Nucor Corporation (NUE) Earnings Call Transcript & Summary

Hi. Good morning, everyone, and thanks for joining us today. My name is Alex Hacking. I'm Citi Research's steel and mining analyst. And we're here today to talk about Nucor's updated greenhouse gas emission targets that were released yesterday and also their sustainability strategy more generally. I'm very pleased to be joined by: Leon Topalian, Chairman, President and CEO of Nucor; Greg Murphy, EVP, General Counsel and Head of Sustainability; and Anita McBain, who's Head of ESG Research at Citi. The format today will be a Q&A. Anita will lead the Q&A. In her previous life, Anita was Head of ESG for M&G Investments. So she's very familiar with the intersection between the investment community and corporates. I would note that Nucor posted supplemental slides on their website today. And we'll try and cover everything. But if you have questions, you can e-mail them to Nucor's Investor Relations team at [email protected]. Before we begin, I'll just make a few brief comments if that's okay. Firstly, I'm sure you will know, but Nucor is the #1 steelmaker in the U.S. They produce somewhere between 1 in every 4 and 1 in every 5 tons of steel in the U.S. And looking at the steel industry more generally, I'll say a couple of things. Firstly, steel is absolutely critical to making a cleaner and better world. Electric cars, wind turbines, solar farms, they all require steel. And more broadly than that, schools, hospitals, mass transportation, earthquake-proof buildings, it all requires steel. So we need steel. But the second point would just be that steel globally has an emissions problem. By some estimates, 8% of all CO2 emissions come from the steel industry. And so the question is how do we make the steel that we need in a cleaner way? I think that's where Nucor comes in, in hopefully our discussion today. So just turning to Nucor. Nucor is exclusively an electric arc furnace steel producer. The vast majority of carbon dioxide emissions come from burning coking coal in a blast furnace. Nucor does not do any of that. So Nucor's existing carbon dioxide footprint is already significantly lower than most of its global peers. Although the company does have a carbon dioxide footprint, and that's what yesterday's updated targets were to address. The second point would just be that Nucor, 80% of their raw materials comes from scrap, from recycled scrap. By virtue of that, Nucor is one of the largest recycling companies in the world. And when we talk about the circular economy, we don't often think about steel mills. But Nucor is extremely important part of the global circular economy. And just to draw a quick contrast, if we're making steel in China, we're probably mining iron ore in Brazil, potentially in the Amazon rainforest. We're mining met coal in Australia. We're putting all that on a ship to China. We're putting it in a blast furnace, a lot of CO2. And then we're putting it back on a boat, sending it around the world, potentially even to the U.S. In contrast, Nucor can potentially take scrap steel in Florida, remelt that into rebar in its mill in Florida. And that finished product is then used again in Florida. So that still, in theory, can barely leave the ZIP code. So I think when we look at the overall footprint of what Nucor is doing relative to its global peers, it's already significantly smaller. And so to summarize, I think Nucor already has today the business model that many of its global peers are chasing, particularly the old European blast furnaces. And what's impressive to me is -- about Nucor rather than sitting back and resting on this very strong advantage is actually taking a leadership position, pushing forward and trying to do better. And for that, I thank them, and it's very welcome. So enough for me. With that, I'm going to turn it over to Anita, who's going to lead the Q&A. And just a reminder, again if you have a question, [email protected]. So with that, please go ahead, Anita.

Thank you very much, Alex, for the introduction. It's a pleasure to be here together with Leon and Greg. Thank you so much for all of your recent updates. So Leon, let's get started with some of these questions related to your recent announcement. As Alex said, Nucor is already the largest steel producer in North America. But please permit me with my ESG sustainability hat on and for investors keen to understand your sustainability credentials, could you explain why you, as a CEO, feel that it is important to also be the leader in sustainable steelmaking?

Yes, certainly. Anita and Alex, thank you for hosting this today and the opportunity to share what we're doing. And I would begin with a backdrop that if you think about the world of ESG over the last 4 or 5 years, it's really become, unfortunately, a buzzword. But it's really been part of Nucor's legacy for the last 6 decades. We pioneered the EAF industry. And that has given us an incredible advantage and then a starting point as we think about the positioning strategy of where Nucor is today and where we're going to go to in the future. So over that period of time, and certainly, when I became CEO, one of the things that we recognized with investors on the roadshows that I did early on was we had this amazing story to tell. Anita, I don't know that we told it well enough. And I don't think we told it broadly enough to our shareholders to recognize that there's a resiliency about the circular steelmaking model in capturing value, in creating a longer-term, differentiated value proposition for our customers and their customers. And that's done by providing the cleanest steels in the world. So as Alex mentioned, we're somewhere 4 to 5x cleaner than the average blast furnace integrated facility around the world. So our starting point today, or last year, for example, was at 0.42 million tons of CO2 per ton of steel produced. We announced yesterday -- and again, Greg and I will share more on this about our net-zero target by 2050. And we waited to do so because again part of our leadership in this industry is recognizing we're not going to wait on others and we're not going to wait on government handouts and subsidies to create our future. We're going to do that on our own. We're going to invest. We're going to create partnerships, technical relationships that give us the ability to control our own destiny. And that's something that again our company has done incredibly well over a long period of time. So while other competitors around the world are investing their billions of dollars to try to look like Nucor at some point in the next 10, 20, 30 years, we're not going to be there. Because we're taking our billions that we're generating, the free cash flow that's being generated and investing in growth opportunities that helps position us for the long term, that helps give our customers again the differentiated capability to buy a net-zero steel today or a very, very close to net-zero steel across the broad width of Nucor's products.

Thank you, Leon. So talking again about this sustainability strategy and with investors on the line, they're very keen to understand the intersection of this sustainability strategy and how it better positions Nucor to deliver attractive investor returns and grow your market share. And perhaps a second part of that question, Leon, is how capital-intensive is -- will this be for you?

Yes. Let me begin with the second part of your question, Anita. Again, there are companies that are having to pivot their entire strategy. That is not what Nucor is doing or has to do. Our starting point is great. But what do leaders do? They lead. They lead through transparency. They lead through openness and dialogue. They lead by partnering with different industry sectors to create the most transparent, agnostic-to-process accountability set of governing principles that should define how green steel is looked at and made for our future. So we're making investments. But they're not -- monetarily, they're not company-betting transformations that if we don't move, our future is going to be not what it could be. We're making investments to continue to separate ourselves as the leader in this industry and make even further gains. So we're making investments in partnerships with ExxonMobil, for example, in Louisiana to do the carbon capture and sequestration. We're looking at new technologies around the world in alternative iron making, looking at different investments in biochar. But they're, from a scale standpoint, relatively small compared to again the size of Nucor's breadth, really where we're going. And the recognition and the sustainability model for Nucor is our customers in our country is going to demand a cleaner product. We're at a point today that we're getting a premium for our iconic steels. In the next 10, 20 years, that premium is going to go away because our customers are simply going to demand that. And that's going to be a sort of minimum entry point for everyone. But where we sit today is an incredibly -- we have a unique opportunity to position us and our customers providing them the capability that they're going to need for their futures to reach their sustainability goals, the OEMs in automotive, the intense manufacturing sector that's needing a cleaner product, the advanced manufacturing sector that's getting built out in our nation. And make no mistake, our nation is moving to a cleaner and green and digital economy. And those economies are going to be built with steel. The steel they get built with matters. It matters greatly. And again, Nucor is well positioned to deliver that. The one area we could probably debate is how fast that transition happens. And again, there's probably 100 varying views on how quickly that happens. But in our view, regardless of administration, we're going to continue to shift our nation. And the demands of our customers are going to continue to ratchet up, delivering and requiring a cleaner product.

Leon, thank you very much for that very, very clear articulation. Perhaps, Greg, we could just move over to the Global Steel Climate Council, which is an ambitious standard that aligns with the Paris Climate Agreement's emission reduction goals, sorry, a lot of words to get out there, but the steel sector by -- as an alternative to the SBTi, the Science Based Targets Initiative. And you're working with your peers in the sector. Could you please again explain for us and listeners on the call today how this helps you to maintain and demonstrate leadership, this partnership with GSCC, the Global Steel Climate Council?

Thank you, Anita, for that great question. A little bit of history might help and explain why the GSCC was birthed. We work very closely with SBTi. We work very closely with the IEA. We've worked very closely with many groups of investors and NGOs in trying to bring what we think is some semblance of rationality to how standards are set. And we sort of start with the idea that the International Energy Agency has already set a glide path. It's an ambitious glide path that would get the industry, the steel industry, to net zero by 2050. And we thought if we're going to come up with a new standard, we could base it on that same glide path. Where we reached sort of a difference of opinion is we believe that the existing standards that measured how the steel industry was going to progress was not ambitious enough. And one of the reasons it wasn't ambitious enough is because it was looking at different production methods differently. So it would look at integrated steel producers and it would say, "Because you start from a disadvantaged position, we're going to create a less ambitious glide path for you to reach net zero." And we struggle with that because we know that the technology exists today to accelerate that transition to net zero. And we know that because of what Leon described, which is that Nucor has adopted a model some 60 years ago that has set us on a very ambitious path to net zero. I think the second thing that we really struggled with is the boundary definitions that are used in setting standards. Some of those boundary definitions, in my opinion, aren't really addressing the problem holistically. They're not looking at some of the raw materials and some of the upstream processes that go into steelmaking, some of which are very significant contributors to the greenhouse gas issues in steelmaking. The other thing is where you stop in counting greenhouse gases. Do you stop at the cast? Or do you stop at the hot melting phase? Why would you ever exclude things like metallurgical refinement as part of the steelmaking process? Because it's inherent in what we do. It's a necessary step in making the steels that we make for our customers. So why would you ignore the greenhouse gas footprint associated with some of those activities? And so we work closely with the SBTi, had tried to see if we'd influence the new standard. And it came to a point where we realized that the rest of the industry wasn't ready to go there. And so Nucor, along with a handful of other very ambitious steelmakers, decided to launch the Global Steel Climate Council. And one of the first things we said was that we wanted our standard to be production-agnostic. We should set the ambition for the industry regardless of what process you use to make steel. Because at the end of the day, what we're hearing from our customers, what we're hearing from our investors and what we're hearing from NGOs is they don't care how you get there. What they care about is what is the embodied carbon in the products that we consume. And so that's what the GSCC is focused on. The second thing is we wanted to make sure that it was an international standard-setting organization. And so we work very closely with colleagues from Europe, from Asia, from South and Central America. And I'm very proud to report that as of today, we have about 40 members around the globe who are subscribed to and bought into the Global Steel Climate Standard. The third thing that we thought was very important is that we should avoid things like offsets and renewable energy credits in order to get to our very ambitious goal of net zero. And so we came up with and developed a standard, which we worked very closely with third-party consultants. We had a public comment period and then we launched that standard a short time ago. And so far, the response has been overwhelmingly positive.

Thank you very much, Greg. And I've recently read Nucor's net-zero 2050 and interim 2030 targets that now include Scopes 1, 2 and 3 emissions from the production of hot-rolled steel as defined by the Global Steel Council. This makes Nucor the first diversified steelmaker in the U.S. to set these very ambitious greenhouse reduction targets across all three scopes. Greg, could you once again go into a bit more detail how these -- how you came about with these new decarbonization goals, which are much more ambitious versus your prior goals? What led you to that? And maybe if you've got any time here, just also talk about how you had to overcome any hurdles, maybe something like the data, would be super keen to hear.

Yes. So there's a couple of things that I would point to that would help to understand why we view these new targets as more ambitious. And you touched on a couple of them. The first is we are using a much broader boundary definition. And so by using a more broad boundary definition, if you compare the new greenhouse gas numbers to the old greenhouse gas numbers that really everybody focused on, everybody just talked about Scopes 1 and 2. And so in some ways, we've actually set the bar higher and made it harder for us to reach our very ambitious net zero targets. But we think that's important because we think transparency is huge in this dialogue. And we don't see how you can possibly ignore things like the carbon dioxide footprint from the carbon-bearing raw materials that you're using in steelmaking because those are driving your numbers. The second thing is we absolutely think we have to take into account Scope 3. Because for an EAF producer like Nucor, that represents roughly 1/3 of our greenhouse gas footprint. So the real debate, I think, when you set these more ambitious targets is what are we going to include in Scope 3? And if you really think about it, I could ask 50 experts on greenhouse gas accounting what should and shouldn't be included in Scope 3. And I would get 50 different answers. But for Nucor, it's very simple. Because we know that there are very, very large buckets of Scope 3 emissions that represent the overwhelming majority of those emissions that are critical to our decarbonization strategy. The first are the inputs that go into steelmaking, the carbon-bearing raw materials. And that would include things like the amount of pig iron that we use, the amount of direct reduced iron that we use, how we produce and procure that pig iron and DRI, whether it's based on a coal-based pig iron production or whether it's based on a renewable forestry product such as green pig iron, whether the DRI that we produce at our own facilities benefits from things like carbon capture and sequestration, which will give us the lowest embodied carbon DRI available anywhere in the world today. And then we looked at other things like lime that we use in steelmaking, the electrodes that we use, the injection and charge carbon that we use. And we looked at all those materials, and we said, "How can we not count those as part of this process?" The other big mover for a company like Nucor is transportation, inbound and outbound transportation. Because Alex alluded to this in his opening remarks, we've got to receive raw materials into our plants. We've got to convert those raw materials into steel and steel products. And then ultimately, we exist to deliver those products to our customers. And those customers are largely in North America. So we've got to look at things like shipping. We've got to look at things like rail. We've got to look at things like trucks and other forms of transportation, barges. And we're working closely with some of our transportation partners on things like using electric trucks for shorter-haul routes, using hydrogen fuel cell vehicles for longer-haul trips. There's been a lot of work that's being done in the shipping industry right now because it's a significant contributor to greenhouse gases and so working with those shippers on the possibility even of using nuclear technology to propel very large cargo ships. So we're attacking this in a multidisciplinary way. And we're looking at it from all facets. And then the last thing I would say makes our goal-setting far more ambitious is we've acknowledged that while the use of renewable energy credits is an important part to the transition of the energy sector in this country, ultimately we need to be able to stand on our own. So we're excluding the use of RECs and offsets as we continue in our inexorable march towards net zero.

Thank you, Greg. And I ought to say, Alex, if you've got any questions, please jump in as well.

Actually, I do have a quick one if that's okay, Anita. So just to follow up there, Greg, you mentioned your DRI facility and you're looking at carbon capture and sequestration. Is there a particular reason that you decided to go down that road rather than the hydrogen road, which is sort of an alternative way of reducing that carbon footprint?

Yes, it's a great question. And as you all know, there's a tremendous amount of work being done around the world to see if we can use hydrogen in steelmaking. Unfortunately, there's also a huge amount of work around the world being done in how we can use hydrogen in things like transportation, aviation, power plant production and on and on and on. And so everybody is sort of latched on to hydrogen as this panacea to solve for the greenhouse gas issues that face our society today. Simply put, Nucor looked at both. And that's kind of been our approach throughout, which is we'll survey and we'll review and we'll take a deep dive into all technological advancements and solutions. And we'll see what fits best with Nucor's business model. And the truth is hydrogen -- using hydrogen in Louisiana to produce DRI, which is something that could technically be done, would be extraordinarily expensive. And it has to do with the fact that you really need to locate massive sources of renewable energy. It needs to be proximate to the site where you're generating that DRI. You need to have a very intensive infrastructure and piping solution to get that hydrogen to the plant. And in the end, it became a very, very costly solution. We were blessed in Louisiana to be sitting on amazing geology for carbon capture and sequestration. And the history of the petrochemical industry in Louisiana gives us a great amount of insight into what those geological layers look like. And we happen to be sitting in Louisiana on areas that have shale layers with void spaces, which is really the perfect geology for carbon capture and sequestration. We also were able to partner with a business partner in ExxonMobil, who is very, very keen to drive its own decarbonization strategy and also to leverage the knowledge that it had from its petrochemical roots in assisting us. So it really became an easy call for Nucor. And then we also had the government tax incentive in the form of 45Q, which actually makes it not only economically feasible to do it, but it makes it very economically attractive to do it. So that's why we went the route of carbon capture and sequestration. But I should say this, because I think this is a theme that sort of resonates throughout this discussion, there is no one size that fits all when it comes to decarbonization. And so what might work for Nucor in Louisiana in producing some of the lowest embodied carbon iron units anywhere in the world won't necessarily work in other places around the world. And that's why I think we all have to work together to try to assess what makes the most sense from a capital allocation standpoint, what makes the most sense from a decarbonization strategy and then execute on those plans well.

That was a great answer. Thanks, Greg.

Thank you, Alex.

So thank you very much, Greg. And I think that's a natural segue into some questions back to Leon, please. And again, Alex, if you've got anything to add to this as well, please jump in after me. So Nucor has recently invested in emerging nuclear energy technologies. Could you please tell us a bit more about why you make those investments?

Absolutely. If we step back and look for a moment out in the United States future over the next 7 to 10 years, one of the things that I would tell you that I think our nation faces is an incredible shortage of energy supply. Again, as we think of the build-out of the green and digital economies in this nation, it's going to require a massive amount of power. Well, how do we do that? How do we supply that? How do we, again as a user of that, continue to think about how our Scope 2 emissions get reduced? How do we get closer to our targets? And again, ironically, Nucor began its journey as the Nuclear Corporation of America. And so one of those technologies that continues to emerge and shine is the advanced nuclear small module reactors. And so Nucor began looking over the last couple of years of, "Okay, we don't want to wait and see. We don't want to wait for the utilities to make all the investments and/or these new upstart companies, like NuScale or Helion, in fusion. We want to be an active participant. We want to be again controlling some of our own futures and coming alongside of those. Because at the end of the day, this nation is going to need clean, reliable, affordable, sustainable power for its citizens, for manufacturing sector and beyond. And so again, the advances of renewables is great. And Nucor is geared up. And we're already supplying that. It's a big part of our portfolio and will continue to be. But it's not enough, Anita. We've got to have both sides of the equation to be able to deliver that. And that is one of the ways that Nucor saw that we could help to continue to accelerate. Nuclear is the cleanest, most reliable and affordable zero greenhouse gas emission technologies today. And so NuScale is the partner that we pick. But quite frankly, not just a few months ago, we were here in Charlotte speaking at a nuclear conference. And the reality is our nation and Nucor needs all four of the emerging technologies to work. We need all of them to continue to accelerate their growth in this nation and continue to deliver that. On the fusion side of things, many in the nation's only glimpse into fusion is what's happening through the government and Lawrence Livermore Labs in California. This technology with Helion uses a very different mechanism to generate and fuse those atoms to create the heat that's ultimately going to power us. And so they're on Gen 7 of that. And we're excited about what they're doing. And again, not huge investors but wanted to take a stake in both of those to continue to help accelerate. And then finally, we've also modeled MOUs with both of those technology companies, where we're going to look to building facilities at Nucor behind the meter to consume that power on our plant sites. And then the excess, we can export to the grid. But again, sort of controlling our own destiny where we can. But the proliferation and again acceleration of nuclear technologies and the advanced nuclear technologies is something we believe in and thinks needs to get supported and rapidly accelerated in our country.

Leon, just to follow up on that, how do you see the timing of this emerging nuclear technology? Is this something that we could see this decade? Or it's a little further beyond on the horizon?

Yes, Alex, I think that's, rough timing, about right. So I think that 2029, 2030 is probably the right time frame as we look for those plants to get built and commercialized. And so it's not around the corner. But again, if I think about President Biden's executive order last year of producing 30 gigawatts of offshore by 2030, these two competing races are happening right before our eyes. And so again, Anita, to your earlier question, it's not requiring Nucor to pivot and invest tens of billions of dollars. Nucor Brandenburg will be the only plate mill in our nation, in this continent that can make those grades in those offshore monopiles. But that's not all they make, right? They're going to be able to provide the military applications, the agriculture, the heavy equipment, all the industries combined. And so again, we want to be a part of watching that happen very quickly. Because again, obviously, we're all aware of some of the challenges with the offshore wind and some of the delays cost and other environmental impacts. So I think it's going to take a holistic approach. And that's the way Nucor's are looking at it. I think what Greg shared earlier is a very balanced approach. And we're going to be actively engaged in all the forms of renewable as well as nuclear technologies that we believe can position not just Nucor but our nation to a more reliable, sustainable and affordable power.

Thank you.

Thank you, Leon, once again for clearly articulating your position there, your stance, how you're looking out into the future with all these different events that are happening in front of very eyes. So Greg, just switching back to you, how are you using your leading position to engage with your supply chain and customers to effect change and positive outcomes? Or put another way, how does Nucor use its position as the largest steel producer to drive this recycling and a more circular economy, which is a language, which is a term that we're hearing with increasing frequency again, which is very encouraging?

Yes, I mean, I think part of it is just embedded in our DNA, which is that we want to lead and we want to lead the North American steel industry. And so it starts with things like some of the bets that the company has made and some of the moves that we've made to say, "Hey, we need new and different solutions. We need to think unconventionally." And so Nucor is going to put not only its dollars but its name behind things like NuScale and Helion. That, I think, has proven to be very valuable to those business partners as they try to attract more investment and as they build out their technologies. I think working very closely with our supply chain partners has always been kind of a core value at Nucor. We know we need them and they need us. And so if we can work closely together, everybody wins. And the dialogue has shifted some. Because now we're talking with things -- with some of our suppliers, for instance, our lime suppliers about how they may be able to use carbon capture to take a very CO2-intensive material that we use in steelmaking and can get that to net zero. We're working with our suppliers of charge and injection carbon to see if we can develop technologies where we can use biomass, either sustainable forestry products or waste wood products, which you can then turn into a carbon material. And you can use that as injection and charge carbon in lieu of using something like anthracite coal. Because we know we need carbon in order to make steel. And the key is where is that carbon made and what is the source of that carbon and what are the technologies that are used. Another example is pig iron. Pig iron happens to be the most carbon-laden raw material that we use in steelmaking. And we're exploring with our suppliers the use of green pig iron, which is pig iron made from sustainable eucalyptus forests. And those forests grow very rapidly. They can be replanted in a very sustainable way. And instead of using coal to produce pig iron, you can use charcoal and then you can have a much more sustainable and circular raw material. The DRI, the direct reduced iron that we use, it's a huge advantage for Nucor. We have the capability internally to produce over 4 million tons of direct reduced iron from our two facilities in Louisiana and in Trinidad. And the reason it's such a huge advantage is not only does it help us in our supply chain for providing high-quality iron units, but it already starts at about 50% of the greenhouse gas intensity of pig iron. So for every ton of DRI you use, you're saving 50% of the greenhouse gases that you would use if you use pig iron. But then we said, "What can we do to take it even a step further? Because it's already 50% lower in greenhouse gas intensity. But what if we could get it closer to zero?" And therein lies the partnership that we struck with ExxonMobil by using carbon capture to capture somewhere between 600,000 and 800,000 tons of CO2 every year and removing it from our carbon footprint entirely. We're doing some really interesting other things. We're working with supply chain partners on our scrap. And we happen to own and operate the largest recycling and scrap operation in North America. But we're exploring some older technologies that have now become more interesting today. For example, we're working in our Berkeley, South Carolina facility on a low copper shred project, where we can take obsolete grades of scrap, which are abundantly available around the world, and we're able to remove some of the tramp elements like copper from that obsolete scrap. And then we're actually able to use it not just to substitute obsolete scrap for prime scrap, but we can actually substitute obsolete scrap for things like pig iron. So now you go from something that's the most carbon-intense raw material and you're replacing it with something that is a zero-carbon material. So that's sort of the supply chain side. A lot of it is driven by raw materials. We're working with some trucking companies on electric vehicles and some other things. But those are sort of the supply chain partners. And we believe that by being a demand driver for those activities, we will accelerate those developments. On the customer side, we exist because of our good customers that buy our steel and steel products. And what we're finding is that the adoption rates vary. But it started with the large OEM automotive companies and some large HVAC companies and other OEMs that said, "We want to be sustainable throughout our supply chain." And what is a Scope 3 emission for them is our steel Scope 1 emission for Nucor. So if we can provide them with lower embodied carbon steel, which they can then use to make HVAC units, automobiles and other things, then we're helping them in their sustainability journey. And that was a big part of why we launched the first at-scale, net-zero steel family of products in Econiq. And Econiq really allows us to sell any of our many varied products with a net-zero designation. I should point out that the way we get to that today is we do use renewable energy credits and we use offsets. Because that's what we have to do today to take our already very low greenhouse gas footprint and get it to net zero. But we're very careful about where those RECs come from and where those offsets come from. And so we've invested on our own in power purchase agreements. And by lending our investment-grade credit rating to those projects, we allow solar fields and wind farms that otherwise wouldn't be built to be built because Nucor is guaranteeing that we're going to be an offtaker of that power into the future at a set price. So that's really how we generate those renewable energy credits. And then the offsets, we hope to get to a point when some of these projects that we've discussed will generate their own offsets. But today, if we procure offsets for our customers, we use the very, very highest-quality offsets that are not counted more than once, that are very auditable by third parties. And we take that very, very seriously.

Thank you, Greg. So let's pivot back to Leon. This is a question I've been dying to ask you. How are you -- or how is the company navigating the negative ESG rhetoric in the U.S. and some of the backlash that we've heard in some of the U.S. states? Once again, could you please explain how your narrative has evolved? I mean, I've heard it already today on the call, the language that you're using. I'd be super keen to hear how you are responding to this change in sentiment towards ESG, please, Leon.

Yes, certainly, Anita. And as I mentioned earlier, for some, the ESG movement has become a buzzword and maybe a quick way to think about differentiation. At the same time, I think we're at the tip of the spear of accountability with the rhetoric. We're watching companies, individuals get hold to task and be held personally and professionally accountable for the statements that they're making. So it's really one of the reasons why, as myself and Greg and the entire executive team at Nucor sat down, we didn't just rush out with a 2050 net-zero goal. Because the reality is, "Okay, I'm not going to be around probably in 2050 and leading Nucor." So who's going to be accountable? Well, we didn't want to just put a target out there that we didn't believe we had control of that either through our investments, technologies that existed, we could reach that goal. That's why you saw us wait. And again, we weren't sitting back and hoping. We're doing an awful lot of work to reach the announcement that got reached yesterday because now we can speak very confidently on how we're going to reduce our Scope 1, 2 and 3 emissions and again broadly being transparent with all three of those numbers so that we can be held accountable to that. So we're not making outlandish claims and hopeful claims and/or wishful claims. Because to Greg's earlier point as well, Anita, we have customers based all around the world that would prefer a 0.2 steel than a net-zero steel with RECs or offsets. They'd prefer not to have that in. And so they're great with again one of the cleanest steels in the world coming at them without the renewable energy credit. So our statement of our net-zero target in 2050 is really is going to be done without the RECs or offsets. It's going to be done with the things that we can control. But I share all that to say, look, there's a lot of negativity coming. Because again, in many cases, those companies made statements or comments that they couldn't back up. They went way too quick out of the gate to deliver an outcome that they couldn't reach. And there's a day of reckoning that will come for that. And again, in many cases, it's coming. But again, I really do think we're on the tip of the spear. The other side of it is for Nucor, how we position ourselves and the strategy by which we implore and roll out to our shareholders should inform you as much about what you're going to do as well as what you're not going to do. And so for us, the sustainability model wasn't a bolt-on. It wasn't some condition that's set in some office that didn't get occupied. We had to roll it into the entire fabric of the 32,000 team members that make up the Nucor family. And you and Alex certainly know how important the culture of Nucor is. It drives everything and every result that we get. It is the men and women who make up this incredible family. So when we adopt something and take a much more deliberate branding approach and targeted approach for delivering the cleanest steels in the world, it resonates through all 32,000 team members in all 40 states, in Mexico, in Canada and Trinidad and Tobago and beyond that recognize their individual roles to contributing to what our customers are demanding. So while I would tell you there is a lot of negative rhetoric and there's a lot of impulsivity and there's again some reckoning that's coming, Nucor has never viewed it that way. And I don't believe our shareholders nor our customers view it that way. We are moving to a cleaner future. I think Nucor can help the industry, help our customer segment, help this current administration and the next and the next and the next to deliver the cleanest outcomes that create the protections that we need from a U.S. military standpoint to the most renewable advanced nuclear and beyond technologies that will create a very sustainable future for us. So again, we don't spend a lot of time looking at the rhetoric. We spend a lot of time thinking about how do we position ourselves to differentiate for our customers that need us and are going to need our steels for the future? Every investment we make is viewed through the lens, can we create EVA? Can we create economic value add? And that equation does not sit apart from sustainability. It is an integral, embedded part of the resilient cost model for Nucor and the deliverable model that we can -- we believe we can deliver something valuable to our customer base.

Thank you very much, Leon. I'm going to hand back to Alex now. Alex, we've got a couple of questions onboard. But I'm going to hand those back to you, please. Thank you.

Okay. I apologize, Anita, I don't have those questions.

So the question is here. So Leon, another question, just to unpick this strategy that you've talked about, how it's deeply embedded, deeply integrated, could you kindly expand how engaged Nucor's leadership and Board is on this strategy and how it is involved in shaping this sustainability strategy going forward? And at what level has the Board supported Nucor in its adoption of these new targets that you just announced?

Yes, Anita, absolutely. We have an incredibly diverse Board and diverse in every context, experientially knowledge-based. The wisdom that they bring to this issue has been incredibly helpful to me in my role. But their commitment, their knowledge, their experience in this has been incredibly impactful for us as we've shaped that strategy. But make no mistake, they recognized very quickly as did we, this is an opportunity for us. This is an opportunity to lean in. We shouldn't have to be telling the incredible story that we're telling the way we've told it because we've been doing it for decades. This isn't new for us. Again, I'm not sure we've told our story always the best way we could or, quite frankly, proactively enough. And so if you think about Nucor, and Alex did mention it during the opening remarks, we're not just the largest recyclable company in North America, we're top 5 in the world. So it is an incredible opportunity to leverage that footprint. How about from an energy consumption standpoint? In many of the states -- in most of the states where we have EAFs in, we're the largest energy consumer in that state. How do we work with the regulators, with the industry experts, with the utilities across this nation to create a more sustainable future and outcome? And we're doing that. We're leveraging those relationships. So again, at the Board level, I would tell you, the alignment couldn't be any more -- any stronger. It's been great. They've been incredibly supportive of where we're going and how we're going to get there. But I would tell you, that also extends to our shareholders. As we sit down and meet individually with all of the obvious big names, and Citi being one of the most important as we think about our client base and the reputational stake of the analysts that are out there that are advising your clients and your customers, it becomes really important that Nucor is always credible, that we're always leading with integrity and transparency and helping reposition the industry. So from our executive team, all the executives are in complete alignment in supporting of this. And then as that flows through in the capital spend and the dollars that we're spending, we're looking every day on how do we continue to advance that ball. And again, I mentioned already, and I won't repeat it, the 32,000 team members that are wholly engaged into this body of work, recognizing the incredible advantage that we have. Now how do we best showcase that? How do we make sure the investors around the world are recognizing the unique position? Because too often -- and again, I'll maybe dive just a little bit deeper. Too often, the external, outside steelmaking industry world looks at steel as the hard-to-abate industry. I would tell you, Greg and I couldn't disagree with that premise any more than it said. I don't agree with it. It is wrong. It is again tied too closely to the overall industry without taking any regard to the process by which steel is made. There is incredible sustainable ways to make steel. And we're going to continue to advance that ball in the United States a little different than Europe. About 80% of the steel is made through the EAFs in the U.S. today. That's going to continue to grow. That's going to continue to climb. And so we want to be on the forefront of that. We want to be making the most advanced, high-strength, zero embodied carbon steels possible for our customer sets because that demand is going to continue to grow in the future.

Okay. Thanks, Leon. Thanks, Anita. Anita, I think we're coming towards the end of our time here. I want to thank you again for your participation. I should have mentioned upfront, Anita sits in London. She's participating remotely. She's our Global Head of ESG. Really appreciate your insightful questions that were much better than any questions that I could have come up with. So thank you.

Thank you, Anita.

And then just before we finish up again, thanks to Leon and Greg for participating. And I will just open the floor up to any final comments that you would want to leave everybody with. Thank you.

I've got a couple. Greg, anything you want to share before I...

Yes. Maybe just a couple of things. The 8% number does always rankle me. Because if you really think about it, if the rest of the world's steel production looked anything like Nucor, we certainly wouldn't be treated as a "hard-to-abate industry." And I -- and there are a couple of statements that I hear repeated over and over again that I think are really, really important to focus on. The first is, well, we can't all produce steel using the electric arc furnace because there's not enough scrap to go around in the world. And while that may be true to a very, very tiny degree, we have a huge amount of room to move in that direction before we come even close to that. And the best evidence is what Leon said earlier. About 70% of the global steel production is made using the extractive steelmaking or integrated steelmaking process. But in the United States, we've proven that we can already make 80% of it using electric arc furnaces. And we don't believe we're done by any stretch of the imagination. So I do believe this -- the scrap equation will be largely solved by the demand pull that's created when we proliferate these technologies in the developing world. And one of the things that I really regret is that as we sit here today, they are still building blast furnaces in the developing world. And we are not helping to solve the greenhouse gas problem for the steel industry by doing that. And they should adopt technologies that are more advanced and that would allow them to accelerate this transition. The second thing I hear a lot is, "Well, we need to have integrated steelmaking because EAFs can't make all the grades of steel that our customers demand." And to that, I would respond that, once again, that is a false narrative. And Nucor has proven that over and over again. We started out making bar products. And the industry said, "Well, that's all well and good, but you'll never be able to make sheet products." And then we built the first sheet mill in Crawfordsville, Indiana, a long, long time ago. And then they said, "Well, that's great, but you can only produce construction-grade sheet products." And now we're today producing advanced high-strength automotive steels and very exotic grades. So necessity is the mother of invention. I view this problem with an optimistic view. But I think it's important that we call people on that false narrative and that we don't allow that to be an excuse for the steel industry to represent such a large percentage of the greenhouse gases.

Thanks, Greg. Just maybe final comments. We're coming off 2 historic years in '21 and '22. And again, already with our results reported through Q3, 2023 will be the third best year on record. I would tell you, our best days are still in front of us. We couldn't be more excited and optimistic about the future, recognizing our incredible responsibility that comes with every shareholder dollar that we invest, looking through that lens of creating EVA to continue to proliferate Nucor well into the future. We have the most amazing workforce assembled anywhere in the world, obviously a little biased with that. But it is an incredible group of people collected and focused on delivering the safest, highest quality, most sustainable and profitable steel and steel products to this industry. And so thank you for your time today, Alex, indeed a pleasure to meet you, and thank you very much for the opportunity to share a little bit about what Nucor has been doing and where we're going.

Great. Thank you, everyone. Again, if you have questions, feel free to reach out to the Nucor Investor Relations team. Thank you very much.

Thank you.

Thank you.