The severity and urgency of the climate crisis has become increasingly clear. The global economy needs to rapidly reduce carbon emissions, halving them by 2030 and reaching net-zero by 2050. RHI Magnesita is accelerating the Company’s climate action.

Climate Governance and Risk

Our climate strategy and progress is regularly reviewed by both the Board and our senior leadership. We have completed an in-depth assessment of climate risks to our business. These include physical risks, such as extreme weather events, disruption to operations and supply chain; as well as transitional risks, such as current and emerging regulations, technology, marketplace and reputation.

We completed our first climate submission to the CDP (formerly the Carbon Disclosure Project) in 2019, gaining a C rating. We are also exploring how to implement the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD).

Inmplemting the TCFD Recommendations
Governance	The Sustainability Steering Committee works with the Executive Management Team and CEO to assess climate risks and opportunities and develop and implement climate strategy. The Board Sustainability Committee regularly reviews climate risks, strategy and performance.
Risk Management	Key climate risks are disclosed in our submission to the CDP, which gained a C rating in 2019. Risks include physical risks (extreme weather events, disruption to operations and supply chain and transitional risks (ccurrent and emerging regulations, technology, marketplace and reputation). Key opportunities include recycling and offering customers full-service solutions, as well as potential opportunities that could result from capturing and managing process emission. We continously monitor and review our approach given the uncertrainties and speed of change in the area of climate risk.
Strategy	Provide innovative solutions to help customers reduce their carbon emissions and increase their opeational efficiency Decrease the carbon footprint of our raw materials Increase the energy efficiency of our operation Reduce the carbon intensity of our energy sources
Metrics and Targets	Our target is to reduce Scope 1, 2 and 3 emissions (raw materials) per tonne by 15% by 2025. We measure our carbon emissions using the GHG Protocol.

Our Target and Progress

In 2019, we revised upward our emissions reduction target, almost doubling it by including Scope 3 emissions from raw materials. Our commitment is now to reduce Scope 1, 2 and 3 emissions (raw materials) by 15% by 2025, while improving energy efficiency by 5%. We are also investigating how RHI Magnesita could adopt a Science-Based Target for carbon emissions reduction.

CO2 Emissions		Absolute Emissions (tonne of CO2)			Relative Emissions (t CO2 per tonne of product)
	2018 (base year)	2019	Change vs 2018	2018	2019	Change vs 2018
Scope 1	2,629,000	2,275,000	-354,000	0.85	0.81	-4,5%
Of which geogenic emissions	1,413,000	1,194,000	-219,000	0.46	0.43	-6.7%
Of which fuel-based emissions	1,165,000	1,051,000	-114,000	0.38	0.37	-0.4%
Scope 2	207,000	190,000	-17,000	0.07	0.07	1.3%
Scope 3 (raw materials)	2,536,000	2,157,000	-379,000	0.82	0.77	-6.1%
Total	5,372,000	4,622,000	-750,000	1.74	1.65	-5.0%

Our Approach

Our climate strategy spans our value chain and includes the following elements:

Providing innovative solutions to reduce customer emissions
Decreasing the carbon footprint of our raw materials
Increasing energy efficiency in our operations and
Reducing the carbon intensity of our energy sources.

Innovative Customer Solutions

The steel and cement industries represent approximately 80% of our customers. They are also major carbon emitters. Helping these customers improve energy efficiency in production can thereby reduce associated emissions.

Our new full-service solutions include:

Recycling services that help customers optimise production, increasing energy and resource efficiency
Working with customers to reduce consumption by extending the life of refractories
Coating technologies that improve refractory performance and energy efficiency in customer production processes
Digital solutions such as our Automated Process Optimisation (APO) that can reduce energy-intensive stoppages and optimise production
Helping customers digitise operational control to increase productivity and energy savings.

Reducing Raw Material Emissions

Geogenic emissions from raw materials represent almost half of our direct emissions (Scope 1 and 2). Carbon dioxide (CO₂) is released when the raw magnesite (MgCO₃) is processed into magnesium oxide (MgO), the basis for many refractory products.

These process emissions represent another major focus area of R&D investment, increasing recycled content in particular. By using recycled content, we avoid the geogenic emissions of virgin materials. We are increasing our use of recycled content and expanding our global recycling capacity. Find more information here.

We also research the best ways to capture and manage process emissions.

To develop breakthrough technologies, we work with others, such as the European Cement Research Academy (ECRA) and the K1-MET consortium which includes steel manufacturers, universities, start-ups and open-innovation platforms. In addition, we are setting up research partnerships with universities and others, including accelerators, start-ups and open innovation platforms.

Reducing the Carbon Intensity of Energy

We are assessing our potential to reduce Scope 3 emissions from electricity consumption. In addition, we aim to increase the proportion of renewables in our energy mix through on-site generation and purchasing.

At present, we cannot use renewables as our primary source of energy, given the high temperatures and quantities required by our business. Our production sites therefore still depend on carbon-intensive fossil fuels. Switching to alternatives is a highly challenging transition which we continue to explore.

Where feasible, we are moving from petroleum coke and oil to natural gas, the cleanest fossil fuel. In 2019, gas accounted for 53% of fuel used by our business.

Increasing Energy Efficiency

New production techniques are allowing us to improve energy efficiency. For example, we can now dry pre-cast shapes for 2.5 hours compared to the traditional five days.

In addition, we now achieve the same performance from refractory bricks tempered at 200°C that was previously possible only by firing at temperatures exceeding 1,500°C.

Energy efficiency initiatives are expected to save up to 61 GWh per year, more than 1% of our energy consumption in 2019.

Energy

	2018		2019
Energy use by source	Consumption (GWh)	Percentage of total	Consumption (GWh)	Percentage of total	change in absolute consumption 2018
Natural gas	2.992	59,6%	2.766	61,3%	-7,6%
Fuel oil	995	19,8%	847	18,8%	-14,9%
Diesel/petrol	78	1,6%	73	1,6%	-6,5%
Liquid gas	16	0,3%	23	0,5%	46,0%
Coal, coke & petcoke	935	18,6%	806	17,9%	-13,8%
Total energy consumption	5.017	100,0%	4.515	100,0%	-10,0%

NOx and SOx Emissions

Our programme to reduce emissions of nitrogen oxides (NOx) and sulphur oxides (SOx) is progressing well. We are targeting a 30% reduction by 2027 and have achieved this for pre-existing plants in China already, with our new Chizhou plant to follow in 2020. We will achieve the same in our US business by 2025, followed by Europe and South America.

Climate and Energy