary response to emissions control, there are alimited number of process and production (PPM)developments that have given rise to reducedemissions and efficiency gains (see Nakajima,1995; Ruth, 1995). Future developments in pro-cess research may well lead to significant changesin the production system in the early part of thenext century as producers attempt to find a wayaround the problematic emissions from coke andsinter plants; however existing options such asdirect reduction iron are unproven and are pres-ently impracticable at large production volumes.The balance between different steel productionroutes (integrated and EAF) is also likely tochange which will have environmental impli-cations since different systems have different rawmaterial and energy requirements (see Hirschorn,1981; Crandall, 1996).

It is clear that end-of-pipe strategies are reach-ing their limits. The capture, filtration and puri-fication processes for air and water emissions areemployed almost universally in Europe and athigh levels of efficiency. The next major stageof emissions reductions (following the likelyincremental introduction of stricter standards) willtake place in changing parts of the process. Whilstenergy concerns (approximately 20% of produc-tion costs) and a focus on quality of inputs intothe production process will continue to lead toeco-efficiencies, major innovations are as yet stillon the drawing board. The arguments of pro-ducers that they have achieved considerable emis-sions reductions since the 1970s and that theynow face higher environmental investments withless environmental performance benefits (a case ofdiminishing returns) is a valid one, but more thananything this suggests that the current approachto environmental performance, of end-of-pipe sys-tems and high levels of recycling, is insufficient.


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The next step is one of significant processchange, and with improved performance evalu-ation and attention to the costing of environ-mental factors in production (widely interpreted),incentives will be created and formerly nonviableoptions will become feasible. For steel producers,the choice of innovation and voluntary strategiesmust be weighed against the drive of regulatorycompliance and environmental pressures fromstakeholders and other interest groups. It is clearthat the larger firms are seeking to stay one stepahead of these pressures via proactive environ-mental management strategies; however the costsof doing so are also rising considerably and arenow an intrinsic part of contemporary steelproduction and competitiveness. Whilst largefirms are able to internalize these costs to someextent, the high cost of abatement technologiesand effective environmental management to main-tain them poses a more serious obstacle forsmaller firms. The IPPC/BAT implementationphase to 2007 will pose serious challenges tothese firms and may test their capacity andfinancial ability to restructure further.

REFERENCES

Aloisi de Larderel, J. (1992) Environmental management: anindispensable component of the iron and steel industry,in: IISI (ed.), Environmental Control in the Steel Industry:Papers Prepared for the 1991 ENCOSTEEL World Conference,IISI, Brussels, pp 8–10.

Bain, T. (1992) Banking the Furnace: Restructuring of the SteelIndustry in Eight Countries, Kalamazoo, MI, Upjohn.

Carruth, R.A. (1989) Industrial Policy Coordination inInternational Organizations, Frankfurt, Lang.

Crandall, R.W. (1996) From competitiveness to compe-tition: the threat of minimills to large national steelcompanies, Resources Policy, 22, (1/2), 107–118.

Department of Trade and Industry (DTI), UK. (1995)Competitiveness Analysis: Bulk and Structural Steels, London.

European Coal and Steel Community (ECSC). (1994) Invest-ing in Europe’s Industrial Future, DGXII, Brussels.

European Commission (EC). (1995) Techno-Economic Study onthe Reduction Measures, based on Best Available Technologies,of Water Discharges and Waste Generation from the Primaryand Secondary Iron and Steel Industry, European Com-mission, Luxembourg.

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Luxembourg.European Round Table of Industries (ERT). (1997) Le

Changement Climatique: (Kyoto, Japon, Decembre 1997): UneÉchance Déterminante pour l’Environnement de la Planete,ERT, Brussels.

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Hirschorn, J.S. (1981) Future steel technology and theenvironment, Materials and Society, 5, (1), 75–80.

Hogan, W.T. (1994) Steel in the 21st Century, Lexington, NewYork.

Howell, T.R., Noellert, W.A., Kreier, J.G. and Wolff, A.W.(1988) Steel and the State: Government Intervention and Steel’sStructural Crisis, Westview, Boulder, CO.

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International Iron and Steel Institute (IISI). (n.d.) UnitedNations Framework Convention on Climate Change: PolicyStatement.

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Ministry of Housing, Spatial Planning and the Environment,The Netherlands. (1997) Dutch Notes on BAT for theProduction of Primary Iron and Steel, The Hague.


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