WEBVTT - US Steel's Integrated Sustainability

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<v Speaker 1>You're listening to Bloomberg Business Week with Carol Messer and

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<v Speaker 1>Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Well, there's

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<v Speaker 1>some hard truths in this world. Steel is dirty. About

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<v Speaker 1>seven percent of global greenhouse gas emissions come from steel.

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<v Speaker 1>But it's also the most used metal in the world.

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<v Speaker 1>We need it and right now we can't live without it.

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<v Speaker 1>We have with us this afternoon, Erica Chan, general manager

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<v Speaker 1>of sustainability at US Steel, a four point for billion

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<v Speaker 1>dollar company with a market cap of four point four

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<v Speaker 1>billion dollars. She's with us right now in the Bloomberg

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<v Speaker 1>Interactive Broker's studio. Erica, it's good to have you with us.

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<v Speaker 1>How are you. I'm doing well. Thank you for having me. Yeah, well,

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<v Speaker 1>thanks for joining us. So how do we do this?

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<v Speaker 1>How do we make the steel industry not responsible for

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<v Speaker 1>seven percent of global emissions? Well, it's going to take

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<v Speaker 1>a lot of things for that to happen. And the

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<v Speaker 1>good news is is that everyone is coming together to

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<v Speaker 1>address this problem. So, um, I'll give you an example

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<v Speaker 1>of collaboration today, The Climate Aligned Fience with the R

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<v Speaker 1>and MY organization and several banks, including I n G,

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<v Speaker 1>launched these sustainable Steel Principles, and this is designed to

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<v Speaker 1>standardize how banks support and finance the steel sector in

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<v Speaker 1>order to accelerate a decarbonization journey. So that's one of

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<v Speaker 1>the ways. Another thing that we're doing at you is

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<v Speaker 1>still in particular is which is really unique, is that

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<v Speaker 1>we've integrated sustainability into our business strategy. So everything that

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<v Speaker 1>we do is integrated across our operations, across our enterprise. Okay,

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<v Speaker 1>I want to just step back because Katie and I

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<v Speaker 1>were talking a little bit earlier about science, and she

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<v Speaker 1>revealed to me, what are you going to say, has

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<v Speaker 1>never taken a physics class? No, it's okay, and it's okay.

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<v Speaker 1>Did you take chemistry? That's totally okay. I almost failed

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<v Speaker 1>the chemists. Okay, she almost sail chemistry. But you're really

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<v Speaker 1>good at writing about bonds. She knows everything about crypto

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<v Speaker 1>very specific time. But let's take a step back and

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<v Speaker 1>talk about how steel is made and why it's so

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<v Speaker 1>energy intensive. So take us through that and can I

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<v Speaker 1>don't know why I threw you under the bus, now,

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<v Speaker 1>it's fun. I should have tried harder, but I was

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<v Speaker 1>steel made. Yeah, well, I am not an engineer, but

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<v Speaker 1>I will tell you in from what I understand. So

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<v Speaker 1>you know, I joined you a steal about eight months ago,

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<v Speaker 1>and I knew nothing about steel. I worked for Dell Technologies.

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<v Speaker 1>But um, it's fascinating. Steel is made in one way,

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<v Speaker 1>which is a traditional way of integrated steel making that's

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<v Speaker 1>been done for over a hundred twenty years, where you

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<v Speaker 1>have a blast furnace, a lot of ingredients supporting and

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<v Speaker 1>then you've got liquid iron coming out and eventually steel. Um.

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<v Speaker 1>The newer technology uses what is called electric arc furnace technology,

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<v Speaker 1>and that is what is referred to as many mills,

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<v Speaker 1>and that has a lower carbon footprint, up to about

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<v Speaker 1>seventy reduction in carbon footprint for steel. So one of

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<v Speaker 1>the interesting things about steel is it's definitely recyclable. It

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<v Speaker 1>loses none of its properties. And so I like to

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<v Speaker 1>say that is that energy intensive go to recycle it? Um,

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<v Speaker 1>you know, we actually use it as an energy source.

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<v Speaker 1>So up to a percent of scrap steel can be

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<v Speaker 1>used in our electric arc furnaces. So we've been practicing

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<v Speaker 1>circular economy before circular economy became a thing. Um. We

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<v Speaker 1>recycled last year. We're five point two million tons of

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<v Speaker 1>steel and scrap. And so if I look at your notes,

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<v Speaker 1>this stat really jumped out to me that steel is,

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<v Speaker 1>of course an emissions intensive sector, counting for roughly seven

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<v Speaker 1>percent of global greenhouse gas emissions globally. And again I'm

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<v Speaker 1>a little shaky on the science, but the process you

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<v Speaker 1>just described what's realistic if we think about where that

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<v Speaker 1>seven percent can could go to. So you know it's

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<v Speaker 1>going to take a competation things. You know, we know

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<v Speaker 1>we can't do it alone, right, one company can't do

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<v Speaker 1>it alone. It is we've got to come together and

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<v Speaker 1>a lot of things have to happen, like government funding,

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<v Speaker 1>you know, policy to support it, UM, improve regulations and

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<v Speaker 1>all of that. But I think that the really important

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<v Speaker 1>thing on getting to that is exploration of technologies that

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<v Speaker 1>can help us get there, like green hydrogen. Have you

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<v Speaker 1>heard of green hydrogen? CEO Andy marsh On, Our program

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<v Speaker 1>works a lot with hydrogen and work with companies all over. Yeah,

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<v Speaker 1>So the availability of green hydrogen is going to help

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<v Speaker 1>lower the intensity of steelmaking. UM. A lot of other

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<v Speaker 1>technologies like electrification, UM direct reduced iron with hydrogen, A

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<v Speaker 1>lot of different technologies need to come to maturity and

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<v Speaker 1>carbon capture utilization storage as well. Earlier this week we

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<v Speaker 1>had on our program Dr Andrew Forrest of fortescuew uh

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<v Speaker 1>and he's uh, it's an holding company that owns a

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<v Speaker 1>bunch of minds in Australia. Uh. And their competitors include

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<v Speaker 1>real Tinto and more. And it's mining, so it's not

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<v Speaker 1>necessarily the processing of it, but they're looking to decarbonize completely.

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<v Speaker 1>What are your goals at us steel like like And

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<v Speaker 1>he's not talking carbon credits or carbon offsets here, he's

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<v Speaker 1>literally talking like, you know, moving completely away from fossil

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<v Speaker 1>fuels in a real way. Yeah, absolute lutely and that's

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<v Speaker 1>why we actually set last year are net zero goals.

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<v Speaker 1>So we've committed to become net zero. So that's an

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<v Speaker 1>absolute reduction in emissions absolute emissions production by and we

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<v Speaker 1>have an interim my missions intensity to go along the way.

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<v Speaker 1>But that is the same UM spirit that we're taking

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<v Speaker 1>is we have to invest and explore in the technologies

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<v Speaker 1>and energy usage as well that will absolutely decarbonize our

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<v Speaker 1>footprint UM. And we are not relying on carbon offset

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<v Speaker 1>to to get us there, but there are a lot

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<v Speaker 1>of things that we need right um to to support

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<v Speaker 1>us in that journey. We'll sit tight with us. Erica.

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<v Speaker 1>We're gonna be back with you in just a few minutes.

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<v Speaker 1>Erika Chan, general manager of Sustainability at U S Steal.

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<v Speaker 1>She's with us right now in the Bloomberg Interactive Broker's studio.

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<v Speaker 1>You're listening to Bloomberg Business Week and this is Bloomberg Radio.

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<v Speaker 1>Let's get right back to Erica Chan, general manager of

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<v Speaker 1>sustainability at US Steel. She's with us right now in

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<v Speaker 1>the Bloomberg Interactive Broker's studio. So, Erica, I want to

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<v Speaker 1>talk more about sustainability of course at US Steel and

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<v Speaker 1>specifically about the plan to eliminate carbon emissions from steel production. UM,

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<v Speaker 1>is it is it too early to completely like how

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<v Speaker 1>do you guys completely comply with E A S and

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<v Speaker 1>like go to mini malls that use all the scrap

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<v Speaker 1>steel to remailed into new steel. Talk about how that works. Yeah,

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<v Speaker 1>So you know, we have we acquire a Big River

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<v Speaker 1>Steel which actually was the first LEAD certified steel mill

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<v Speaker 1>in the US. UM and it's also the first US

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<v Speaker 1>based steel site to be persponsible steel certified. So um

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<v Speaker 1>that is our first electric arc furnace along with the

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<v Speaker 1>one that we have a ver tubular business in Fairfield, Alabama.

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<v Speaker 1>So the journey there is that it's it's a combination

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<v Speaker 1>of utilization of this improved technology for steelmaking UM, but

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<v Speaker 1>as well as investing in UM technologies that can help

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<v Speaker 1>actually decarbonize so UM carbon capture utilization and storage. That's

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<v Speaker 1>one method as well. We talked about green hydrogen earlier.

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<v Speaker 1>Um A electrification of the grid because steel is so

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<v Speaker 1>energy intensive, you know, we need more renewable energy in

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<v Speaker 1>the grid and the grid infrastructure that can support that

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<v Speaker 1>expanded power need. So UM, those are some of the

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<v Speaker 1>ways that we're looking at it. When it comes to

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<v Speaker 1>carbon capture with the current furnaces, you have the current

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<v Speaker 1>blast furnaces. Does that work? What research have you done there? Yeah?

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<v Speaker 1>So UM we actually have formed some partnerships and alliances

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<v Speaker 1>we're bringing together in a noncompetitive environment like peers in

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<v Speaker 1>academia UM as well as government agencies to look at

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<v Speaker 1>how do we escale and how do we implement that

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<v Speaker 1>infrastructure because it doesn't exist in a in a scale

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<v Speaker 1>at a level that we would need, you know, to

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<v Speaker 1>cover all of the last finn assess to our an

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<v Speaker 1>operation today in the US, what is the role of

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<v Speaker 1>the government here, and to what extent does the US

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<v Speaker 1>government need to step in and actually help you and

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<v Speaker 1>other American steel companies get to net zero? Yeah? Absolutely,

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<v Speaker 1>I mean I think we've seen a big signal from

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<v Speaker 1>the government, um, just in the past few weeks, right

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<v Speaker 1>with the IRA and I think that's going to be

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<v Speaker 1>a good first forward movement into making sure that the

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<v Speaker 1>US government enables the various levels that we need to

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<v Speaker 1>to carbonize across a number of different industries. And so,

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<v Speaker 1>what kind of relationship, what kind of conversations do you

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<v Speaker 1>have with politicians with the White House? What does that

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<v Speaker 1>look like? Yeah, well, we actually welcome engagement from policymakers

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<v Speaker 1>on all levels, federals. You know, we work very local

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<v Speaker 1>in our communities as well, and it's it's looking at

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<v Speaker 1>the policies that can enable like clean energy, right, like

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<v Speaker 1>renewable incentives for renewable energy, infrastructure and development. So we

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<v Speaker 1>do work with regulators and administrators and various agencies at

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<v Speaker 1>a federal and stand local level. Who are those regulators?

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<v Speaker 1>Who are the politicians that you're actually speaking to on

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<v Speaker 1>a regular basis, So it's a number of different ones.

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<v Speaker 1>And my colleagues who work in government affairs, are you know,

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<v Speaker 1>the ones who are the primary leads on that. My

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<v Speaker 1>role in sustainability and I focus on looking at the

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<v Speaker 1>overall corporate sustainability strategy and how do we meet our goals,

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<v Speaker 1>how do we advance on our commitments to UM, you know,

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<v Speaker 1>be more sustainable company, to offer more profitable steel solutions

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<v Speaker 1>for our customers. Because our customers are really the ones

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<v Speaker 1>who are also at the forefront of this, right because

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<v Speaker 1>in the sense that they're demanding exactly well, so how

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<v Speaker 1>much of this is driven internally versus externally? I think

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<v Speaker 1>it's a it's a good healthy combination. UM. So our

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<v Speaker 1>customers have their own expectations, like their own commitments. UM.

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<v Speaker 1>Whether you're an auto manufacturer and appliance manufacturer, you want

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<v Speaker 1>to offer more sustainable products to your customers, and in

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<v Speaker 1>order to do that, you need more sustainable materials, right,

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<v Speaker 1>whether it's steel or you know, some other material that

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<v Speaker 1>goes into making up and erico. I want to talk

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<v Speaker 1>a little bit about you, uh and Drew role at

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<v Speaker 1>u S Steel. You said that you joined eight months ago.

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<v Speaker 1>Where did you come from? So? I worked at Dell

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<v Speaker 1>Technologies that was also in corporate sustainability and I worked

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<v Speaker 1>there for over eleven years. Um So it was a

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<v Speaker 1>really interesting journey to come over to the steel sector,

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<v Speaker 1>which I knew nothing about. I'm not an engineer, I

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<v Speaker 1>don't have a PhD. And metallurgy. Yeah, I don't think

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<v Speaker 1>I failed my physics class though, but I didn't even

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<v Speaker 1>take I didn't even take physics. I failed chemistry. Mr

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<v Speaker 1>Harris from my high school was listening to this, maybe

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<v Speaker 1>so he would know how it wasn't so great. Um So,

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<v Speaker 1>I do think that's really interesting that you went from

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<v Speaker 1>Dell Technologies to U S. Steel sort of from uh,

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<v Speaker 1>you know, technology to an industrial industry. Why that leap

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<v Speaker 1>in particular? So what I saw in US Steel was

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<v Speaker 1>the opportunity to join an iconic company that I saw

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<v Speaker 1>was on a solid journey towards transformation. Right. It's not

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<v Speaker 1>just I'm going to announce these goals and do nothing

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<v Speaker 1>about it. There were solid plans in place and actions

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<v Speaker 1>being taken, and so I wanted to be part of that.

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<v Speaker 1>I wanted to, you know, bring my practice around sustainability

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<v Speaker 1>and my knowledge to kind of help evolve the foundation

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<v Speaker 1>already that was there. And so, um and I love

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<v Speaker 1>a good challenge. So yeah, we only have thirty seconds left.

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<v Speaker 1>But you've been there for eight months. Where how big

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<v Speaker 1>of the change has been since you've been there? What

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<v Speaker 1>can you tell us? So? Cultural wise it's different, right,

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<v Speaker 1>going from a hundred fifty thousand global you know company

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<v Speaker 1>to a twenty four thousand I think I'm gonna stet right, um,

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<v Speaker 1>employee world by both US and then you and Slovakia

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<v Speaker 1>and UM. What I found is that it is a

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<v Speaker 1>very warm and embracing culture. We have employees who have

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<v Speaker 1>worked there like for multi generations, like for four generations,

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<v Speaker 1>and that is something you really don't see in corporate

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<v Speaker 1>America today. So UM, the environment has been very warm

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<v Speaker 1>and welcoming. So it's been a really great experience. Well

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<v Speaker 1>please do come back and join us once again when

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<v Speaker 1>you are back in New York City. Very pleased to

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<v Speaker 1>have with us. Erika Chan, general manager of Sustainability at US,

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<v Speaker 1>deal with US in the Bloomberg Interactive Broker Studios in

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<v Speaker 1>New York