The German stainless steel recycler Cronimet and Finnish stainless steel producer Outokumpu are expanding their cooperation. The companies announced on Tuesday that Outokumpu will acquire a 10 per cent stake in Cronimet North-East GmbH, an intermediate holding company which directly and indirectly owns the shares in Cronimet's companies in Northeastern Europe. The strategic partnership is to help decarbonise stainless steel production. The cooperating companies say they are working together to "optimise the raw material cycle".
Completion of the acquisition is subject to customary closing conditions and regulatory approvals by the competition authorities. The value of the transaction was not disclosed.
In addition to supplying Outokumpu's European stainless steel mills with scrap from Cronimet's sites in northeastern Europe, the companies say they have also agreed to work together on innovation and research. They intend to work on technologies that contribute to the decarbonisation of the stainless steel industry. The partnership is also to focus on reducing costs through better planning and reducing waste within the supply chain.
"This partnership is another step towards achieving the sustainable development goals: a low carbon footprint in the production of stainless steel with regional scrap and through shorter transport routes to Outokumpu’s stainless steel mills," commented Jürgen Pilarsky, CEO of Cronimet Holding GmbH.
Outokumpu described continuous supply of high-quality stainless steel scrap as an important factor in maintaining and increasing the company's industry-highest rate of recycled content of 94 per cent and continuing to achieve its ambitious climate targets. "Outokumpu has the lowest carbon footprint in the stainless steel industry, 70 per cent smaller than the global average, which is a competitive advantage for us. The better the quality and the closer the scrap is sourced, the smaller the carbon footprint of our production, allowing Outokumpu to decrease the supply chain emissions further," commented Marc-Simon Schaar, chief procurement officer at the steel company.
He described creating partnerships along Outokumpu's value chain and strengthening its sustainability leadership as key priorities in the company's strategy. "We are excited about this partnership with Cronimet, as we have a shared ambition on regional development – to accelerate the circular economy in the Northeastern European market area. Together, we can further strengthen our scrap supply and drive green transition in the industry," Mr Schaar added.
Cronimet to maintain full operational control
As a shareholder, Outokumpu is to act as a strategic partner in Cronimet’s business in Northeastern Europe, "expanding the successful existing collaboration", while Cronimet retains full operational control of the companies involved. "An expansion of the shareholding in Cronimet or an investment in other companies of the Cronimet group is not planned", the German holding reported.
Outokumpu said it "does not see vertical integration into the supply chain of stainless steel scrap as part of its raw material strategy but considers cooperation and partnerships as the way forward". This is a markedly different approach than the one being followed by Outokumpu's competitor Aperam. The Luxembourg stainless and specialty steel company acquired 100 per cent of the German stainless steel recycler ELG Haniel at the end of 2021.