Sustainability
January 25, 2024
Outokumpu buys into recycler
Stainless steel producer Outokumpu of Finland has completed its planned acquisition of a 10% stake in a long-established supplier, German recycler Cronimet, following regulatory approval. Outolumpu’s main motive is to secure sourcing of high-quality scrap close is to its steel making operations in northeastern Europe. But the companies will also co-operate on joint innovation and research with the goal of improving technologies to reduce CO2 emissions, lower costs and cut down on waste.
Outokumpu will act as a strategic partner in Cronimet, with the Karlsruhe-headquartered company retaining full operational control.
“Outokumpu does not see vertical integration into the supply chain of stainless steel scrap as part of its raw material strategy but considers cooperation and partnerships as the way forward,” the Helsinki-headquartered company added.
Cronimet, which also recycles ferroalloys, runs about 70 sites around the world.
Mills increase upstream scrap integration in response to CBAM and tightening environmental regulations in Europe.
The global stainless steel industry is witnessing increasing upstream integration among the key producers. Outokumpu is not the only stainless steel producer expanding into scrap collection In 2021 Aperam acquired ELG, the leading global recycling company, for a total consideration of €357 mn, including an equity value of €30 mn. According to our estimates, many European stainless steel producers are using 80% of stainless steel scrap in their melt, making stainless steel scrap a critical raw material component. Increased usage of stainless steel scrap also minimises the usage of primary material and lowers mills’ carbon footprint, making operations more compliant with the European CBAM regulations.
