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Responsible sourcing

SSAB has thousands of suppliers all over the world. The input materials used to make iron and steel account for SSAB’s most significant purchases. Suppliers must comply both with SSAB’s own policies and with international social and environmental guidelines.

Efficient and responsible sourcing of goods and services

SSAB has an extensive supply chain including around 20,000 active suppliers in more than 60 countries. However, measured by supplier spend, more than half of our purchases come from Finland, Sweden and North America. SSAB buys input materials, products and services in most of the countries in which we operate. These materials and services range from input goods like scrap, iron ore, coal and alloys to gas, refractories, zinc, paint, maintenance services and spare parts. 
SSAB contracts only the most competitive suppliers and the strategies for this depend on the products or services purchased. Since the supply chain is global, it is important to evaluate supplier risks and suppliers’ ability to address social and environmental issues. At SSAB, sustainability is an integrated aspect of sourcing operations and supply chain management. Stringent quality requirements and long-term business relationships provide the sourcing organization with a good insight into conditions at suppliers. We assess suppliers on the basis of quality, delivery reliability, cost and sustainability.

Cost savings through more efficient sourcing practices

During 2016, we explored new opportunities to reduce SSAB’s total sourcing costs, i.e., total cost of ownership. Here are some examples of how we are trying to take cost reduction initiatives to the next level: 

  • The supply market for gaseous fuels is characterized by limited competition, hence unfavorable prices have been applied to our disadvantage. In order to enable competition, we eliminated the logistical hurdles and also planned some minor technical changes that enable us to switch fuels. The latter makes it possible to apply a multiple fuel strategy. Moreover, storage capacity at the supplier has made it possible to benefit from seasonal price changes.
  • The market for manganese alloys has been dominated by a few players with limited competition. By introducing new suppliers and by adopting a holistic approach with all different manganese alloys across the production sites, increased competition has been enabled. Increased competition enables reduced product costs, lead times and transportation costs, and increased robustness in the supply chain.
  • In the previous setup, combined shipments of coking coal were applied for the Swedish coke plants at Luleå and Oxelösund. The Raahe coke plant was supplied with exclusive shipments to Raahe. With the new setup, combined shipments are applied for Luleå and Raahe, whereas the coke plant at Oxelösund is supplied with its own shipments. At Raahe, shipments of coking coal are lightered at sea, i.e., no port call, and the ship is then routed on to Luleå, where it is fully unloaded. The new setup results in two port calls instead of three. It has also enabled payload optimization of the ships and improved material handling, hence less risk for demurrage.  
  • Our operational procurement is largely based locally on the sites. By applying local site knowledge to the local supplier market for maintenance and services, we have successfully decreased the tail spend. This change has been made by challenging our own specifications, by challenging established service providers and also by adopting more lean oriented ways of providing services.

Where SSAB sources its input materials 
Iron ore pellets  Mainly Sweden, also Russia
Metallurgical coal Australia, North America, smaller share from Russia
Injection coal Russia
Scrap US, Sweden, Finland
Supportive blast furnace coke  Poland
Limestone Sweden
Alloys Around 40 different suppliers

Incorporating sustainability criteria in sourcing 

SSAB is a signatory to the UN’s Global Compact initiative and the principles of the compact are applied in our work with suppliers. During the year, SSAB implemented a Supplier Sustainability Policy based on the UN’s Global Compact principles. The purpose of the policy is to ensure that SSAB collaborates with suppliers who share our sustainability values. Contracts with suppliers refer to the Supplier Sustainability Policy.  SSAB also reserves the right to conduct reviews of our suppliers or onsite audits to ensure compliance with the Supplier Sustainability Policy.
SSAB’s Group Procurement Policy addresses quality, delivery reliability and cost issues, as well as the principles of the Global Compact and how to take them into account when evaluating suppliers. 
SSAB also has an Anti-Corruption Policy, which provides employees with information on how SSAB defines bribery and improper benefits, and how employees are expected to act in relation to suppliers, customers and other business partners.

Supplier Sustainability Policy

Increased focus on identification and evaluation of supplier risks

SSAB systematically identifies the risks related to our suppliers. We do this by placing suppliers in various risk categories depending on the countries in which they operate. Classification is based on Maplecroft´s Human Rights Risk Index and Transparency International´s Corruption Perceptions Index. Classification in this way illustrates the risks in areas such as human rights, labor conditions and corruption. Suppliers who are placed in the medium- or high-risk group are required to complete a self-assessment questionnaire containing questions about, for example, their social conditions and environmental credentials. Unsatisfactory answers are investigated. 

SSAB also conducts regular visits to major suppliers of input materials around the world, including high-risk suppliers. On these visits, purchasers and quality managers visit production sites and conduct quality inspections. SSAB updated its on-site protocols during 2016 and the monitoring of social conditions and environmental performance at our suppliers will be subject to greater focus during future visits. The procurement organization was also trained during the year to evaluate information about the supplier’s social and environmental performance gathered during site visits.

No conflict minerals in SSAB’s steel

SSAB does not use conflict minerals (including gold, tin, tungsten and tantalum) and, upon request, provides customers with certification affirming this.1)

1) “Conflict minerals” is a term used for minerals derived from areas characterized by large-scale internal strife, where the mining of minerals risks contributing to, or financing, continued conflict and violation of human rights.

SSAB is a signatory to the UN Global Compact

SSAB and Aspo ESL Shipping signed a long-term agreement for raw material sea transport to reduce CO2 emissions

SSAB needs volume flexibility for key input materials to meet fluctuations in the blast furnace consumption of these materials. SSAB’s vision of a stronger, lighter and more sustainable world, encourages the pursuit of solutions to limit environmental impacts, where sea transport is of significant importance.

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SSAB and Aspo ESL Shipping signed a long-term agreement for raw material sea transport to reduce CO2 emissions

SSAB needs volume flexibility for key input materials to meet fluctuations in the blast furnace consumption of these materials. SSAB’s vision of a stronger, lighter and more sustainable world, encourages the pursuit of solutions to limit environmental impacts, where sea transport is of significant importance.

SSAB and Aspo Group’s ESL Shipping Ltd signed a long-term frame agreement covering sea freight for SSAB’s inbound raw material sea transport within the Baltic Sea and from the North Sea. The agreement secures deliveries of coking coal, iron ore and PCI coal to SSAB’s coking plants and blast furnaces in Raahe, Luleå and Oxelösund. The new combined sea freight agreement will result in a reduction of more than 50% in CO2 emissions per tonne of cargo transported compared to present vessels. Besides these environmental benefits, the cost savings provided by new technology will also allow better profitability. The cost savings related to the agreement are part of SSAB’s synergy program announced in conjunction with the merger with Rautaruukki in 2014. The new agreement will result in ESL Shipping building two new, energy-efficient LNG-fueled ships. The two ships have been ordered and will be delivered during 2018.