Despite having previously been granted aid of 450 million euros by the Ministry of Industry in Spain and other incentive plans in countries such as Germany and France, ArcelorMittal announced this Tuesday that it is paralyzing its investments in Europe to produce steel based on green hydrogen. . The company is not definitively giving up its plans, but it does want to wait for the decisions made by the European Union in 2025 to decide. Thus, the brake has a full impact on the decarbonization of the steel factory that the group has in Gijón and which in 2022 looked like the most polluting factory in Spain, according to the American tool Climate Trace.
The Luxembourg-based listed company explained in a note that the decision to suspend investment plans for direct iron ore facilities (DRI) based on green hydrogen was due to “European policies, the energy and market have not evolved in a favorable direction”.
Before making a final decision, ArcelorMittal says it wants to “have full visibility of the political environment which will ensure that higher-cost steel production can be competitive in Europe without a global carbon price.”
For this reason, it will wait for the CBAM – the mechanism by which the costs of non-EU products that emit CO2 when entering Europe – to be reviewed in 2025. In addition, it predicts an early review of steel safeguards and the publication of the Action Plan for Steel and Metals. “When completed, these initiatives will provide the necessary parameters to shape the business case for decarbonization investments in Europe,” he says.
And ArcelorMittal suffers from a macroeconomic environment of low prices in the sector, flooded with production from Asia. With the costs of green hydrogen still far from profitability and low demand, both at a general level and for a sustainable product in particular, the company has reversed its original plans announced at the end of the pandemic. It’s about uA path that other continental steel companies such as Thyssenkrupp have also takenwhich will cut 11,000 jobs until 2030, Celsa or H2 Green Steel.
However, the company is not giving up plans to reduce its carbon footprint. The focus is now on electric steelworks, such as the one existing in Sestao (Vizcaya) and the one also being built in Gijón. In fact, the group uses both facilities as an example, as it assumes that the steel produced in blast furnaces has less and less mileage.
In May, the construction of the 1.1 million ton electric furnace began in Gijón while it aims to increase its production to 1.6 million tons in 2026 at the Sestao flat products center.
Reactions to ArcelorMittal’s decision
Despite maintaining part of the investments, the reactions of the administrations were immediate. The Ministry of Industry assured that the new DRI plant will go forward “with ArcelorMittal or with a third party,” according to statements collected by The Commerce. The regional government added that the aid for the company does not disappear, but is “on hold” and will remain on the table “for when the unknowns are cleared up.”
The truth is that The steel company has approved aid of 450 million linked to the Perte decarbonization from April 2023. The subsidy went hand in hand with an investment of 1,000 million, but the Executive and the company have been negotiating since then how to make it viable with current energy prices and the difficulties of making profitable, for the moment, a commitment to green hydrogen.
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