The steel industry says it's no bad thing if more scrap steel from the new cash for clunkers Clean Car Upgrade Scheme gets sent offshore.
Foundry worker. Photo: 123rf
Climate Change Minister James Shaw said the aim should be to recycle it all here.
But the industry said it's doing well cleaning up and cutting emissions, as things stand.
The government aims to trial the scrapping of 2500 cars initially under its half a billion dollar scheme to move people out of old, dirty cars, into newer, cleaner ones.
Climate Change Minister James Shaw told RNZ that few details have been worked out, but that ideally the scrap would be able to be recycled onshore.
"The international market for secondhand steel pays a price that our own steel mill in New Zealand can't beat," Shaw said.
"But we are looking at working with them, to say: 'Well, how do we actually get to a point in Aotearoa where we do recycle all of our own steel here?'
"Because that would actually be the best outcome, not just when it comes to steel from vehicles but also buildings and other scrap steel."
But NZ Steel, which operates the country's only steel mill, at Glenbrook, said the international price was not the problem.
"NZ Steel does not purchase scrap in the merchant market because it cannot melt any more scrap than it does now with its current operating model," it told RNZ.
"NZ Steel currently reuses all of its annual scrap generation in its steelmaking process.
"Scrap price is not a real constraint - it's scrap processing capacity."
Any move to raise that capacity was at "the concept stage" in talks with the government that included the longer-term strategic importance of domestic steel production and options to use hydrogen to power it, the company said.
Glenbrook steel mill Photo:
The country's leading steel research body, the Heavy Engineering Research Association (HERA), said "it doesn't really make sense" to invest in domestic recycling anyway.
The government would be better off putting its efforts elsewhere, said its chief executive Dr Troy Coyle.
"Demand for it is so high ... the benefits exist already if we're sending it offshore.
"What the government could do is focus on increasing the recovery of steel scrap."
The system only recovers about 80 percent. But the figure is higher in construction (85 percent) and lower in domestic (75 percent).
[https://www.hera.org.nz/wp-content/uploads/R5-89-Steel-Recycling-Report-v2.pdf
A HERA study showed] showed exporting scrap already provides significant environmental benefits - equal to 800,000 tonnes of CO2 a year, or more than a million tonnes if all steel could be captured.
Also, setting up recycling would require changes to the unique process here of making steel from ironsands, Coyle said.
The head of Phoenix Metal Recyclers, architect Hilary West-Reeve, said it had been hard to educate the government on how they worked, and to show that they were not like a waste industry trying to discard rubbish plastic overseas, but instead had a "huge engine" of scrap exporting aimed at recovering a valuable resource for reuse time and again.
The industry had "found it very difficult to advocate for what's working really well in New Zealand".
Recycling is the back end; at the front end, steel and iron is still made here.
Though the industry is tiny by world standards, it is still the country's single-largest industrial source of CO2 emissions, emitting 55 percent.
So HERA has set up a new zero-carbon steel program that relies on offsets against native forest projects in the Pacific Islands.
Genuine carbon-neutral steel in its own right remains a holy grail worldwide; various countries' steel industries vary dramatically in how dirty they are, offsets or not.
"There's no doubt that the ultimate solution will be steel made without coal," Fletcher Steel head of innovation and sustainability Scott Morrison said.
"But that's at least a decade away before Australia and New Zealand will get reliable, consistent supply of those products."
The zero-carbon offset steel programme was "a valid bridging solution, while we wait for the ultimate solution", Morrison said.
The steel could cost more and, perhaps surprisingly, supply chain pressures were actually helping with customers being prepared to wear that.
"One of the flip sides to supply constraints is that people are more pragmatic with regards to pricing," he said.
"Pricing isn't just necessarily front and centre anymore.
"Some of these, like, non-tangible benefits are really coming into play now."
The programme, combined with recycling, completed a circular economy for steel, Dr Coyle said.