Volkswagen AG and Vulcan Green Steel have signed a Memorandum of Understanding (MoU) for a partnership for low-carbon steel.

VW said the volumes of low-carbon steel that Volkswagen AG expects to order will cover ‘a significant proportion of total steel requirements’ and will be used by the VW Group’s production facilities from 2027 onwards.

Starting in 2027, Vulcan Green Steel will produce automotive grades and other high-strength steels in Oman. Natural gas will be used in the Duqm operations during the initial years and later the operations will be switched over to green energy in a move that will cut carbon emissions by 70% once the transition is complete. The facility is currently in the construction phase and is slated to come on stream in 2026.

The fully vertically integrated production of flat steel in Oman will extend from mined iron ore to own generation of green energy and production of green hydrogen all the way to secondary metallurgy of the finished steel.

VW said high wind speeds and strong, continuous solar radiation in Oman create ideal conditions for generating green power from wind and solar energy – an essential basis for the production of low-carbon steel using green hydrogen.

VW also said Vulcan Green Steel’s low-carbon steel is expected to lower carbon emissions in steel production by 70% in the future.

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Dirk Große-Loheide, Member of the Board of Management of the Volkswagen Brand responsible for Procurement, said: “Decarbonizing supply chains is a decisive factor for the Volkswagen Group on the road to carbon neutrality. We want to achieve this goal by 2050 at the latest, and using low-carbon steel is an important step in this direction. Green steel will help us make supply chains at Volkswagen even more environmentally friendly going forward.”