European Commission approves Stahl-Holding-Saar decarbonisation state aid

The European Commission has approved the €2.6 billion ($2.8 billion) in German state aid to be provided to Stahl-Holding-Saar (SHS) for its transformation to low-emission steelmaking.

Plate maker Dillinger Hütte and SBQ maker Saarstahl, coming under SHS, started planning earlier this year for the construction of a direct reduction plant and two electric arc furnaces at their sites in Dillingen and Völklingen (see Kallanish passim). They currently operate a combined two blast furnaces and five basic oxygen converters.

Natural gas, initially used in the new DRI plant, will gradually be phased out of the steel production processes. Ultimately, the new installation will operate using mainly low-carbon and renewable hydrogen.

SHS intends to organise a competitive tendering process to select renewable hydrogen suppliers. The successful bidders will install electrolysers near SHS’s facilities, thereby kickstarting the development of a renewable hydrogen value chain in the Saarland region, the Commission says. At a later stage, SHS expects to be connected to the German hydrogen network, which should result in access to larger and cheaper volumes of hydrogen.

The group is targeting production of up to 3.5 million tonnes/year of green steel starting in 2027/2028. The public funding that has now been announced is essential for the projected investments of around €3.5 billion, SHS said earlier this month.

Adam Smith Poland