Salzgitter, Uniper sign green hydrogen supply pre-contract for German steel plant

German steel producer Salzgitter has signed a pre-contract with Uniper for the supply and purchase of green hydrogen for its Salcos low-carbon steelmaking program, the companies said April 23.

Uniper will supply up to 20,000 mt/year from its 200-MW Wilhelmshaven electrolyzer from 2028 to the direct reduction iron plant Salzgitter is constructing.

The electrolyzer is due to be commissioned in 2028 on the site of a former coal plant, with volumes dependent on availability of the German core hydrogen network and a specific pipeline to the steel plant, Uniper said in a statement.

“A pipeline connection from Wilhelmshaven to Salzgitter is absolutely essential and must be established as quickly as possible,” Uniper said.

Uniper plans to expand Wilhelmshaven electrolysis capacity to 1 GW, producing 100,000 mt/year.

The company is also developing a green ammonia import terminal at the site with capacity of 2.6 million mt/year of ammonia, which can be cracked into at least 300,000 mt/year of hydrogen, to be fed into the planned German hydrogen pipeline network.

A final investment decision on the terminal is expected in the second half of the decade, a Uniper spokesperson told S&P Global Commodity Insights by email.

The preliminary agreement between Uniper and Salzgitter includes a technical and commercial framework for hydrogen supply.

The agreement is the first step in securing hydrogen supply for Salzgitter’s Salcos project, which will require up to 150,000 mt/year of hydrogen in its first stage.

In a first phase from 2026, Salzgitter will commission a direct reduction plant, an electric arc furnace, and the 100-MW electrolysis plant.

The DRI unit will have a production capacity of over 2 million mt/year of direct reduced iron, while the EAF will produce 1.9 million mt/year of steel, according to Salzgitter Flachstahl and engineering company Primetal, which will build the EAF.

It aims to convert its operations to “virtually CO2-free steel production” by the end of 2033.

The first stage of Salcos is backed by subsidies from Germany’s federal government and the state of Lower Saxony, as well as by the company’s own funds.

The agreement follows hydrogen supply agreements from other German steel producers.

German steel producer Stahl-Holding-Saar launched a tender in March to buy up to 50,000 mt of locally produced renewable hydrogen for its Dillinger and Saarstahl plants in Saarland.

And in February, Thyssenkrupp issued a tender seeking up to 151,000 mt/year of renewable and low-carbon hydrogen under 10-year contracts from 2028, for pipeline delivery to its Duisburg steelworks.

Platts, part of S&P Global Commodity Insights, assessed the cost of green hydrogen production via alkaline electrolysis, backed by renewable power purchase agreements, at Eur7.10/kg ($7.6/kg) on April 22, up from Eur6.11/kg at the start of the month.

The assessment reflects one possible pathway for producing EU Renewable Energy Directive-compliant green hydrogen.

Platts assessed Northwest European hot-rolled carbon-accounted coil stable on the day at Eur745/mt ($793/mt) ex-works Ruhr on April 22, a Eur120/mt premium to conventional supplies. The assessment was calculated in line with the sum of Platts daily carbon-accounted steel premium (CASP) assessment and Platts daily hot-rolled coil price assessment in Northwest Europe.

James Burgess