Thyssenkrupp breaks economic link with Hüttenwerke-Krupp Mannesmann
Thyssenkrupp Steel Europe, subsidiary of German steelmaker Thyssenkrupp Steel, is breaking its economic link with Hüttenwerke-Krupp Mannesmann (HKM), the joint venture between Thyssenkrupp Steel, German steelmaker Salzgitter and French pipe manufacturer Vallourec.
The company has announced that it has decided to terminate the supply contract with HKM. As a result, Thyssenkrupp Steel Europe’s obligation to purchase around 2.5 million mt of steel per year will expire on December 31, 2032, at the latest.
Last year, Thyssenkrupp Steel had declared that it intended to divest its stake in HKM as part of its restructuring plan, while the negotiations with Hamburg-based CE Capital Partners on the sale of Thyssenkrupp shares in HKM failed, as SteelOrbis previously reported.
“Due to market conditions, we will have to reduce our production capacities in the long term from the current 11.5 million mt of steel to a shipping target of 8.7 to 9 million mt. The separation from HKM is therefore imperative for us in order to achieve a competitive cost position, to maintain our location in Duisburg-Nord, and to make Thyssenkrupp Steel economically robust and geared up for the future. Irrespective of the termination of the supply contract, the sale of the shares in HKM remains our preferred option. We are open to discussions with all serious interested parties,” Dennis Grimm, spokesman of the executive board of Thyssenkrupp Steel, said.
Thyssenkrupp to axe 11.000 jobs, reduce capacity
Thyssenkrupp Steel says it will cut around 5,000 jobs in production and administration by 2030. A further tranche of 6,000 jobs is to be transferred to external service providers or shed through the sale of business activities.
The steelmaker will lower annual production to 8.7-9 million tonnes, from 11.5mt currently. The reduced volume corresponds to shipments in the previous financial year.
Such a reduction is “in line with market conditions, thus adapting capacities to future market expectations,” it says in a press release sent to Kallanish. The figures are the cornerstones of a key issues paper on the company’s future strategic set up, which was announced previously.
Tk Steel’s separation from Hüttenwerke Krupp Mannesmann (HKM) remains a key element in the capacity reduction. The primary objective is to sell the shares in HKM. If a sale is not possible, tk Steel will hold talks with the other shareholders about mutually acceptable scenarios for the plant’s closure – the first time this option has been explicitly mentioned.
In addition, a processing site in Kreuztal-Eichen is to be closed.
“Comprehensive optimisation and streamlining of our production network and processes is necessary to make us fit for the future. We are aware that this path will demand a great deal from many people,” says tk Steel chief executive Dennis Grimm.
“In terms of operational efficiency and profitability, we still have some catching up to do in key competitive areas. We need to close these gaps if we want to look forward to a positive future,” adds Marie Jaroni, chief transformation officer.
The company maintains that it remains committed to the green transformation and carbon-neutral steel production, and is holding firmly to its intended plan of completing the direct reduction plant that is under construction. A decision on building another DRI plant will only be taken at a later date and under the economic, technological, and political conditions that apply at that time, tk Steel says.
