Season 3/Episode 4: Olivier Vassart, ArcelorMittal Steligence

Hi, I'm Astrid Koff and welcome to the third series of the Green Steel Challenge. Season 3 will place an even greater focus on innovation, new energy, fresh ideas and breakthrough technologies. We challenge conventional thinking and look beyond the obvious, exploring creative solutions to the pressing challenge of decarbonizing steel. During inspiration from my late father Willie Koff, the steel pioneer and rabble behind the Minimil and DRI revolution, this podcast aims to be a catalyst for bold thinking and real change. As always, Dr Mike Woltz and James Smalls are right here with me, with their insights from years of strategy and project management consulting across the steel industry. Today, I'm delighted to welcome Professor Olivier Vassar, CEO of Stelegens, Arthur Loemitals Innovation Platform for Sustainable Construction. Olivier has been pioneering a holistic approach to steel in the build environment, linking material efficiency, circularity and life cycle performance with a global drive toward green steel. How and when was it created and how does it operate? What does Stelegens do within the industrial industry in general? The idea of Stelegens pop up already several years ago at research and development level. As you know, Arthur Loemitals is a quite large group in research and development. We don't only do research on steel, we also do research on application of steel and construction is of course a really large market for the use of steel, globally 50 percent of the worldwide steel production will end up in construction and infrastructure in a way or another. This is a really large market for steel industry and we were doing R&D focused on construction but segregating by products. It means each product line, the flat product, the long product, the tubular. We were doing the project separately. Why, because we were organized like this in the company but also the construction is organized like this. The construction is really segmented. You have the structural engineers, you have the facet engineers, you have the energy efficiency engineers, so everything was segmented and we realized that even if everybody was doing a terrific job optimizing this part, the buildings were not optimized because the sum of optimum is never the optimum to get a really meaningful building. You need to compromise left and right in the best world on one area to save globally in the building. We flipped on mile and we said, "Okay, let's organize ourselves for the construction market and we started to end up for developments and research in the construction taking into account all the parts and what we realized is that our settlement has on the shelves in the product range, all the products you can dream to have in the construction market. We have the structure, we have the façade, we have the floor, but we have also the steel for the MEP, for the ventilation system, for the fire suppression system. Any steel you can find in the building, we edit. When we realized that we approach R&D not at the product stage but really at the building. So as you mentioned in the introduction, holistically we took the building as the final target. We started to look at what product needs to be developed, what solution combining product needs to be developed. Then we went further and of course in the building you don't have any steel, you have other materials. How do I combine more efficiently the steel with the concrete, the steel with the glazing system and this created a lot of changes in the way we were approaching the construction market. And then of course this after all these developments we realized that also on the market we need to change our approach to weapon approach which is more building oriented or bridges or infrastructure but construction oriented and not just steel product by steel product on the market. Finally we got a really big buy from the market because our conversations with architects, these engineering office were totally different. We were not coming to sell them the idea of a beam or sell them the idea of a steel sheet for the floor or a panel for the facade. We came with the full portfolio and we started to have conversation with them to say okay but in your project this solutions data and then a level of credibility started to increase a lot on the market because we were not trying to sell them absolutely or beam or tubes or plate. We were looking in their project what was the most meaningful and now we have a complete team on the market so we started by the European perimeter because it's where the initiatives started but now since several years we spread out worldwide and we have people engineers architect by training which are in the different market and which are interacting with the stakeholders of the construction market to help them to optimize their building. And of course today the focus on CO2 improvement of the embedded CO2 into construction is a big leverage we have and we have a lot of companies to really try to optimize the CO2 content of their construction. I mean it sounds like you're getting involved at the very early stage in the conception of a building. Is it architects approaching you or is it building owners that are approaching you or construction engineers? Who's your market? It's exactly the right question because in the past we were focusing upon our customers so our customers are who are the people who are buying us the buying us this team. That means it's the people who are the builders it's the people who are doing the facet panels but at the end these stakeholders have not a lot of decision power on how the building must be done they build as they are requested to build. So the one with whom we interact are far before in the chain of decision. That was also something strange is that we are daily and constantly discussing with people that will never buy us one kilo of steel. An architect will never buy us one kilo of steel but the architect the engineering office they have the power of prescription so they choose how the building will be done. So that's where the first one with whom we interact it is the architect and the engineering office the building designers. But then after certain time the real estate world the building owners and the developers realized that our approach is really meaningful for them and they are the one effing the biggest advantage to exchange with us we speak the same language we speak about buildings. In the past we were speaking about products so you cannot go to a real estate developer to talk to him about the column being a floor of a thing it's it's not a language that he understands and it's not it's not his priority but when you comment and you talk about building flexibility, global optimization of building the way that the building can be modified can change affectation in the future that's a language that really the real estate developer is it's like it. I have the. the privilege to teach at at university to a young architect and and young engineer and I always tell them they want when you take your pen and when you do the first drawing of the building barely everything is already decided with the material you will use to do this building because the most important is the grid the schematic and the grid of the building if you draw it for concrete do it in concrete if you do it for steel do it in steel but when you try to flip when you reach construction stage when you try to change from concrete to steel or steel to concrete it's a big lack of efficiency because you don't design them the same way the grid is different the architecture is different so they call you in as a consultant in the beginning it's a kind of consultancy we do we do it for free so we are not asking any money with that we we totally refuse because we were already asked it's not it's not a problem of knowledge or teams they they have the knowledge to design the building but we need engineering offices we need them to to build the project from they want till the construction the final the final drawing the design they are professional on that so we are professional on steel composite and and this type of thing so we position ourselves a kind of of advisor which is there we help them to do these these variations to see the pros and cons of the of the different solutions and like this it can guide them in it's a dialogue it's not but we we add them to frame their manual on the direction they want to go are you influencing on a project by project basis or are you influencing on a person by person basis is it the case that you want to get to an architect when he or she is 20 or 21 years old and you want to teach them all of the principles of a good sustainable building or is it the case that you work with an established architect or structural engineer on a particular project or is it both let's say it's books we do a lot of webinars seminars we do some classes at university as I said personally I teach I have a chair so a steel and construction and a fire engineering in a university I have a lot of my employee which go to the young generation to to show them in general what are the benefit doing it like this or doing it doing it another way so we have these let's call it general conversations of course we work on a project by project with architect realistic developer engineering firm what I like a lot is that we see now the people they don't come back to us you could think it's a failure no it's because they don't need us anymore and then we see project popping up exactly how we would have done it because we made one or two projects with an individual and then you started to embrace the philosophy and that's that's what I call this normal effect and this is focus mostly at commercial buildings or civil construction we do a bit of everything of course you have commercial buildings if you take today London composite construction long span using yeah you call it green steel I call it low low embedded carbon steel so if you look at the portfolio that will be built in the in the square mine in London up to 2030 nearly all of them are in steel and composite construction and nearly all of them are designed with X-carb steel so steel is reduced embedded carbon to to optimize the carbon intensity of the building many of them are also designed reusing the steel of the building that will be destroyed before putting the new one so all these things are now if I take London fully embraced by the the local design communities and the local administration which have chosen really to push far this type of optimization and this type of calculation and we must not forget the infrastructure the bridges we go we go on the port infrastructure the road infrastructure are also a really big consumer of steel and our team are also really active on that to to optimize the solution to speed up to speed up the construction and and decrease the carbon intensity so you're saying that the construction industry is really getting a hand on sustainability my question is is the construction industry prepared to pay the premium and how is it in the different countries yeah it's it's always the question of premium I will flip it I will flip it the the other way we just finished a tower a high-rise building in London with a with a really large real estate company we worked on this building since many years already because you know the time between the the starting of the design and really the the completion of of the work they wanted to decrease by minimum 30 to 40 percent the carbon intensity of the building so we worked really hard with their team and the and the engineering office and the architect on the on the design of the building we use quite expensive steel it means we use really high-strained steel which is more expensive than conventional steel we use X card steel so low or low unbedded carbon steel which which come also with a premium but not only for the structure we use that for the structure for the floor for the NEP system so then all the steel which was put in the building was steel with premium and finally they built the building with 38 percent decrease in in carbon content compared to the benchmark 10 percent cheaper than the budget why because using these high-strained steel we significantly decrease the amount of steel that will be in the building so the decrease in carbon intensity is a combination of using less steel combining intelligently steel with the material and of course using steel with lower unbedded carbon so yes the steel which was sold was more expensive it was sold with a premium but finally the total cost of ownership was cheaper so everybody has in mind that sustainability going for a building with lower unbedded carbon is significantly more expensive they prove it's wrong yeah of course it's it's one case we cannot generalize the premium for green steel on the building if I take a collusion building if I don't do any other optimization I just switch from conventional steel to low unbedded carbon steel will cost to the real estate developer between 1 and 2 euro per meter square built so when you discuss and when you have the ability to discuss with the real estate developer and when you show them that with facts and figures for them it's a no-brainer it's a total no-brainer the problem with the premium of green steel is that all customers they cannot be read on their own because all customers are barely buy a reseller so they buy the steel they transform it to make a structure the floor a facade and then they put it on the job side so for them there is no environmental interest the one which has the interest is the building owner and for him at the end the cost is really small so that's why the work that all people are doing interacting with architect real estate developer is massively important because if green steel is not prescribed then the value chain cannot absorb this premium the developer are starting to put what they call a carbon budget they have a budget per meter square built that they put on the table to decrease the environmental footprint the current part is the decision of the developer and the real estate outlet and on the other side I have a bit the stick part which is the regulation which is evolving in in different countries so If you take France, Netherlands, Denmark, they start to have a carbon budget, per meter square build, that you need to fulfill to get the building permit. So the engineers need to calculate the carbon intensity of the future building and they need to be under a threshold. This is the way today the market is developing. On one side, the developer will take stance and on the other side, regulation, which start to push them also in the right direction. When you talk about carbon intensity of a building and a carbon footprint of a building, and you talk about clients wanting to reduce it by say 30 to 40 percent, I think you said, is that just the embedded carbon within the building or is that the operation of the building presumably dominated by its thermal properties and how insulated it is, are the two intimately connected or are the two completely separated embedded carbon and carbon in the day-to-day operation of the building? They are of course connected, but when I said this reduction was for the embedded carbon, if we go 20 years back in the time, the use phase, let's call it like this, the use phase of the building was by several orders of magnitude bigger in CO2 equivalent emission than the construction of the building itself. So no one focused on that because if you want to have an effect, you need to start by the biggest part. So in the last 30 years, let's say a lot and a lot of improvement have been done on the energy efficiency of the building. So today, most of the building which are built are low energy, so are even positive energy building. It means that this use phase reduced a lot and what we saw is that now embedded carbon. It means the carbon which is emitted to do all the material, to transform the material, to build the building, start to take a bigger ratio in the calculation. It's now the same order of magnitude than the use phase. So now we need absolutely to also focus on the embedded carbon of the building. When I was speaking about these 38% decrease on this industrial office in the UK, it was on the embedded carbon. I know you don't want to generalize, but let's play a bit. If that 38% reduction, how much of it came from the kind of holistic approach that you're suggesting and the redesign and bigger spans and so on, and how much came from a reduction in the weight of the steel required to build the building? I could provide you that, but I need to do a bit of math. Take your time Olivier. Normally the use of high strength steel and so on, you can save in a building on an element you can save more than on a building in general. Let's say it's 25% of the weight between low strength steel and high strength steel. You go from 235 NBA to 460, let's say if you do a simple math, it's divided by 2, but it's not so straightforward, as you have been, you have deflection, you have a lot of things. Let's say 25, it means we would have 25% which is coming from the material optimization in the structure. We can have also savings in the floors by using, there they use concrete, but they use the concrete where it's needed, they use the composite floor with corrugated sheet to save some weight, let's say 30, 35% of the reduction is coming, 30% is coming from the optimization of the design and from the saving of material, 40, 30, 30, the same magnitude is coming from the use of lower embedded steel to material. So in this building they also use concrete with low CO2 semins, it was a full combination and the achievement came from the steel part and from the concrete part. So basically between one third and one half is coming from the design part and the rest is coming from the material side. So that overall, and this is a complete flight of fantasy, but as you said construction is about 50% of steel demand around the world, that could be a very significant impact on overall demand over time. I disagree on that. I know that it's always the debate, but at the end we speak about efficiency. I know it's a bit schizophrenic in the way I approach this and I tell people you need to use less steel in your building, at the end I say steel, so it's a quite weird message that I put, but when we look at the challenge, which is ahead of us, we need absolutely to change the way we approach construction. If you take the big number between now and 2050, 2060, I will not debate on the target, we will need to double the surface of the building compared to what we have today. So if we keep all the building we have worldwide, we keep them alive, up to 2050, 2016, which is already a challenge, we don't demolish anything. We will need the game to build the same amount of square meters than we have today. Why this? First is the worldwide population growth. That's one thing that will streamline that. But also, and what is even bigger, is that in many countries, people will not live the way they are living today with 5, 6, 7 people living on 20, 30 square meters. We see in many countries the standard is raised. So the amount of square meters we will need for people worldwide will also grow. The steel demand will go up because of all this, but if we want a human coming to sustain that, we need to change the way we approach the building. And we need to build more rationally using less material if we want to face this challenge. We do also a lot of building in concrete. But from a environmental point of view, I see that there is a shift towards steel. Why? Because from a environmental point of view, a building made of steel, when it's well down, it's more efficient than a concrete one. So for building, we will use less steel, but we will have more building in steel and we will have more building to build. So that's why I'm not afraid to push that on the market, because at the end, it will have a positive effect on the steel demand. There are other groups within our salon middle that are adopting the same holistic approach to other markets, such as automotive. I mean, you can pretty much make every piece of steel that goes into a car as well. Yeah, in automotive, it is something we were doing, even before doing that in the building. So at the early 2000, our salon middle developed a lot and a lot of knowledge in car design. So when I say car design, it's not the shape, the color, it's the design of the body and why the design of the chassis, the safety design of the building. And we developed with the years a lot of knowledge on how to optimize that, how to choose the right steel at the right place, because we must not believe that a body in white is just a piece of steel which is spending. You have five, six, seven, ten, even some time more type of steel, which are combined together to really optimize everything. So when we launch the intelligence, the intelligence approach for the construction, in fact, we inspired ourselves on what has been done in the company for the automotive sector. That too, this is the number you're going to hate that you ever mentioned, this 38% reduction. Sorry Olivia, but it's a good example because if you do talk about a real example of a commercial building in London where the embedded carbon requirement went down by 38% as James alluded to, that is a very, very significant factor in terms of greens or low carbon still. So, in this case, who exactly specified it should be 38%? Was it the client, the customer, or was it somebody else? And why did they pick 38%? How would 38% of the command of this? Why wasn't it 39 or 36? What's ultimately driving the carbon intensity of any building? Yeah, it didn't work like this. In fact, 38% is a resource. So, what was the driver, the driver, was the real estate developer, which wanted absolutely to decrease as much as he can the carbon intensity. The as much as he can must, of course, always be leveraged by budget, urbanistic constraint. So, there are many, many constraints, but in the constraint that was given, they asked the team, and when I say the team, it was the architect, the engineering office, the MVP specialist, us. We worked all together to do as much as we could, and the as much as we could, ended up with 38. So, it was not that they put 38 to target, and no, that was a bit the first of its kind. It means we had already in the past, in London, worked a lot on the structural part, worked a lot on the floors, but here we went really far. We added the MVP system, the cooling system, and everything to see up to where we can go. So, it were various from project to project. The 38 is not like that was specific for this particular building. Yeah, 38 was for the entire building. You know, this percentage, it's always for me, it can be sometimes also misleading, it depends on the scope. That's always the thing. When you do environmental comparison, it's always a matter of scope, a matter of comparing the right object with the right object. In this case, it was the real estate developer who had those aims. Are they just doing that for good favor, or do they get some kind of economic benefit of having a low carbon building, or is it just sounds a marketing look at this, come and work in this building, it's low carbon, or come and live in this building, it's low carbon, or is there an incentive for them to do this? Yeah, that's you need to ask them, you know, what was, let's see, what was there, what was their driver, but I see, and especially in London, the public, the building users, the community have started to put a huge pressure on developer to do the right thing. So, today there is no regulation as such, which is forcing them to go so far, but you have a real pressure of the people that will use this building, the future customer of the real estate developer, which are really sensitive to that, and I really like it because that show that it's possible, you know, that you don't need, that it's not only regulation, that it's forcing people, that make things happen. Of course, it's London's centric, some other countries, they go more, from a regulatory side, so all its project by project with a certain company or real estate developer, or you have the push of the regulation. Well, you see people come conscious of the fact of the importance of sustainability and construction, and probably also in the future, there will be regulation in place, so these developers are in advantage. I'm convinced, regulation will come. That's for sure, and when regulation comes, I feel that developer, they want also to anticipate that. I explain myself, in France, you have the REE 2020, so it's a regulation for today commercial residential and commercial building, that gives you CO2 threshold for 26, 27, 28, and beyond. I see a lot of developer, which are designing their building today, they take the threshold of 2028 or 2029, they don't take the threshold of 26. Why? Because they want a bit to be in advance on the regulation. Because the decision they take today, their building will come on the market in 28, so perhaps the public opinion would have changed, and their building, if they are not complying with the 2020 age regulation, even if they are authorized to do them, perhaps will be less marketable than another one. So what's the next iteration of Stelligence look like? What would you like Stelligence to go on to do? You've clearly established the viability of your approach and you're seeing results, positive results for both Arsenal or Middle, the building owners, contractors, etc. What happens next? Yeah, the next step we are doing now is to push this concept outside Europe. That's something we have started with, let's say, quite already good success. So in Southeast Asia, for example, they are also really focused on environmental optimization of buildings. So it's an area which is also growing a lot, Australia. They start also to push a lot in the building sustainability and building optimization. That's the aim now. We have started this journey not so long ago to really go international and do that internationally. Yeah, there is still one market where we are not in continental Europe, really developed this residential. In continental Europe, there is really small share of steel in the residential sector. When you look at UK, you have, in UK, a lot of steel in residential, you go to US, you have a lot of steel in residential. The approach to residential is different. And I think that's my next challenge to see, how can I change the game in the residential sector, but from a full ecosystem point of view and also from a people mindset point of view. Yeah, we say that the badge and they have a brick in the belly. Most of the people, they own their house. There is a lot of similar family houses and most of them are done in concrete and in bricks. And when you have someone handling in a house to buy it, if the house is already built, the first thing they will do, they will knock on the wall to see if it's made of concrete or stone. And if when they knock it, it's sound empty. It's not a good house, which is not at all the case. But that's also it takes time to work on the mentality. Olivia, just out of interest, are you an engineer by training? Yeah, I'm a structural engineer by training. Given the size and importance of construction and the huge fragmentation and range of products, steel products and its applications within the general construction sector, you've definitely got a job for life there, Olivia. I mean, it is massive. Two lives. And I just want to, it's my view for the listeners, is that in terms of significant reduction of CO2 requirements in steel products, then this is what Olivia is talking about is by far the biggest influence in changing embedded carbon in steel. Construction is the biggest sector and it's got the most to give in terms of CO2 reduction. So good luck and keep it up for life. As I said previously during the discussion, I really love when I see an architect, an engineering office with whom we have worked one, one time, two time, three time. And then they never come back. That's for me really the victory. If they come back because They don't need me because they are applying the concepts. That's really what is the victory because, as you said, construction is the most fragmented market in the world. Nearly everybody is a builder. You know, at all my do building things that I do takes. I'm a builder. Everybody's a builder at a certain time. So it's very impossible for anyone to touch everybody. So what I really try to do is to do this snowball effect. So when I have convinced people, then they are on a project with other people. And if they can spread the message, then the message go further. Because really what we want to push is to do more officials per day. And then people can take efficient as they want cheaper, lighter, faster, more environmental friendly. For me, that's all the lever of efficiency. Great message. It's very exciting to listen to you, what you are doing. And especially that dreams and visions seem to be coming true. Thank you, Olivier. Thank you, Mike and James. Thank you. Thank you. That was very interesting. We're glad to get your message out, Olivier. Thank you. Thank you very much. Next time, we will be joined from Singapore by Alex Tankock, CEO of Intercontinental Energy. For the very latest steel news, pricing and market data, stay ahead with Kalanishk commodities. Your trusted source for steel industry information. With an unrivaled team of experienced journalists all around the world, get accurate updates and market reports to help you make informed business decisions fast. The latest data, market information and steel news is at Kalanishk.com. In this fast-paced world, knowledge matters. Hi, it's Astrid. My dad, Willy Corp, was known as the Steel Rebel. A man who built a global legacy from nothing but determination and bold ideas. His incredible story has inspired me all my life, and now I'm proud to share it in English for the first time. The book is called The Steel Rebel, Willy Corp. And I think you will love it. Now out on Amazon.