German Steel Company Thyssenkrupp May Rethink Plans for Green Steel
Thyssenkrupp is revisiting its ambitious plan to produce green steel at its Duisburg site due to escalating costs. The German government has spent billions of Euros subsidising the project.
Thyssenkrupp is reviewing its plans to produce “green steel”, by making the production climate-neutral according to the German newspaper Handlesblatt which quotes internal company documents.
The report says that the company’s senior management and CEO Miguel Lopez have initiated a fundamental review of the ongoing project of their direct reduction plant (DRI), where steel production would run on hydrogen instead of coal. It was originally planned to start operations in 2027.
The federal government as well as the state of North Rhine-Westphalia have committed to provide €2bn for the project. Reportedly, €500m of state subsidies have already been paid. If the project is cancelled, the company would have to pay back these funds.
Contacted by Euronews Business, Thyssenkrupp did not confirm that they are considering scrapping the whole project, even though the costs of such a scenario are still being examined, according to documents cited by the German newspaper.
A spokesperson from Thyssenkrupp told Euronews Business: “The situation is currently being reviewed” adding that the company “currently assumes that the direct reduction plant can be implemented under the given framework conditions,” and that potential cost increases for the DRI plant currently have no impact on the subsidies.
The troubles around Thyssenkrupp’s steel unit
The German industrial conglomerate reported disappointing results in June, with its net income and profit falling dramatically and its operating expenses rising.
The steel division in particular, has been in the news recently, as Euronews Business reported and it has had a major management reorganization.
As a result of resignations, the steel company has a new CEO, a new chair and five directors. The resignations were triggered by an ongoing takeover battle at Thyssenkrupp, after Czech billionaire Daniel Křetínský acquired 20% of the steel business with the possibility of buying a further 30%.
Five years ago, the troubled steel maker had proposed a joint venture with Tata Steel Europe which would have created Europe’s second-largest steelmaker. The company appealed against an anti-trust ruling by the European Commission that prohibited the merger in 2019, saying it “would have reduced competition and increased prices”.
But this week, Europe’s highest court, the Court of Justice of the European Union (CJEU) sided with the European Commission and dismissed Thyssenkrupp’s appeal.
Meanwhile, Thyssenkrupp’s steelmaking unit has been hit by fierce competition from Asia, while high energy prices and lower demand in Europe squeeze the steelmaking businesses’ prospects, which is also tied to meeting climate requirements which require heavy investments.
However, switching to “green steel” is a prestige project for both the company and the German government.
The firm said in a statement to Euronews Business: “Thyssenkrupp remains committed to its green transformation and climate-neutral steel production. There is no way around the decarbonisation of CO2-intensive steel production in the long term.”
Thyssenkrupp’s shares were traded close to minus 5% around midday in Germany.
