Brazilian steelmakers are increasingly engaged in finding solutions to reduce greenhouse gas emissions and make their energy- and carbon-intensive operations more sustainable.

As part of these efforts, there is growing interest among these companies in using charcoal, which generates lower emissions than mineral coal in steel production.

In Brazil, charcoal is produced from eucalyptus, giving regions with vast forested areas a significant competitive advantage. This is particularly true for the state of Minas Gerais, a major hub for both steel and mining production.

Adriana Maugeri, president of the Minas Gerais forestry industry association (AMIF), who will participate in the Forest Leaders Forum on February 4 in Minas Gerais, speaks with BNamericas about the progress made in green steel production and the importance of charcoal in that process.

BNamericas: Where is Minas Gerais currently at in the production of green steel?

Maugeri: Minas Gerais is already a leader in green steel production, whether entirely green or partially so, through the use of charcoal derived from biomass.

There are various opportunities for the national steel industry to expand its competitiveness in producing green steel, that is, steel with low carbon emissions.

In this context, charcoal presents an interesting option because it offers scale and can be utilized in two ways. It can serve as a heat source for blast furnace heating, and it plays a role in the chemical reaction process during steel production.

Minas Gerais has large and intensive pig iron production capacity and all of this pig iron is made using charcoal from planted forests. This is because, since 2018, state law has mandated that only charcoal from such forests can be used.

I say this because producing charcoal from planted forests is our objective and focus – to enhance production within these renewable forestry cycles. Today, Minas Gerais is the world's largest producer and consumer of this type of charcoal.

In the past, charcoal production was associated with negative images, largely due to public campaigns highlighting rudimentary production methods, the use of irregular labor, child labor and the pervasive smoke from traditional kilns. However, that no longer reflects industrial charcoal production nowadays. The sector has moved past those practices, as there is no longer a market for that type of charcoal.

For this reason, I see strong potential for further expansion in Minas Gerais while maintaining its global leadership.

BNamericas: How do societal pressures for ESG practices influence initiatives related to charcoal use in steel mills?

Maugeri: As discussions around GHG [greenhouse gas] emissions intensify, these processes become even more relevant. The sector has faced growing pressure from civil society and governments to reduce its emissions.

Moreover, charcoal production is also linked to the maintenance of planted forests and conservation efforts, which provide environmental and climatic benefits over seven-year cycles.

Without a doubt, I see this as a very promising scenario for Minas Gerais, for the consolidation of all this work. It's also a major opportunity for Brazil because, by learning from Minas Gerais, the country can explore new frontiers, including the concept of "energy forests" for sustainable production on a global scale.

There are interesting prospects for these solutions to gain traction in European, North American and Asian markets, particularly for green steel production, which can help reduce emissions from the products manufactured with it.

BNamericas: What are the main obstacles to expanding the use of charcoal in steel mills?

Maugeri: Currently, 12% of national steel production relies on charcoal. This is mainly because, beyond the climate discussion, producing steel with charcoal is significantly more expensive than using mineral coal. The entire process, from managing forests to labor costs, makes it more costly.

Additionally, there are technical differences in the production process. Most blast furnaces are not designed to switch between charcoal and mineral coal at will. They are typically built for one or the other, with only a few being capable of handling both. Therefore, adapting equipment is necessary.

Modifying a blast furnace is expensive, but I believe society is already demanding products with lower emissions. Even with existing restrictions, this transition is becoming increasingly viable.

Today, for steel mills, forest planting has become part of the business model because they require charcoal.

However, I must highlight two key challenges: the high cost of adapting machinery and the rising cost of land, both of which present obstacles to further progress.

BNamericas: Do you see any risks of delays in the global ESG agenda due to the new US administration, which has been signaling opposition to these initiatives?

Maugeri: Certainly, there's always a risk – not only of delays and setbacks but also of policy reinterpretations.

However, I believe that the ESG agenda, unlike earlier notions of sustainability, is now deeply tied to project financing. It is an issue driven by investors, and because of that, I think ESG concerns extend beyond political movements.

Of course, political shifts influence investors, but at the same time, this will reveal which companies are truly committed to clean production.

The climate change agenda is stronger than any political cycle. This isn't just a political issue – it's an environmental and survival issue, independent of government ideologies.

The US is experiencing an energy crisis, and we know that political repositioning occurs under pressure.

Many Brazilian steel mills have operations in the US, and it will be interesting to see how the industry navigates this evolving political landscape.

We're eager to understand how companies that have invested in the energy transition for decades are responding to the current scenario.