New research: Investors willing to go harder, faster on green steel

A new report released by ACCR reveals investors are willing to move harder and faster than companies and policymakers towards a green steel sector, and are seeking more supportive market conditions so they can lift investment.

Ahead of the game: investor sentiment on steel decarbonisation, analyses a survey of 500 investors in the steelmaking, iron ore and/or metallurgical coal mining sectors, commissioned by ACCR and undertaken in December 2023. Survey respondents came from a range of investment institutions in Australia, the United States, Asia and Europe, with the largest cohort working as portfolio managers, investment managers or investment directors.

Key findings from the survey include:

• the majority of investors (81%) agree that ‘green steel’ cannot be produced with fossil fuels;
• 68% foresee a transition away from metallurgical coal in steelmaking, and 80% believe metallurgical coal’s risk profile will increase in the next decade;
• 59% agree that effective climate policies are crucial to accelerate the transition towards green steel production and are likely to positively impact their investment portfolio;
• 59% see importing green iron as a viable opportunity for steelmakers with limited access to renewable energy.

The full results of the survey are also available to read online.

Commenting on the findings, Fiona Deutsch, Company Strategist and Lead Analyst at ACCR, said:

“It’s clear from this research that investors around the globe have a very clear-eyed understanding of the opportunities of the green steel transformation and are willing to move faster - if the right frameworks are in place.

“With the vast majority of investors surveyed predicting a transition away from the use of metallurgical coal in steelmaking, it’s clear that fossil-fuel free projects are viewed as a safe, long-term prospect for shareholders. Any company seeking to expand metallurgical coal assets or double down on coal-based ironmaking should be paying serious attention to this strong investor sentiment.

“With nearly 60% of investors agreeing that effective policies are crucial to accelerating the transition and likely to positively impact their investment portfolio, this is a clarion call for companies and policymakers to facilitate an investment environment which supports green steel supply and demand.

“Investors understand that retaining metallurgical coal in steelmaking is increasingly risky, which is why nearly half of those surveyed are undertaking lobbying to combat this problem.

“By strongly backing innovative future solutions like ‘green iron corridors’, where green iron produced in countries like Australia would be exported to steelmakers in countries with less access to renewables, investors are signalling an appetite for the bold step-changes needed to decarbonise the steel value chain and secure long-term value for portfolios.