ArcelorMittal has suspended its planned €1.3 billion ($1.5 billion) direct reduced iron and electric arc furnace investments aimed at decarbonising its German operations in Bremen and Eisenhüttenstadt.
The decision marks a significant shift in the group’s decarbonisation roadmap for these sites, where DRI-EAF technology was intended to replace traditional blast furnaces, Kallanish notes.
Under the agreement between ArcelorMittal and the German government, which included state financial support, construction of the DRI-EAF facilities at Bremen and Eisenhüttenstadt was scheduled to commence by June 2025.
“ArcelorMittal Germany has been obliged to formally notify the government that it cannot proceed with these investments, given the realities of the market and the economics of low-carbon emissions steelmaking,” the steelmaker says.
It is unlikely to meet its 2030 carbon emissions target amid slower-than-expected progress in the energy transition, including delays in green hydrogen becoming viable and the lack of competitiveness of natural gas-based DRI.
“Full implementation of existing NDCs by 2030 would only cut emissions by up to 10% from 2019 levels, far short of the 28% needed for 2°C and 42% for 1.5°C. Meanwhile, the European steel market is under unprecedented pressure, with weak demand and high levels of imports.” the note states.
ArcelorMittal is calling on the European Commission to take action on several key challenges impacting its decarbonisation strategy and market competitiveness.
The company points to rising steel imports amid weak EU demand and the need for effective support from tools like the Carbon Border Adjustment Mechanism. It also noted the high cost of electricity, which is critical as the shift from blast furnace to EAF increases reliance on gas and power rather than coal. Electricity prices in Germany are currently too high compared to other countries in Europe.
“We appreciate the financing offered by the federal government of Germany and the state of Bremen as well as the support of the state of Brandenburg for this project. 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,” says Geert van Poelvoorde, ceo of ArcelorMittal Europe.
“As it stands, the European steel industry is under unprecedented pressure to remain viable, and that is without the additional costs required to decarbonise,” he adds.
He remains concerned the EC’s Steel and Metals Action Plan may not go far enough or happen quickly enough.
The high levels of imports are a major concern – we need imports for flat products to be limited to 15% – which means a reduction of around 50% compared with what we are seeing today,” he warns.
ArcelorMittal is also halting decarbonisation investments in France and Belgium. However, it has confirmed its €1.2 billion commitment for its first EAF in Dunkirk, where energy prices are comparatively moderate (see Kallanish passim). In Gent the steelmaker is considering closing its Steelanol plant.
Natalia Capra France
