Thyssenkrupp opens Materials Services to investors
German conglomerate thyssenkrupp AG has decided to divest further shareholdings in various divisions. This will also affect thyssenkrupp Materials Services, the division for distribution and trading of steel and other materials, Kallanish notes.
The group’s plan, announced on Monday, is to gradually separate all its business segments and open them up for third-party investment. It has already taken this step by agreeing to turn thyssenkrupp Steel Europe into a 50-50 joint venture with Czech energy company EP Corporate Group (EPCG).
“In the coming years, the Materials Services and Automotive Technology segments are also to be prepared for the capital markets and become independent,” thyssenkrupp writes in an announcement.
Media reports over the weekend already suggested that tk Materials Services would be floated on the stock market, citing sources familiar with the plans. In that case, Germany’s largest steel distribution groups with international locations – the other being Klöckner & Co – would become publicly-listed companies.
This sweeping clean-up move does not come unexpectedly, although thyssenkrupp chief executive Miguel López called Materials Services a core activity just earlier this month. The group divested last year 20% in steelmaking division tk Steel to EPCG, with the intention of ultimately making it a 50-50 joint venture.
Regarding its other divisions, thyssenkrupp says it aims to retain controlling interests once they have been made ready for the capital market. This would basically make thyssenkrupp a holding of diverse stakes in independent companies.
The statement does not mention any potential layoffs. Media reports say that tk plans to cut 500 of 1,000 jobs at its Essen headquarters, plus 1,000 more in diverse administration roles. Policymakers from the North Rhine Westphalia state government were quoted as calling the plans “dramatic”.
Christian Koehl Germany
Price gap of ‘green’ and ‘gray’ steel to close steadily until mid-2030s: Thyssenkrupp
Prices of reduced carbon emission steel and conventional steel will continuously align until the 2030s, Thyssenkrupp CEO Miguel Ángel López Borrego said Feb. 2.
At a public shareholder meeting, Lopez said that customers of the German steel unit of Thyssenkrupp would understand that prices of lower carbon emission steel would be at a premium, particularly once it will be produced with green hydrogen.
“However, also gray steel will become more expensive with rising carbon costs,” Lopez said.
Platts assessed the current premium of carbon-accounted HRC at Eur140/mt Feb. 2., up Eur15/mt day on day.
One of the main costs will be green hydrogen, and the company aims to run its new direct-reduced iron plant, which will replace one blast furnace, to be fully run by green hydrogen by 2029. Thyssenkrupp will finalize tenders for the supply this year. Lopez added that he expects Thyssenkrupp to form more joint ventures for hydrogen in the years to come.
Steel JV talks progressing
Shareholders of Thyssenkrupp, which owns Germany’s biggest steelmaker, Thyssenkrupp Steel, questioned the availability of energy for the decarbonization of the steel operations.
“The energy question is the key question,” Lopez said. “That’s why we are favoring a JV with EPH.”
He said that the current favorite option for the steel unit would be a joint venture with Czech energy provider EPH owned by Czech billionaire Daniel Kretinsky. He refused to elaborate on the ongoing talks despite requests by multiple shareholders at the event.
Lopez also said Thyssenkrupp would still be looking at a plan B if the JV would fail but said he would not expand on the alternative.
Thyssenkrupp will be spinning off its steel unit no matter of more government funding to decarbonize the steel industry. The tinplate plant Rasselstein will also be part of the steel JV. The company will invest Eur3 billion in the decarbonization of the steel unit, which includes the support of Eur2 billion from the German government.
The Thyssenkrupp steel mill accounts for 2.5% of Germany’s entire CO2 emissions.
Previous attempts at deals
Thyssenkrupp has had several failed attempts at previous JVs or sales of the struggling steel unit. It ended talks in 2021 about selling its steel unit to Liberty Steel, saying “ideas about the corporate value and the structure of the transaction were far apart” and would drive forward a “sustainable position” for steel on its own.
Prior to that, a steel joint venture with Tata Steel Europe was called off in 2019 following the blocking of the plan by the European Commission without further divestments.
In the fiscal year 2022-23 (Oct 2022-September 2023), Steel Europe shipped 9.4 million mt of steel, down from 9.5 million mt the previous year, while lower spot steel prices caused sales to fall 6% year on year to Eur12.4 billion. In particular, high raw material and energy costs in the first half of the year affected earnings.
Author: Laura Varriale, laura.varriale@spglobal.com
