Reducing carbon emissions is a key priority for RHI Magnesita. In addition to charting its own transition, the Group want to be a trusted partner to its customers on their journey to a low carbon economy.
As an energy-intensive industrial producer, RHI Magnesita will focus on decarbonising the main steps of its production process but also on supporting customers on their journey towards a low carbon economy. The Group’s carbon footprint shows that 50% of its emissions are direct emissions (Scope 1). The short term target is a 15% reduction in CO2 emissions intensity for Scope 1, 2 (emissions caused indirectly by the company when the energy it uses is produced) and 3 (emissions caused by suppliers on the company’s value chain) (raw materials) by 2025, as compared to 2018 levels.
RHI Magnesita’s path towards a low carbon economy considers the implementation of breakthrough technologies and investment. Government support and a level playing field will be essential to ensure it can remain competitive. It also needs green energy in sufficient quantities and at competitive prices, more responsive “smart” electricity networks to help reduce emissions, and the necessary infrastructure for transportation and sequestration of CO2.
Climate change represents both strategic and operational risks to RHI Magnesita’s business. These are grouped as physical risks and transitional risks. Physical risks include greater severity of flooding, droughts or other extreme weather events which could disrupt operations or supply chain. Transitional risks range from new regulatory frameworks and market dynamics, technology and investor expectations related to climate change.
The Group updated climate-related risk analysis, highlighting increased financial risk from carbon pricing, notably due to CBAM (Carbon Border Adjustment Mechanism) implementation in the EU, which is an EU policy instrument designed to level the playing field for domestic producers subject to carbon pricing by implementing a carbon-based import tariff on goods from countries without equivalent carbon pricing. RHI Magnesita also refreshed its physical climate risk assessment, considering IPCC (Intergovernmental Panel on Climate Change) scenarios, assessing 29 categories of hazards. Find more details on climate governance, strategy, and risk management on the Group’s Task Force on Climate-Related Financial Disclosures (TCFD) reports.
Refractory production is a ‘hard to abate’ industry. Raw material processing typically relies on fossil fuels to ignite and burn carbonate rock, leading to CO2 emissions. Additionally, the manufacturing process demands significant amount of energy, which generates additional emissions. Finally, the transportation and delivery of refractory products to customers worldwide also contribute to emissions. These geogenic emissions are classified as Scope 1* when resulting from the Group’s own production or Scope 3 in the case of externally purchased raw materials. Significant energy is also required for firing of products in the refractory manufacturing stage. Further emissions are generated in the shipping and distribution of refractory products to customers worldwide.
Through its investment in research and development of emissions avoidance or reduction technologies, the Group has developed a theoretical pathway to decrease its Scope 1, Scope 2 and Scope 3 (raw materials) carbon emissions from refractory production to close to zero.
* Scope 1 covers emissions from sources that an organisation owns or controls directly – for example from burning fuel in our fleet of vehicles (if they’re not electrically-powered)
* Scope 2 are emissions that a company causes indirectly when the energy it purchases and uses is produced. For example, for our electric fleet vehicles the emissions from the generation of the electricity they’re powered by would fall into this category.
* Scope 3 encompasses emissions that are not produced by the company itself, and not the result of activities from assets owned or controlled by them, but by those that it’s indirectly responsible for, up and down its value chain. An example of this is when we buy, use and dispose of products from suppliers. Scope 3 emissions include all sources not within the scope 1 and 2 boundaries.
The required measures have been prioritized in order of deliverability. The first stage of CO2 emissions reduction is to be delivered through measures which can be implemented by the Group without significant external support, including increased use of recycled raw materials, fuel switches and energy efficiency measures. It is estimated that these measures could deliver an absolute reduction of around 1 million tonnes of CO2 emissions, or 20% of the baseline total by 2035. Beyond this initial reduction, decarbonization measures become progressively harder to deliver. Recycling has a natural ceiling since refractories are consumed during use and only residual materials can be reclaimed, whilst fuel switches to natural gas only offer a partial reduction. The pathway for stages 2 to 4 is reliant on the provision of (i) new infrastructure or renewable energy sources such as hydrogen by outside parties; (ii) the use of technologies which do not yet exist or are not proven at pilot or production scale and (iii) significant capital expenditure, which may not be possible for the company to generate from its existing operations, obtain from its finance providers or receive via government funding.
Working within these limitations, RHI Magnesita is committed to:
1. Leading the refractory industry by decarbonizing its operations as fast as sustainably possible
2. Annually updating its decarbonization pathway based on the latest developments in technology, infrastructure and estimated capital expenditure
3. Continuing to invest in the development of new technologies to avoid CO2 emissions, proving technical readiness to use alternative low-carbon energy sources and to capture CO2 emissions for storage or utilisation
4. Offering customers enabling technologies for their own low-carbon production technologies together with low-carbon products and heat management solutions (with full transparency on carbon footprint) to enable them to reduce their Scope 3 (indirect) CO2 emissions from the purchase of refractories
5. Lobbying governments to invest in the necessary infrastructure to decarbonize the refractory, and other energy intensive, industries, including additional renewable energy generation, hydrogen supply networks, CO2 transportation and storage and carbon capture and utilization technologies
6. Collaborating with partners in the private sector to develop new renewable energy solutions, hydrogen energy networks and carbon capture and utilization technologies
RHI Magnesita has significant CO2 emissions within its own value chain and there are large emissions savings that can be delivered for its customers through improved heat management or other solutions. The Board of Directors therefore prioritizes the allocation of capital and other resources towards reducing the Group’s own CO2 footprint and the emissions of its customers rather than investing in carbon offset projects. Taking this approach will deliver a faster, greater and more sustainable decrease in net CO2 emissions than could be delivered by allocating capital to offsets.
RHI Magnesita has significant CO2 emissions within its own value chain and there are large emissions savings that can be delivered for its customers through improved heat management or other solutions. The Board of Directors therefore prioritizes the allocation of capital and other resources towards reducing the Group’s own CO2 footprint and the emissions of its customers rather than investing in carbon offset projects. Taking this approach will deliver a faster, greater and more sustainable decrease in net CO2 emissions than could be delivered by allocating capital to offsets.
RHI Magnesita leads the refractory industry in the use of circular raw materials. For every tonne of waste refractory material that is re-used, approximately two tonnes of CO2 emissions can be saved. Historically, the use of circular raw material in the industry has been limited because of the reduced effectiveness of refractories containing recycled material. RHI Magnesita has developed a new technology for using circular raw material without impacting performance.
The Group’s recycling target is to increase use of circular raw material to 15% of total raw material by 2025. In light of the CO2 emissions resulting from geogenic sources and the energy consumption associated with processing new raw materials, increasing the recycling rate is an effective means to reduce CO2 emissions in the short term. Working towards this not only develops the circularity of our business but is also the single most important contributor to achieving our 2025 emissions reduction target.
Around half of Scope 1 (direct) CO2 emissions are released from carbonate minerals during processing. Replacing these virgin raw materials with recycled or circular raw materials avoids these emissions. For every tonne of recycled refractory material that is re-used, approximately 1.5 tonnes of CO2 emissions are avoided compared to the processing of virgin raw material. Recyling is the most effective route to reduce CO2 emissions in the short term towards our 2025 emissions intensity target.
The MIRECO joint venture in Europe supports our strategy, highlighting the circular economy and CO2 emissions benefits of recycling to our customers. In 2023, over €4 million has been invested in capital expenditure projects related to recycling to date, focused on adopting new technologies and upgrading collection, sorting and storage facilities.
In 2022, the Group initiated the ReSoURCE project, a 42 month initiative under the Horizon Europe framework. As project coordinator, RHI Magnesita leads technical framing and coordination, focusing on automated multisensor-based sorting for the refractory industry. The project aims to develop reliable, robust automated sorting solutions with high accuracy for spent refractories, validated sustainability benefits, and facilitation of material usage for alternative products. More information about ReSuURCE here.
The impact of increasing the use of recycled raw material is now visible to the Group’s customers after the launch of carbon footprint datasheets for all products. Developing more recipes with higher recycling content is another key focus. The ANKRAL LC (low carbon) series of bricks for the cement industry includes up to 50% recycled content. Trials of new basic refractory mixes are also underway for products with 20-50% recycled content. These brands are already well established in Europe and the concept is gaining momentum in the China & East Asia region.
RHI Magnesita is switching to lower-carbon and renewable sources of energy where feasible in order to reduce the carbon intensity of the energy it uses. By end of 2023, 64% of purchased electricity was from low-carbon or renewable sources (2021:48%).
The Group targets to increase its energy efficiency by 5% by 2025 as compared to 2018. In 2023, energy intensity decreased by 6% compared to 2022 and was 8% lower compared to 2018, exceeding the target. The energy intensity KPI is affected by M&A, changes to the extent of vertical integration and product mix changes (e.g. production of flow control and shaped products consumes more energy ).
Energy efficiency measures in Hochfilzen, Austria resulted in 21 GWh of energy savings. In Tlalnepantla, Mexico the capture of waste heat from the tunnel kiln saved 350 MWh. Across all ISO 50001 plants, improvements made to compressed air systems result in 1 GWh of energy saving and other energy efficiency measures resulted in 33 GWh of energy savings.
We are continuing to roll out ISO 50001 standards across all operations and by end of 2023, 38% of energy was consumed at plants which have implemented ISO 50001. 88% of energy consumption was used for heating and 12% for electricity.
RHI Magnesita’s target is to reduce its nitrogen oxides (NOx) and sulphur oxides (SOx) emissions by 30% by 2025 as compared to 2018. This target was already achieved in China in 2021 and the current focus is now on North America. We significantly reduced NOx emissions in York, Pennsylvania, by implementing a two-stage combustion process in the rotary kilns. SOx reduction appliances have also been installed and are successfully reducing emissions.
Although the refractory industry is not water intensive, we must still minimize the amount of water we use and use it as efficiently as possible. In 2023, RHI Magnesita drew 12,4 million m³ of water from surface and groundwater sources, with 16% of this consumption taking place in areas at risk of water scarcity. At Bhiwadi, India, a modification to the cooling system reduced water consumption by 17% and at Flaumont, France, a water underground storage system was implemented to protect nearby rivers from wastewater emissions. At present, ten sites operate in regions where water scarcity is or might soon become a risk, including Mexico, Brazil, India, China and France. RHI Magnesita is developing mitigation plans in these areas. In India, industrial rainwater harvesting pits at our Clasil site protected the plant from flooding during the monsoon while helping to recharge the aquifer with an estimated 30,000m3 of rainwater. With the prevention of flooding, it also helped in providing safe drinking water to local communities.
RHI Magnesita also works to drive down waste, using material previously discarded. The new rotary kiln in Brumado will use waste magnesite ore, almost halving the amount of magnesite ore we extract from the local mine, extending the mine’s life by over 70 years. The company also offers to collect waste at customer sites.
RHI Magnesita is committed to protecting biodiversity at its operational sites and is taking every possible step to minimise impacts on local plant and animal life. At the Brumado mine and raw material processing site in Brazil, the Group is required to restore land to its prior state after use, including planting native vegetation which matches that found in the local area. For this purpose and for wider community benefits, over 20,000 seedlings were grown yearly in the on-site tree nursery and planted inside and outside RHI Magnesita’s properties by employees and community members in 2023.
The Group is dedicated to preserving biodiversity at its operational sites and is actively working to minimise its impacts. A new screening of biodiversity risks was conducted in H2 2023 and further assessments are planned for 2024 at the Group’s key mining sites to provide a more detailed understanding of biodiversity risks or potential dependencies.
