Plan major investments in the medium term to create a European commodity supply chain and shelter the industry from risks related to geopolitical uncertainties that can jeopardize security of supply. This, in a nutshell, is the message launched by Assofond, the Confindustria association representing Italian foundries, at the conference "Raw Materials, What Future?" organized at the annual meeting of member companies held today in Soave, in the province of Verona.
"For several months now," stressed Assofond president Fabio Zanardi in his introductory remarks, "we have been living with a sluggish market, and for the moment we see no prospects of a turnaround. Investments in the main target sectors of our products are at a standstill. A wait-and-see attitude that can be explained by the many uncertainties we are experiencing at this time: on the one hand the unknowns related to the orientation that the next European Commission will take, and on the other those on the outcome of the U.S. elections in November, on the developments of the conflict in Ukraine, on the moves of the central banks still grappling with many doubts about the start of a consolidated path of cuts in the cost of money."
Against the backdrop of a market picture that is certainly not rosy for companies in the sector-which in Italy has about 900 companies, with 23,000 employees and a total turnover of 7.6 billion euros-is the path of ecological transition initiated by the European Union, which, in the short space of a few years, aims to make Europe the first continent in the world to reduce climate-changing emissions to zero. A process that is now underway, but which requires, in order to ensure its success, the need to revive industry, the only sector capable of guaranteeing the investments and technologies necessary to achieve the sustainability goals set for the coming years.
"The ecological transition," Zanardi further stressed, "is the biggest challenge we face, and we must all do our part to come out on top. Foundries, today more than ever before, represent a key link in decarbonization, since they produce components that are fundamental for making, for example, wind turbines and hydroelectric power plants to produce green energy, increasingly light and low-emission means of transport, various types of machinery capable of reducing the environmental impact of manufacturing... and the list could go on and on. In Italy, moreover, we have already done a lot to reduce the environmental footprint of our manufacturing process, with investments in the environmental field that, on average, cube for more than 20 percent of the total. To continue on this path, however, it is necessary in Europe to put back at the center of attention the basic industry, including the production of raw materials, which today takes place largely outside the borders of the Union, with all the risks and unknowns that come with it."
Assofond's call is in line with what has been clamored for by the more than 1,000 European organizations - including, indeed, Assofond - that have signed the Antwerp Declaration for a European Industrial Agreement: an urgent appeal to policymakers to revitalize the continent's industrial landscape, with the aim of accelerating the Green Deal, ensuring that industry remains globally competitive and maintaining quality jobs for European workers.
"Investing in basic industry and raw materials," Zanardi continued, "is a prerequisite for the Green Deal to succeed. It may seem counterintuitive, but it is not: today we largely source raw materials from hostile or potentially hostile non-European countries, which are produced while generating significant environmental impacts. Security of supply, as a result, is constantly at risk, and the environmental footprint of European products, even if made with the best available technologies, is burdened by the emissions generated to produce the raw materials and transport them from distant countries. Think of pig iron, which is essential for the entire mechanical engineering industry, for building important infrastructure such as water, and for manufacturing components that are essential for producing green energy. Most of it comes from Russia, but we already know that starting next year only a limited amount can be imported, which will then be reduced to zero from 2026. We do not discuss sanctions, which are necessary and sacrosanct. But we need to think about how to guarantee supplies to industry. To date, the alternatives are distant and expensive-South Africa, Brazil and little else. Also in 2026, then, the full operation of the CBAM will make it even more costly to source this material from countries outside the EU. At this point we have two paths to choose from: that of inertia, which would lead within a few years to the end of the European industry, overwhelmed by Asian productions made with Russian cast iron that can be purchased cheaply, and that of investment and innovation, which could instead create a European supply chain of raw materials with a low environmental impact and thus restore momentum not only to an industrial sector, but to an endless supply chain, as well as foster the ecological transition. The technologies are there: what is needed is the will to encourage investment in a strategic sector and to plan for the long term, even if it might not seem convenient today."
A picture, then, that clearly highlights how green transition and investment in the basic industry are not opposing principles but rather complementary, as also highlighted during the conference by Paolo Kauffmann, CEO of Matherika Group and founder of FARO Club, a community dedicated to risk management and policies for optimizing commodity purchases: "Was it green policies that raised commodity prices and triggered the inflationary process? This seems to be the answer in vogue by many observers. In reality, under the surface, the process of deglobalization has taken the world back to its origins. From a phase of zero-cost money and globalized cost commodities, we are back to normal: moving commodities costs money, is risky, and activity is greatly influenced by geopolitics. But the European battle is far from lost and just needs to be reinvented according to new keys that make room for young talent and Europe's millennial culture."
"The international ore, scrap and pig iron markets," stressed Emanuele Norsa, content manager of siderweb, "are undergoing a period of great transformation. Competition for the supply of these raw materials for Italian players will continue to grow, with potential new market tensions in the short and medium term. Scrap, in particular, will be increasingly in demand in the coming years as European production of electric furnace steel grows. We therefore need to gear up to handle the new scenario we will face in the coming years."
"The supply of pig iron, steel scrap and aluminum," emphasized Prof. Carlo Mapelli, professor of metallurgy at the Politecnico di Milano, "which are the raw materials needed to support the production of foundries, will face critical issues in the coming years depending on the constraints related to the decarbonization process, tariff rules imposed by the CBAM, available technologies and energy sources that can be used and are sustainable both from an economic and environmental point of view. In order not to be passively subjected to market trends that may undermine the competitiveness of companies in the next decade, it is possible to invest at different levels in technologies that can enable the production of these raw materials in Europe with reduced environmental impacts. There is the possibility of making preroduct using natural gas or hydrogen, lowering CO2 emissions than during conventional pig iron production in blast furnaces. Again, there is smelting, which can be implemented with biocarbon or even with fossil coal as the CO2 is sequestered. These are different options, with different costs and applicability, and within the framework of the green transition each geographical context will have to choose its own solution and plan the necessary investments accordingly."
Assofond - Italian Foundry Association
This is the trade business association representing Italian foundry companies. Founded in 1948, it is a member of Confindustria and, at the international level, a founding member of the European Foundry Association (CAEF). The association performs institutional representation functions and promotes the reputation and competitiveness of Italian foundries. It also assists companies in their relations with institutions and local authorities and provides support to member companies in administrative, commercial, economic, tax, regulatory, technical, environmental, and occupational health and safety fields.
The foundry industry: an excellence of Italian manufacturing
Foundries are enterprises that make indispensable components for all major industrial sectors: from automotive to mechanics, aerospace to machine tools, construction and power generation. Italian foundries rank second in Europe in terms of production, behind Germany. The industry has about 900 companies, with 23,000 employees and a total turnover of 7.6 billion euros. The foundry process is the only one that allows a wide range of manufactured goods to be produced in an energy-efficient manner, and it represents an advanced circular economy system: foundries make 100 percent recyclable products using scrap metal that has reached the end of its life as raw material.
