Green steel is cheaper than conventional steel, but Europe’s market is distorted, says Tykač’s steel chief
14 November 2025, Forbes, Jan Strouhal Link to the original article
This spring, Czech billionaire Pavel Tykač acquired British and Scandinavian steelworks from the Spanish group Celsa. Apart from their shared new name, 7 Steel, they have one key thing in common: they produce circular steel using electric arc furnaces instead of blast furnaces. This technology is expected to become a symbol of decarbonisation for Czech and other European steelworks as well.
“As the name suggests, the primary source of energy is not coal, or more precisely coke, but electricity. Steel is produced by melting steel scrap,” explains Libor Černý, Head of Steel Activities at Sev.en Global Investments, or 7GI, in his first media interview.
Černý has worked in the industry for more than three decades, and this spring Pavel Tykač chose him to lead his steel activities. The acquisition of what are now the British steelworks 7 Steel UK and the Scandinavian 7 Steel Nordic marked Tykač’s first entry into the sector.
“The steel acquisition was simply an interesting opportunity with significant potential,” says Libor Černý in the administrative building of the British steelworks near Cardiff, where Forbes visited him in the autumn.
The visit was not only an opportunity to interview the new manager in Tykač’s team, but also to tour the entire steelworks with expert commentary and understand how green steel production actually works, whether it makes financial sense and what the future could look like for steelworks in the Czech Republic and elsewhere.
European steel producers are facing the need to decarbonise by transforming blast furnaces into electric ones.
“Investment in an electric arc furnace is substantial, but in the long term, operating one brings significant savings,” says Černý in an exclusive interview, while adding that the situation across the industry remains complicated.
You joined Sev.en Global Investments, or 7GI, this spring. What is your connection to the steel industry? Were you given a specific task by the management or directly by the owner?
I come from Ostrava, the industrial heart of the Czech Republic. I have worked in steelmaking for more than thirty years, starting as a university graduate and eventually becoming CEO and chairman of the board. Among other roles, I have also worked at a research institute and in flat product processing, galvanising and tube production.
In 2022, I stepped away from the steel business completely for a while. When Sev.en Global Investments successfully completed the transaction with Spain’s Celsa and brought green steel producers from five countries under Czech ownership, there was a clear need for someone with industry experience to lead this new sector under the 7 Steel brand. I was fortunate that they chose me for the role.
My task is to develop 7 Steel and act as an intermediary between the leadership in Prague and the management teams in the United Kingdom and Scandinavia. I also represent the owner’s interests on the boards of both companies.
Why did Pavel Tykač buy the British and Scandinavian steelworks?
Sev.en Global Investments is a strategic investor that continuously analyses a very broad range of business opportunities across different sectors and countries. The steel acquisition was simply an interesting opportunity with significant potential.
Of course, I am pleased that our offer succeeded in the negotiations and that circular steelworks from five countries came under Czech ownership. We are also continuing to look at further opportunities in steelmaking, and we have the ambition to grow.
Let’s talk more about those opportunities. I’ll start with the main difference between 7 Steel’s steelworks in the United Kingdom and Scandinavia and conventional steelworks, which is that their core technology is based on electric arc furnaces rather than the blast furnaces we know from the Czech Republic. How does an electric arc furnace actually work?
As the name suggests, the primary source of energy is not coal, or more precisely coke, but electricity. Steel is produced by melting steel scrap, which is charged into the furnace. Electrodes made of pure graphite then create an electric arc using a strong current, which heats the scrap and gradually melts it. Natural gas is also added to make better use of the energy and to ensure proper mixing of the molten bath.
The entire process, from charging the scrap to fully melting it and finishing the heat, takes around 45 minutes. The steel is then tapped into a ladle, which is transported to continuous casting. There, the liquid steel is poured into moulds where it solidifies.
In other words, steel is not really produced here, but rather melted?
That is just a matter of wording. Steel is produced here too.
Blast furnaces generate a relatively high share of waste. What is the situation with an electric arc furnace?
In the case of an electric arc furnace, we need roughly 1,100 kilograms of steel scrap to produce one tonne of steel. In a blast furnace, producing one tonne of pig iron, from which steel is then made in the steel plant, requires around 1,500 kilograms of iron ore, 500 kilograms of coke, 150 kilograms of limestone and other additives. In total, that means more than 2,000 kilograms of input material.
Put simply, blast furnaces have to heat and melt twice as much material as electric furnaces.
Are these numbers also reflected in employee productivity?
Yes, if we define productivity as the amount of steel produced per employee. In that sense, our productivity is at least twice as high as with the blast furnace route. Investment in an electric arc furnace is high, but in the long term, operating one brings significant savings.
In the Czech Republic, and not only there, high electricity prices are of course an issue, but even that can be managed.
For example by using flexibility? Do you switch it on depending on current electricity prices?
Exactly. You can switch an electric furnace off and on almost immediately, which is not possible with blast furnaces by their very nature. So we can respond to current energy prices. When the price of electricity is high, we can switch off the furnace and wait for more favorable hours.
And when electricity prices are negative, which we see more and more often, our furnace can act as an energy absorber.
How does the electric furnace compare in terms of emissions?
For steel produced using the blast furnace route, carbon dioxide emissions can exceed 2,200 kilograms per tonne of steel. In our case, they are around 300 kilograms per tonne, so seven times lower. At 7 Steel Nordic, the difference is even greater.
While in the Czech Republic and the United Kingdom part of the electricity is still generated from fossil fuels, which is of course included in the overall emissions, in Norway electricity comes from renewable sources such as hydropower and wind. In that respect, Norway is something of a green perpetual motion machine.
Steelworks of your type are naturally dependent on scrap. Is there a risk of shortages?
In developed Western economies, we already have enough scrap in circulation to keep melting it again for years to come. In less developed countries, the situation is worse. Some simply do not have enough material to scrap yet. That is also why scrap is becoming a traded commodity and is being exported from Europe.
To maintain self-sufficiency, we should protect the market more and treat scrap as an important component in the production of steel, which is an entirely strategic material.
How much scrap do you need each year to maintain continuous production?
Across both of our steelworks combined, we use roughly two million tonnes of scrap a year.
You are among the largest scrap recyclers in the United Kingdom. Do you source it entirely yourselves?
It is a mix. In our recycling division, we do not buy scrap from small-scale collectors, but from medium-sized scrap yards, and then we process it.
We also source two thirds of our scrap from large suppliers, such as companies specialising in vehicle disposal. They remove all operating fluids, glass and seats from cars, and then sell the cars to us.
Here in Cardiff, we have one of the largest shredders in the United Kingdom. Every thirty seconds, it can turn one car into small pieces of scrap roughly six centimetres in size, ready to be melted in the electric arc furnace.
China, for example, does not have this resource. It does not yet have enough old cars to scrap. That is why the blast furnace route dominates steel production in developing countries.
European steelmakers often complain that scrap is being bought up here by Asian companies, which then import it back into Europe in the form of steel. They fear future shortages and are calling for scrap to become a strategic raw material in the EU. Do you see this problem in the United Kingdom as well?
Steel production in the United Kingdom is currently relatively low, and we are the only producer using the electric route.
If we are talking purely about the British market, we currently see a surplus of scrap, which is even being exported. But once Tata Steel’s plants start operating, as they are currently switching to electric furnaces with an annual capacity of three million tonnes, everything could change quickly.
There is enough scrap at the moment, but the situation can change fast.
Is the situation similar in Scandinavia?
Yes, the ratio is very similar. In Scandinavia, we mainly recycle in southern Sweden, where we have a slightly smaller shredder than the one here in Cardiff. At 7 Steel Nordic, we also have a team that handles the demolition of old buildings, from which we obtain high-quality steel scrap.
We can even track the entire steel cycle. For example, steel from one demolished building can be used in the same place for a new building. That is exactly how sustainable circular production works.
Europe is rolling out electricity subsidies. The Czech Republic is lagging behind Germany in relief measures. So should Europe protect its scrap? Listening to you, it sounds like there is plenty of it everywhere.
Steel is the queen of materials. We see it everywhere: in buildings, transport infrastructure, renewable energy, the defence industry. Europe really should start defending its scrap.
The European Union wants to transform steelmaking so that high-emission steel production is pushed into the background and production moves to electric furnaces. But then it must of course ensure there is enough input material, and that material is scrap. If we want to recycle and produce green steel, we cannot get rid of it.
There is enough scrap now, but we must keep in mind that steelmaking is a cyclical industry and that the number of electric furnaces will grow. Once demand on the market increases, resources must still be available.
Are customers interested in green steel? What advantages does it bring them?
There are quite a few advantages. In the Scandinavian countries, and also here in the United Kingdom, customers are increasingly asking about the origin of steel and the environmental burden it carries.
Our products have what is known as an EPD, an Environmental Product Declaration, which tracks the entire emissions footprint across the value chain. It is a relatively complex and strict certification method, and our customers pay close attention to it. In Scandinavia, for example, the government will not financially support a project unless green steel is used.
In this way, they are effectively supporting circular production, and that seems fair to me. When governments set environmental rules, they should be the first to follow them.
Green certificates are one thing, but the other key factor is price. Green steel is probably not cheaper than conventional steel, is it?
Logically, green steel should be cheaper. As I mentioned, we have high productivity per employee and, with an electric furnace, you need far less input material than with a blast furnace. You also save costs because you do not need to store, transport and handle as much material.
Today, however, circular steel is more expensive because cheaper conventional steel from Asian countries is flowing into Europe. In effect, these are dumping imports subsidised by the Chinese government. Even on their domestic market, these producers would not be able to sell at the prices at which they are currently selling here without government support.
The European market is simply distorted. Governments should create conditions for profitable domestic production, ensure sustainable energy prices and introduce measures to protect the market. I consider that much more effective than handing out subsidies in all directions.
Is it possible to achieve one hundred percent green steel?
One hundred percent green steel does not exist. We are closest to it in Norway, where our production is powered by hydroelectric plants in the fjords. Our 7 Steel UK operations are still dependent on gas from an energy perspective, but in the future we plan to use hydrogen as well, which will make our steel production here even greener.
Hydrogen is much discussed in industry, but still little used in practice. How far away is it in your case?
The first project to ensure that our gas mixture contains twenty percent hydrogen is already under way. It concerns the reheating furnace for input material at our rolling mill here in Cardiff. The innovative project was approved at Sev.en Global Investments shortly after the acquisition of the steelworks. Project tenders are now under way, and launch is expected in the first half of 2027.
So Sev.en GI believes in hydrogen?
In my view, hydrogen is still promising. There was simply too much expectation around it at the beginning, and that has now faded a little. But some technical issues still need to be resolved, as do concerns that hydrogen atoms, which are very small, can pass through a steel pipe.
From an economic point of view, hydrogen production still does not make sense for many companies.
Hydrogen can be produced by electrolysis at night, when electricity consumption is lower and electricity is therefore cheaper. The hydrogen produced can then be liquefied and stored in steel vessels, effectively storing energy. It could work like pumped-storage power plants. At night I store energy, during the day I consume it.
It is true that hydrogen is still not as popular as was perhaps expected, but that will come. There is plenty of hydrogen in the world, and the energy it provides is genuinely clean.
So is demand for green steel increasing?
At the moment, I do not see that, because overall demand for steel itself is not increasing either. Recently, several unfortunate circumstances have come together for steel. Demand has been falling since the Covid years and has still not returned to pre-Covid levels. It also fell because of high interest rates, which reduced mortgage volumes and therefore overall construction activity. On top of that came US President Donald Trump with his tariffs, and Russia’s aggression against Ukraine.
Here in the United Kingdom, demand also fell because of a major residential tower fire in London in 2017, which claimed 72 lives. The British responded by tightening building regulations. So in addition to the factors that affected the whole of Europe, construction in the United Kingdom also declined because of longer and stricter building approval processes.
Do you export steel?
As for the Scandinavian part of our steelworks, they mainly serve their domestic markets, meaning Norway, Finland, Denmark and Sweden. Historically, they also supplied a small volume to Spain, mainly because the previous owners were Spanish.
In the United Kingdom too, most of the production is intended for the domestic market. That also makes sense from the point of view of greenness and circularity. We do not have to transport products over long distances; they are used close to where they are produced.
How do you see the future of the steel market in Europe?
I am mildly optimistic. Recently proposed new measures to protect the European steel industry significantly limit steel imports into Europe, start to place emphasis on sustainable production, and restrictions on scrap exports from Europe are also being prepared.
These are steps that European producers have been calling for for a long time, and they are finally gradually arriving. Let us hope their implementation will ensure that steel production in Europe remains stable and largely self-sufficient.
Without steel, there can be no automotive industry, defence industry, energy sector, mining and raw materials processing, construction or many other sectors. We simply cannot function without steel, and we cannot afford to be dependent for such a strategic material on suppliers from distant countries, for whom Europe’s dependence on their deliveries may also be politically useful.