Germany’s Salzgitter to explore hydrogen supply options for steelworks

German steelmaker Salzgitter has signed a memorandum of understanding with gas trader VNG to study options for supplying hydrogen to the Salsteel production site in Lower Saxony as part of plans to reduce the plant’s carbon emissions, the companies said April 17.

The two companies will focus on options for developing electrolyzers and exploring partial supply of non-pipeline hydrogen derivatives such as ammonia or methanol via rail during the transition phase.

“The focus is also on the long-term connection already planned to a supraregional hydrogen grid for transporting hydrogen on a large scale from various production regions and projects to the location,” the companies said.

Salzgitter is part of the GETH2 project, a planned hydrogen pipeline network across northwest Germany, expected to connect to the steel plant by 2030.

The European Commission in October 2022 approved a Eur1 billion ($1.09 billion) grant by Germany for decarbonization at Salzgitter via hydrogen. This grant included plans for a 100-MW electrolyzer at Salzgitter producing about 9,000 mt/year. The steel works already hosts two small electrolysis pilot projects.

A Salzgitter spokesperson told S&P Global Commodity Insights that the company is in talks with German gas grid operators about future hydrogen supply. Under current planning, hydrogen could supply the site by via pipeline by the end of the decade, the spokesperson said adding this was a pre-condition for large volumes.

From 2026, a new gas pipeline is to supply Salzgitter with natural gas to reduce coal consumption.

At the moment there are a number of electrolyzer projects planned across Germany, while first import cargoes of green ammonia under the H2Global scheme are expected from 2024.

“Developing the hydrogen economy is an essential precondition for reducing carbon emissions in industry,” Hans-Joachim Polk, VNG executive board member responsible for Infrastructure & Technology said.

“Supplying the steelworks with hydrogen is one of the crucial elements of our SALCOS transformation program,” Salzgitter CEO Gunnar Groebler said.

Producing green hydrogen using sustainably generated energy is a core element of SALCOS, as the steelmaker plans to switch its coking coal based steel production to hydrogen-based processes from end-2025 and become carbon neutral by 2033. As part of the transformation, direct reduction plants and electric arc furnaces will be built to gradually replace its blast furnaces and converters.

The SALCOS programs aims to start production of 1.9 million mt/year by 2026. Once completed, the project is expected to avoid the release of 8 million mtCO2e/year.

Production costs for electrolytic hydrogen in Europe (Netherlands alkaline electrolysis including capex) have fallen to Eur5.71/kg by April 13 after averaging Eur8.41/kg in February, S&P Global Commodity Insights data based on grid power show.

This joint feasibility study is not the first for Salzgitter and VNG. In 2020, the companies signed an MOU under which two feasibility studies on hydrogen supply and hydrogen transport have already been carried out.

Platts assessed hot-rolled coil in Northwest Europe stable day on day at Eur840/mt ($916.94/mt) ex-works Ruhr on April 17.

Author Annalisa Villa