Steel Talks: Powering the energy transition with electrical steels

Guests include Sigrid Jacobs, Scientific Advisor for Global R&D Electrical Steels; Cristina de Lucas, Chief Marketing Officer for Electrical Steel and Automotive at ArcelorMittal Europe; Shalaj Gupta, Director of Automotive Sales in North America; and Jurgen Cobbaut, Head of the Automotive Business at ArcelorMittal China.

Together, they offer insights into how ArcelorMittal is expanding its electrical steels portfolio to support electrification across the global economy, discussing the innovations, regional perspectives and strategic priorities shaping the future of electric mobility and sustainable industry.

Read the full transcript below...

When people hear electrical steel, there are a few misconceptions that EVs are somehow made of it, that it's called electrical steel because it's made in an electric arc furnace, or even because it's now talked about a lot in the context of the energy transition and electric mobility, that it is somehow a low carbon steel.

But none of that is correct. So let's start there, get some facts. Let me come to you, Sigrid, with your R and D hat on. What exactly is electrical steel and what is it not? Where does it sit in real world applications and why is it suddenly so critical in the context of electrification?

(Sigrid Jacobs)

So, electrical steel is the core material of motors, generators, transformers. The electrical steel sits inside the electric machine and it has current carrying conductors wrapped around it.

And those current carrying conductors are creating the fields that produce movement of a motor, create electricity in a generator and change the voltage level in a transformer. There are two key properties of electrical steels. The first property is in fact the ferromagnetic properties of steel.

It's thanks to that ferromagnetism that the core made out of electrical steel increases the power of these electric machines. So in fact we should be calling this magnetic steel, not electric steel. The properties that quantify that ferromagnetic behaviour are the polarisation, the induction or the permeability.

Electrification in mobility implies that combustion systems are being replaced in their role to produce mechanical energy by electric system. Each internal combustion engine of a car that is replaced by an electric motor generator system uses one or more electric machines in that traction system and has electrical steel in its core.

So electric traction is first of all more efficient than combustion systems. And furthermore, the braking energy no longer gets dissipated, but it is recovered. And that brings a cleaner and quieter solution for the driver. This fits in the overall energy transition where, greener sources of electricity are developed.

The generators that create that electricity also use electrical steel in their cores. So the quality of the electrical steel is important to produce electricity efficiently and also to convert that electricity to movement efficiently.

So that explains to an extent why, although this is a product that has been around for decades, we're now starting to see quite a large and structural shift in demand. I'd really like to put some numbers around that. Cristina, bringing you in. From a European perspective, can you put that growth in demand for electrical steels into a European context?

(Cristina de Lucas)

If we look at, how the market has evolved since 2015, we are clearly at a turning point.

What used to be a relatively industrial market has now become a strategic enabler of electrification. Looking ahead to 2030, the growth outlook, is strong. We are seeing a solid growth globally. But what really matters for me, Tom, is not just the growth itself, it's the shift in demand.

This is not just a growing market, it is a market undergoing a deep transformation. So what's behind this growth? I like to describe this in, three key drivers. First is electrification of transportation.

You may know that in Europe we have very ambitious, CO2 targets, talking about 55 reduction in CO2 emissions by 2030 and, 100 by 2035. So that, clearly means, we are shifting to zero emissions vehicles.

It is a very important energy transition. We are, rapidly in Europe deploying the renewables and especially wind. And also we are in a, major process of modernisation of the grid.

And there is one element that I like to highlight a lot is efficiency and development trends.

We are talking about industrial electrification. Simple devices that we have at home like, air conditioners. We need to look for a better efficiency and energy consumption. It is about data centre or digital infrastructure and the new applications like drones for instance.

And for me, if you simplify all of this, all these drivers converge in one key idea. We need to use electricity more efficiently. And that's exactly what electrical steel comes in.

So actually, as well as the sort of the structural shift in how we use electricity to replace, for example combustion engines. In automotive, there's actually that advancement of the fundamental, the electrical steels, the motor capabilities, the efficiency of those themselves, which I'm guessing is driving sort of the, it's almost an increase in value as well of the electrical steels rather than just, volume.

Coming to Shalaj for a different perspective, a North American perspective. Obviously the context of the energy transition, the change in sort of, the sort of automotive preferences is quite different there. But what is the shift in demand, shift in behaviour looking over there?

(Shalaj Gupta)

Electrification obviously is essentially driven by two main factors. It's government mandates and consumer preferences. Similar to what Cristina just mentioned, the start of electrification was driven by what we call Obama era CAFE standards.

We always like to confuse people with acronyms, so I'll just specify CAFE is corporate Average Fuel Economy, essentially miles per gallon. And that was set as a very stringent target going back to 2010 at 54.5 miles per gallon.

And since then we've seen a gradual shift in the introduction of electrified vehicles, which are hybrid electric vehicles, battery electric vehicles, etc. So if you go back maybe to 10 years ago, there was one, maybe two OEMs who were coming out with electric vehicles.

Tesla is one of them, as you know and gradually we've seen this shift towards battery electric vehicles. But then there was a change in administration. It took out the $7,500 EV credit.

So to give you a perspective, currently the BEV, or battery electric vehicles as we call them, is about six to six and a half percent of the market. And despite the slowdown, by 2030 we are expecting to see double the penetration of electric vehicles, in the next four to five years.

But as I mentioned, the electrification landscape is constantly changing. When you look at who's gaining, it's the hybrid electric vehicles. They are at about 15 to 16% of the market today and will go up to as high as 30 to 35% by 2030.

So it's a big shift. And guess what? If fuel prices stay elevated, it makes hybrid vehicles an automatically more popular choice because it gives you more miles per gallon and hence less fuel consumption cost for the drivers.

It's interesting how across the two regions you've got, slightly different, degrees of progress perhaps, but fundamentally the same drivers. It's consumer demand, consumer demand sometimes and increasingly at the moment driven by cost and also that, that regulatory framework, whether it's the CAFE standards, whether it's the CO2 limits, etc.

It's really pushing this thing, this thing forward and that feels a very long term, structural trend. Given that Sigrid, we recognise that this is a critical material for the future, demand is likely to continue accelerating.

(Sigrid Jacobs)

Certainly if some of those, those numbers that Shalaj was giving there, map out and perhaps even, we go even higher because of fuel prices, why aren't we seeing a more accelerated pace of production of electrical steel to meet that demand?

I would say that there is a huge barrier to start producing electrical steel if you are a newcomer on the market or in the production side because electrical steel has a very complex metallurgical knowledge requirement before you can start becoming an active player.

We rely on classic steel production techniques to control the grain size and the precipitation state. But we have to do something very specific for electrical steels and that is the development of an optimal texture. The texture is the crystal orientation within the steel.

So we need to achieve a very complex optimum in terms of the customer's requirement. In the combination, combination of electromagnetic, mechanical and thermal properties. There is a huge variety of combinations that the customers may want and that we need to develop.

And furthermore you need very specific assets in order to be able to go into that direction of production.

And so I'm guessing that the state of the art has moved very quickly given the accelerating demand, the rate of change in the EV technologies and I suspect change generating technologies as well. What was the state of the art for electrical steels 10  years ago is nowhere near what the state of the art is now.

(Sigrid Jacobs)

Yes, yes, exactly. I would say that, 10 years ago we already had the high efficiency requirements for nuclear power stations, for hydro generators.

So on the production side of electricity, but on the consumption side of the electricity, the situation was different. There was a drive to have higher efficiency industry motors, but it's really electric traction that kicked it off.

And that is because of the cost of the battery, the scarcity of all the materials that are needed to produce a traction powertrain. And the point is there, that the new requirements on electric vehicles are way more stringent than they were for those larger machines.

Although they are fairly small, they're very complicated. If you imagine, a generator that runs a power station for nuclear power, again as an example, that runs 100% of the time at a constant regime because the, the nuclear power will be there all of the time.

So you want a high efficiency, but if you look at the rotation of the rotor within the stator, it's always at constant speed. The forces are high but they are fixed. When you look at the car, it's going to start, stop, accelerate, decelerate and so you will have a huge fatigue solicitation as well onto that electrical steel stack.

So that makes a different mechanical requirement on the electrical steel.

Coming back to the EU and you Cristina. A product requiring such high technology, such high precision in a market that's very high growth and increasingly seeing trade policy disruptions, border controls. How does ArcelorMittal position itself in this context?

(Cristina de Lucas)

ArcelorMittal has a very distinctive position in Europe. We are not just a supplier, we aim to be a technology partner. Our ambition is very clear.

We really work hard to lead in next generation electrical steel. So we are not only delivering materials, we are co developing solutions with our customers. ArcelorMittal is today the only European steel maker with two production sites to be combined.

From one side, Saint-Chély-d'Apcher, with a strong historical expertise. And on the other side is Mardyck, the new plant and the next generation platform. The investment in Mardyck is not just about capacity. It is about preparing for the future of electrification and about how we work with our customers.

So in the end we are not just supplying steel, we are really proud to say that we are partnering with our customers across the full value chain.

And how does it look in North America, Shalaj? Is it a similar picture there or are things quite different?

(Shalaj Gupta)

Well, you mentioned about trade policies, so I'm assuming you're talking about as it exists at 8am Eastern Time today, Right? Because it's constantly changing. Despite that, the ever evolving trade policies are driving a significant amount of localisation and domestic production from our customers.

We've heard our customers announce billions of dollars to bring back production back to the US and this reshoring of production needs domestic supply. You might have heard or read about it, but since we acquired 100% of the ownership in Calvert last year, it is the basis to set up a centre of excellence in the US and electrical steel production is the perfect example of that.

We will be the only domestic producer to meet the needs of our customers. As Sigrid pointed out, it's a highly sophisticated product. We will be capable with the best-in-class assets that we are constructing in Calvert, to produce high quality premium electrical steels that will help our customers achieve their goals.

Given those policies that are not just driving on shoring of manufacturing, but actually, I suspect, actually a sort of a Renaissance of American brands as well. That seems like a very timely facility to be coming online.

That's absolutely correct because, with this facility we'll help the customers, automakers, achieve high performance and sophisticated designs for their electric motors.

So all in all, we are perfectly positioned to meet the demands of our customers, be the market leader and capture this growth that is set up in the North American market.

To you, Jurgen, China, an incredible market. Very much a leading space in terms of, EV technology. A real hub for other EV makers like Tesla. What's the market there been like? What do the growth numbers look like? And how do you see expected Demand out towards 2030?

(Jurgen Cobbaut)

Yeah, indeed. It's true that this new energy vehicle market is really, dramatically growing. It's huge. If we look at last year, for instance, one out of two cars produced was actually a new electrical vehicle.

And that is already 16 million units. So 16 million units of electrical cars have been put in the market last year. And if you just look at 20, 30, so five years later, well, that number will go to 25 million approximately.

And that would represent then 75% basically, of all cars produced will be electrical cars. So for every four cars you would see new cars that you would see on the street, three of them would be, electrical cars. So, and that actually represents, of course, a huge, demand in, electrical steel.

We, can see that also from 2025 to 2030, 2033, the demand would basically double, for this type of material for our electrical steel. And that is really because, electrical motors, of course, they are the heart, the beating heart of every electrical car.

And how does the market look specifically in China? Because it has been explosive the last few years in terms of the appearance, of many Chinese brands on the scene, and their sort of penetration into European and American markets.

(Jurgen Cobbaut)

Oh, yeah, yeah. Well, first of all, looking just into China itself. So when I walk around, for instance, in big cities like Shanghai or Beijing, you basically see only electrical vehicles. And how do you see them? You don't need really to, to look at the exhaust pipes, if they are there or not. But in China, the number plates actually, they are green.

They are green number plates when it's an electrical car. So when you walk in the street, you see, see everywhere the, green number plate. So it's, it's really, yeah, dramatic. You, you see them everywhere. And, and everything comes together with it as well, like infrastructure.

You can see everywhere, of course, possibilities for people to charge the car. You have service stations. And together with that, of course you have a lot of newcomers in the market. So actually companies I, think everybody knows so some kind of Chinese, mobile phone, operators, they're also now entering this market. I think they, Chinese electrical cars, they become somehow the new benchmark in the car industry.

And it's not just cars, is it? There are other domains where these steels for motors particularly are starting to see quite significant growth. Obviously other forms of transport, I mean Shanghai particularly, it's very easy to get run over by, electric bikes, electric scooters, etc. But other forms of other uses of motor as well.

(Jurgen Cobbaut)

Yeah, correct. Well, I think you give a good example indeed. You see these motorbikes everywhere with delivery people.

They bring actually from small things to big things to your home. And now indeed, there is a move to do that with drones, of course, not yet on huge scales, but some pilot projects happening, like in the city of Shenzhen, just next to Hong Kong in the south of China.

They're doing, trials with small drones, that can deliver your goods. Like a hamburger for instance, could be delivered at fixed points. It's not that possible to get it delivered to your home, but you can go for instance to a point in a park or next to a big commercial building.

You see a small station where you can scan a QR code with your phone, you order what you want to have, and then within 10 minutes you have a drone arriving there, a small drone dropping the package in this station and then you remove it. So it's very interesting. Next to that you have also trials, with bigger drones.

So where people usually now only one person can actually sit inside. This can be used for emergency response, for instance, an ambulance that cannot reach difficult places, because of traffic jam, for instance. Of course, also entertainment options exist with tourism.

So it's very interesting to, to see that happening. Actually next to where I was living, I live in the south of China. There is this kind of a company and it's the first time they were doing trials that you could see somebody going up next to you was, was very funny, a bit scary as well.

But yeah, we, we should get used to, to see that more and more. I think in a market that's high growth, quite dynamic, but also seeing a lot of policy disruptions in terms of trade barriers, border controls, et cetera.

How is ArcelorMittal positioning itself specifically in China? Well, ArcelorMittal sees this segment as a really growing segment, growing demand for Electrical steel in China. So that was also the reason why we decided on bringing this investment, bringing this product to China as well.

(Jurgen Cobbaut)

So we have a project now that will start operations middle of next year in 2027. Now this project is really fully dedicated to serve the Chinese market, as we see, this big growth, the booming growth in the car industry for instance.

So we will be serving the car makers present in, in China with our material. It will also allow us, to better serve for instance, global customers. A, customer being present in North America, Europe, China, which is I think the case for most of them today.

Well, they will be able to interface always the same supplier. It will be ArcelorMittal knowing their specifications, their quality requirements. And of course our target would be the three regions also to align to make sure that we are able to serve them in the best way in all the different continents.

So it will make it also easier for all the different carmakers, because of this. And is that a wholly owned ArcelorMittal presence in China or is that a joint venture? Are you partnering there? So in China, Axel or Mittel is partnering with China Oriental.

And that's also then why maybe in Chinese market you will see next to the name ArcelorMittal, also the name AMORNEX, as this is our actually commercial name for this, joint venture setup between ArcelorMittal and China Oriental.

Coming back to you, Sigrid, we talked about how the state of the art with regards to electrical steels keeps moving. It's not in a fixed position and I'm assuming that we can foresee, a series of innovations in the years ahead. How does ArcelorMittal ensure that it stays at the forefront of that? Because there must be a lot of research, a lot of development, a lot going on in terms of meeting that expectation of advancing capability.

(Sigrid Jacobs)

As Shalaj mentioned, we are having new equipment being constructed in North America. And Cristina is also, informing us about the ongoing constructions and newer capacities available in Europe, Before we were able to go into those, equipment, construction phases, we had to define exactly which equipment we needed.

That was of course based on very, strong internal knowledge in the company, both within R and D, as also in our, production and technology teams. So first of all we had to define that equipment and make sure it was state of the art and had all the, tricks and everything available for the upcoming products that we will need to produce and that we're not producing, right now already.

So that was the first stage, for that, we've definitely developed different metallurgical tools, different electromagnetic tools, different simulation tools within R and D. And we continue following up on that path using, data we already have available and generating new, insights that will define the steels that we will need to produce, over the next years to come.

We have specifically in the research lab in Ghent, a new cold rolling mill called Hector. And it's going to be able to help us develop further the very thin grades. I'm sure you're aware that for automotive This is a real trend.

It's been in the press, quite a lot. The point is that when you reduce the thickness of the steel, you can easily reduce its loss level because you reduce the added current losses. Those are the losses that also make it warm up, as I was saying earlier.

And so for those very thin grades, we need very different metallurgical parts. And that is a specific, development area we're doing now. And, that is going to be one of the crucial aspects. And of course we accompany that with very, very strong IP protection.

First of all, before we started expanding as a group, we made sure that we had freedom to operate on all the metallurgical routes that we have had since many years in. But then we've brought all our newest ideas which were either on the product side or on the process side in strong sustainable patterns so that we can be sure to stay a relevant player in the market and not be copied by competition, of course.

Challenging in such a fast moving market, I'm sure.