Luxembourg-based steel-maker ArcelorMittal has decided not to go ahead with plans to install electric arc furnaces at two of its German mills, citing concerns about the cost of electricity.
The company, Europe’s largest steel-maker, was in line to receive €1.3bn in public funding for the conversion at its plants in the port of Bremen and the town of Eisenhüttenstadt, about 50km southeast of Berlin.
The idea was to use electric arc furnaces powered by hydrogen to decarbonise the production process.
ArcelorMittal blamed its decision on Germany’s expensive electricity and possible capacity constraints in the future.
The cost of electricity in Germany stands at €39.43 per 100kWh, followed by Denmark at €37.63 and Ireland at €36.99.
The company’s chief executive Geert van Poelvoorde said ArcelorMittal appreciated the finance offered by the German government, the city of Bremen and the state of Brandenburg, but “even with the financial support, the business case for moving ahead with this transformation is not strong enough, which shows the scale of the challenge”.
The Bremen project was first announced in 2020. The aim was to install an electrolyser on site to produce hydrogen, which would be injected into the plant’s blast furnaces.
Last November, the company complained of energy costs and tough market conditions, and has now informed the German government that the project is not economical. Berlin had set a deadline of this month to begin work on the project, if it were to receive the subsidy.
The company said it was committed to reducing the carbon footprint of its assets, although was “increasingly unlikely” to achieve its 2030 carbon emissions intensity target.
It commented that there had been slower-than-expected progress on all aspects of the energy transition, including green hydrogen not yet being a viable fuel source.
Germany’s economics ministry said it regretted the decision, but noted that it was still going ahead with some €6.9bn in industrial climate subsidies, including backing for Thyssenkrupp, Salzgitter and Stahl-Holding-Saar.
It now appears that Europe’s adoption of electric arc furnaces will be in France. ArcelorMittal is planning to spend €1.3bn on installing one in the Dunkirk region, taking advantage of cheaper nuclear-generated electricity and a supportive government.
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