Mitigation of risks in low-carbon transition and seizing the corresponding opportunities

Note I：Each scenario considers the maximum rise of temperature with 50% confidence level in 2100.

Transition risks Scenarios Scenario Analysis Impact on CSC's operations CSC's Response Metrics and Targets
Transition of raw materials Temperature rises 1.7℃ (IEA APS)
  • In the low carbon emission scenario, scraps and reduced iron may become critical sources of raw materials. Furthermore, the demand of high-quality iron ore is expected to increase, causing the prices of raw materials to fluctuate.
  • The increase of demand from the industry would stimulate the prices of emerging new raw materials, leading to the rise of operating costs.
  • Continues to expand sources of alternative materials.
  • Prepares for new raw materials and resources.
 Continues to develop new raw materials or materials in line with CSC's carbon neutral roadmap.
Implementation of carbon fee mechanism
  • Considering that domestic carbon fees are still unclear, CSC has considered carbon pricing, international carbon tax and carbon trades to assess the impact.
  • Products need to bear the cost of carbon emissions, resulting in the increase of operating costs.
  • Conducts research on international carbon pricing mechanisms to advocate for alignment with international, reasonable carbon fee systems, thereby mitigating the impact of carbon pricing systems.
  • CContinues the development of emerging steelmaking technologies to reduce CSC’s carbon emissions and the carbon cost of its product.
  • Improves efficiency of processes and power plants through smart scheduling and the implementation of best available technologies.
 Carbon emission targets of CSC:
  • Reduce carbon emissions by 7% in 2025
  • Reduce carbon emissions by 25% in 2030
  • Achieve carbon neutral in 2050
*The baseline year is 2018*
Planning of low-carbon energy policy Temperature rises 1.4℃ (IEA NZE, in line with the Paris Agreement)
  • In the low-carbon emission scenario, the demand for renewable energy may continue to grow in response to the long-term development of net-zero technologies in the steel industry.
  • If CSC continued to reduce purchased electricity through low-carbon energy, operational costs would increase.
  • Invests in solar photovoltaic energy to meet short to medium-term internal renewable energy demand as much as possible.
  • Long-term assessment of low-carbon energy demand is conducted; investment and procurement are planned accordingly.
R&D of carbon neutral technology of the steel industry
  • In the low-carbon emission scenario, the steel industry may continue to invest in the research and application of low-carbon steelmaking technologies.
  • Investment in the R&D of new steelmaking technologies would lead to the increase of R&D cost.
  • Actively engages in industry-academia collaboration projects and focus on emerging low-carbon steelmaking technologies, including: replacing a portion of iron ores with reduced iron, replacing coal injection with hydrogen injection, as well as implementing carbon capture and other applications.
Opportunities Scenario Scenario Analysis Impact on CSC Operations CSC’s Responses Metrics and Targets
Entry to renewable energy/ automotive related supply chains Temperature rises 1.7℃ (IEA APS)
  • The installed capacity of global wind power generation is expected to increase by 220%, and electric vehicles are projected to constitute 40% of the automobile market in 2030.
  • The renewable energy and electric vehicle markets are flourishing, and if CSC developed products that are aligned with market trends, the revenue may increase.
  • Continues to promote the entry of high quality ES for electric vehicles into major manufacturers, develops corresponding technical thresholds, and actively conducts product-related tests and verifications.
  • Assists domestic vehicle manufacturers in accelerating the application of ES for electric vehicle motors, and enhances their competitiveness in the domestic market of electric vehicles.
  • Participates in the construction of domestic renewable energy projects and provides wind power steel plates needed for underwater foundations and wind turbine towers, assisting in achieving the localization of domestic wind power facilities.
  • Sales ratio of premium steel ≧ 50.3% in 2025.
  • Sales ratio of premium steel ≧ 52.0% in 2030.
Provision of high-strength steel to enhance climate resilience
  • In order to adapt to recurring climate hazards, governments worldwide would continue to strengthen the resilience of public infrastructure.
  • Strengthens public infrastructure and national resilience projects in line with policies, leading to the increase of steel demand CSC’s revenue.
  • Provides high-strength structural steel to meet the demand of collaborated projects with governments, thereby increases the opportunities of CSC’s products being applied in governmental infrastructure projects in the future.