Transition risks in the steel sector
This report is the fourth in a series of six, as part of the Energy Transition Risks project. It investigates the potential financial impact of climate change scenarios on companies in the steel sector, focusing on ArcelorMittal, thyssenkrupp, and voestalpine’s crude steel business.
Our analysis suggests that ArcelorMittal and voestalpine could be valued more highly in either of the climate change scenarios compared to the baseline, while thyssenkrupp1 could be valued lower, when based on their crude steel operations. This reflects the specific technological and regional assumptions of the LCT/ACT scenarios, and the valuation assumptions (terminal growth rate and discount rate) used in the DCF model. We apply the valuation assumptions used by KECH’s mining equity analysts. This sees different discount rates being applied to each of the three companies, reflecting differing perceptions of the risks posed to each company’s future cash flows. Other analysts or studies may have different views on any of these modelling inputs, resulting in different conclusions to those of this study.
