COVER STORY: PRIMETALS TECHNOLOGIES
hydrogen produced from natural gas. “Low-carbon hydrogen will have to scale up massively before it can offer meaningful emissions-reduction in the steel industry.”
In summary, the Wood Mackenzie analysts reflect that “steel decarbonisation will be a technological evolution where three levers will come into play – scrap, alternative ironmaking and carbon capture”. Hamon returns to his observation that the Paris Agreement was 20 years too late. If the environmental impact had been considered before China’s boom in steel production, technological expertise could have found a way to build zero-emissions steel plants if supported by the right financial incentives for steelmakers. Right now, he adds, there is clearly insufficient green hydrogen,5
but this
could change when the cost of production comes down.
The opportunity to be part of this solution is something Hamon finds very exciting: “As a technological provider, we are ready to support steelmakers.” But to do this, there needs to be more regulatory support. While the EU Taxonomy is, in his view, “a really good move” and “financial players are facing responsibilities and identifying what is ESG and what is not in terms of what they support”, greening steelworks is currently still a greenfield project.
Aligning ESG to FX hedging When Deutsche Bank approached Primetals to outline what would become the world’s first hedging concept that links currency options to sustainability goals, Hamon jumped at the opportunity. “I took this as a personal challenge,” he enthuses. Signed on 5 November 2020, the framework agreement enables Primetals to hedge its currency risk with FX options with Deutsche Bank over a four-year period.
If the company fails to meet the agreed sustainability targets, Primetals Technologies pays a predefined sum to a contractually defined non-government organisation. Any currency hedges executed by Primetals must comply with the criteria of the new Sustainable Finance Framework that Deutsche Bank published in July 2020. This sets out the classification of ESG financing, which is aligned on a best-effort basis to the EU Taxonomy Regulation.6
The targets – in this case framed by Sustainable Development Goals 9 and 13 – were developed in consultation with external independent consultancy Environmental
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Resources Management, which will be monitoring Primetals’ ambitious targets, with a remit to annually assess whether or not the targets have been met. Hamon explains these targets are mostly “share of green technology sold expressed in percentage of total order entry” and “research and development expenses on green technology”.
The process of getting buy-in for the deal, says Hamon, helped bring about more cohesion and purpose in not only his own treasury team but also within the wider team: “Although we know our technology, a lot of us didn’t know how to quantify in sales terms for example how green – or not – the products are that we were sending to customers, so going through this exercise was hugely beneficial.”
When he was in discussions with Deutsche Bank Corporate Bank’s CFO and Chief Sustainability Officer, Gerald Podobnik, they agreed that every corporate banking product could prompt this sort of initiative. “I wanted to somehow convince other treasurers they could take this step and engage their finance organisation in this sort of commitment,” Hamon says.
“We plan to develop more and more financial products that are linked to sustainability targets,” said Podobnik when the deal was announced. “In so doing we will assist clients like Primetals Technologies in implementing their sustainability strategies and monitor their achievements over the longer term.”
Hamon had to manage nervousness about what could happen if key performance indicators were too ambitious for such an industry and encountered reputation risk as a listed Japanese corporate, as reputation matters more than the financial benefit of the scheme. And although Primetals can’t position itself as a green technology business entirely, it can demonstrate that it helps its customers deliver energy savings in their transition to greener steelmaking. “We are on the right track,” he says modestly.
Hamon’s concluding railway metaphor seems rather apt given his early interest in trains and transport infrastructure, and the fact that Primetals has been instrumental in engineering machinery that is producing long-rolling products forming many of the world’s railways. With Hamon in the driving seat, it’s clear that Primetals’ Treasury team is travelling firmly in the right direction.
CV: Jeremy Hamon
December 2020 Head of Group Finance, CFO, Primetals Technologies Treasury, Linz (Austria) February 2018 CFO, Primetals Technologies Treasury, Linz (Austria) January 2015 Head of Group Treasury, Primetals Technologies, London (UK) 2012–2015
Associate Senior Risk Consultant, Siemens Financial Services GmbH, Munich (Germany) 2008–2012
Financing Consultant North West Europe, Siemens Financial Services GmbH, Camberley (UK)
EDUCATION
2007–2009 Institut d’études politiques de Paris MA, Public Affairs 2006–2007 University of Warsaw International Relations 2004–2007 Institut d’études politiques de Paris BA, Political Sciences
Sources 1
See
https://bit.ly/3evH6gV at
spglobal.com
2 See
https://bit.ly/3b9vJud at
static.autobahn.db.com 3 See
https://cnn.it/3vem8Ka at
edition.cnn.com 4 See
https://bit.ly/32KrmRD at
woodmac.com
5
For more on green hydrogen, see
https://bit.ly/3dL1lbe at
flow.db.com
6 See
https://bit.ly/3xlB8I0 at
db.com
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