ArcelorMittal France is currently producing at 60-70% capacity utilisation, around 6.5 to 6.8 million tonnes of its total 10m t/year capacity, due to the constant and continuous decline in steel consumption in Europe and in France. So said ArcelorMittal France chief Alain Le Grix de la Salle to the “commission des affaires économiques” economic affairs commission at the Senate in Paris last week in a televised hearing seen by Kallanish.
The steelmaker’s high energy costs are jeopardising the Dunkirk site’s planned direct reduction plant (DRP) model, a facility producing DRI to feed the future electric arc furnaces. Considering the current CO2 emission allowances ArcelorMittal pays, the cost of a steel coil produced using the blast furnace route is equivalent to the cost of a coil produced using the gas-fuelled DRP process.
“Therefore, no economic model currently justifies the transition to the DRP model,” De la Salle said. Hydrogen produced from electrolysis is 70% dependent on the price of electricity. The target price for hydrogen to enable the production of pre-reduced iron ore at a competitive cost is €2/kg ($2.2), whereas the current market price is around €7/kg.
“To reach such a target price, the price of electricity would have to reach €25 per kilowatt-hour. This gives you an idea of the road ahead … In any case, the use of DRP in Europe will take time; its development will depend on the cost of natural gas and electricity. This does not mean that our project in Dunkirk is stopped: it is on hold,” de la Salle noted.
In his address, he highlighted the ongoing deindustrialisation occurring in France (see separate story). Defining the energy price that would facilitate reindustrialisation in the country poses a significant challenge.
“I will take the example of hydrogen: the Americans and the Chinese are preparing to overtake Europe. Can’t we, on a European scale, create a demonstrator without wasting time as we are currently doing? Let’s resolve the economic problem of price to demonstrate the industrial feasibility of hydrogen-related projects. Time is passing, and nothing is being done,” he warned.
Europe should authorise certain aid measures for electricity-intensive industries. “I’m thinking of tax exemptions and the compensation of the cost of CO2 in the price of electricity – this is known as carbon offsetting. These two forms of aid are essential for us to remain competitive,” De la Salle continued. He pointed out that the commercial acceptance of low-emission steels is another pressing issue. Very few consumers are so far prepared to pay a premium for green steel.
The transition towards green steelmaking in Europe will cost billions of euros. “When Europe has clarified the rules and given us visibility, the ArcelorMittal group will also provide some clarity on its continental, and therefore French, strategy. In fact, the Fos-sur-Mer teams, like those in all European countries, are waiting for clarification from us regarding the decarbonisation plan. We hope to proceed in stages and begin its deployment by the end of the year,” De la Salle said.
He confirmed that ArcelorMittal will relocate certain job functions to India, mirroring the strategies employed by numerous European steel companies over the years. The steelmaker is collaborating with unions to identify the functions that are suitable for offshoring, with an emphasis on those that do not necessitate close customer interaction. As a result, transactional tasks may be consolidated into one or two locations, allowing for economies of scale.
In France, the group employs nearly 15,400 people at 40 production and processing sites, representing 25% of its European workforce. Over the past five years, it has invested approximately €1.7 billion in France. This represents approximately €350 million in annual capital expenditure, or 25% of the group’s European investments.
Natalia Capra France
