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.
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 the rising price of CO2 emissions allowances to the viability and customer acceptance of emerging technologies.
In 2022, two climate scenarios (representative concentration pathways 2.6 and 8.5) were considered based on the Intergovernmental Panel on Climate Change Fifth Assessment Report to update RHI Magnesita’s modelling and risk analysis. This exercise concluded that physical risks remained unchanged, whilst there were new developments to assess related to transitional risks, for example emissions legislation developments in Europe. Full details of risk assessments can be found in the Group’s Task Force on Climate Related Financial Disclosures 2022 TCFD report.
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 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 10% of total raw material by 2025; this was already achieved in 2022 with over 10% (2021: 6.8%). 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 (2022: 51%) 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. Consistently reaching the company’s target of 10% recycled content will therefore avoid up to 300,000 tonnes of CO2 and 150,000 tonnes of landfill waste per year. The target’s early achievement was due to improvements in the collection and processing of circular raw material.
In the first half of 2022, a new joint venture between RHI Magnesita and Horn & Co Group was established in which the Group holds a 51% stake. A new brand for the joint venture, MIRECO is intended to be an open platform servicing all participants in the refractory production cycle.
MIRECO will be active across Europe, including the Balkans and Türkiye, adopting a local-for-local approach. Additionally, in 2023, further investment is planned at the company’s facility in Mitterdorf, Austria to install automated sorting technology.
RHI Magnesita is also investing in new recycling facilities and processing technologies outside of Europe. In 2022 a magnesia carbon brick treatment plant was installed in Brazil and in 2023 a new magnesia carbon treatment station in India and a recycling centre in South America are planned. 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 the end of 2021, 48% of purchased electricity was from low-carbon or renewable sources.
The Group targets to increase its energy efficiency by 5% by 2025 as compared to 2018. In 2022, energy efficiency decreased by 6% compared to 2021. The main reason was the increase in sourcing of raw material from the Group’s own assets as the new rotary kiln processing dolomite ore in Hochfilzen, Austria, was commissioned and ramped up, and overall reduced capacity utilisation. At the Radenthein site in Austria primary energy was replaced with waste heat for drying, saving around 4 GWh per year.
At Tlalnepantla, Mexico, improved process control enabled energy savings of ca. 0.5 GWh, and at Niederdollendorf, Germany, recipe modifications reduced the firing temperature from 1500°C to 1300°C, resulting in a significant decrease in energy required. The Group continues to roll out the implementation of ISO 50001 across all operations. By end of 2022, 34% of sites had implemented ISO 50001.
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 2022, RHI Magnesita drew 12,1 million m³ of water from surface and groundwater sources, with 15% 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 in the on-site tree nursery and planted inside and outside RHI Magnesita’s properties by employees and community members in 2022.