Salzgitter’s SALCOS project to receive extra funds
The German government has approved EUR322 million in additional funding for Salzgitter’s SALCOS decarbonisation project, according to a state press release.
The Federal Ministry for Economic Affairs and Energy (BMWE) approved the funds following the European Commission’s authorisation under EU state aid rules earlier in February.
Salzgitter’s SALCOS – Salzgitter Low CO2 Steelmaking – strategy initially aimed to reduce CO2 emissions by over 95% by the end of 2033, replacing its existing blast furnace-basic oxygen furnace (BF-BOF) route production with direct-reduced iron fed electric-arc furnace (DRI-EAF). The DRI plant would operate on a mix of hydrogen and natural gas, neither of which are very competitive at present in Europe, due to insufficient scale and high costs.
As noted in the German government’s statement, a financing gap was identified at the time of initial state aid approval in 2022, despite the EUR1bn pledged by the German state. Salzgitter’s construction relating to the first stage of SALCOS – the 2.1 mt/y DRI plant, 1.9 mt/y EAF, and 100 MW hydrogen electrolyser – is ongoing, now supported by the additional EUR322m grant, which according to the BMWE “further secures the project’s timely implementation.”
Salzgitter’s leadership stated last year that it expected relevant green steel production to begin in the first half of 2027. The latter stages of the SALCOS project remain on hold until final investment decisions are taken – expected for 2028-2029 – which could see plans to expand the H2 electrolyzer cancelled in preference for external supply.
The German government had previously assumed that additional funding to fill the SALCOS financing gap could be allocated from other state aid initiatives and instruments due to the project’s consumption of hydrogen produced as part of the EU’s Important Projects of Common European Interest (IPCEI) framework, but such an allocation “proved unfeasible,” requiring approval for additional funds.
More information on SALCOS, and other decarbonisation projects in the global steel sector, can be found in McCloskey’s Global Green Steel Profile.
Salzgitter acquires German steel processor Thyrolf & Uhle to bolster defense offerings
Salzgitter has acquired Thyrolf & Uhle, a German steel processor specializing in ballistic protection components, as the second-largest German steelmaker seeks to expand its presence in Europe’s growing defense sector.
The deal, announced on Feb. 11, gives Salzgitter access to Thyrolf & Uhle’s expertise in processing high-grade security steels, including 400, 450, 500, and 600 SECURE grades used in military vehicle construction and infrastructure protection, the German steelmaker said in a statement.
Thyrolf & Uhle, based in Dessau-Rosslau with around 100 employees, processes over 12,000 metric tons/year of steel at its facility and holds key certifications for manufacturing ballistic protection components under German military standards TL-2350-0000 and DIN 2303 Q3 BK.
The acquisition positions Salzgitter to capture growing demand for armored steel components as European nations boost defense budgets, the company said in the statement.
“This acquisition marks a further step in our active portfolio management involving targeted acquisitions in growth markets,” said Gunnar Groebler, CEO of Salzgitter AG. “Germany and Europe need an efficient defense industry with a qualified materials base in order to prevail in the face of geopolitical upheaval. This is precisely where we as Salzgitter AG are strengthening our offerings,” Groebler added.
Germany announced plans to significantly increase military spending following Russia’s invasion of Ukraine in 2022, driving demand for specialized steel products used in military vehicles and protective infrastructure.
Thyrolf & Uhle has operated as a steel processor since 1859, providing steel construction, component manufacturing, and sheet metal processing services. The company supplies steel components for both civil and military vehicle construction across Germany and Europe.
Financial terms of the transaction were not disclosed, with the transaction subject to the fulfillment of the agreed closing conditions, in particular, official approvals.
Platts, part of S&P Global Energy, assessed Feb. 10 domestic hot-rolled coil in Northern Europe at Eur650/mt ex-works Ruhr, stable day over day.
Salzgitter to take over HKM steel joint venture
German steelmaker Salzgitter said it will be the sole owner of the Hüttenwerke Krupp Mannesmann (HKM) joint venture from 1 June 2026 after agreeing to buy out the co-owners of the company, according to a joint statement from Salzgitter and thyssenkrupp Steel.
Under the plan, thyssenkrupp Steel will sell its shares in HKM to Salzgitter, effective 1 June 2026, for an undisclosed sum, providing the latter sole responsibility in a reduced scope.
Thyssenkrupp owns 50% of HKM, while Salzgitter and Vallourec control 30% and 20% of the company, respectively.
Implementation of the plan is subject to the approval of Salzgitter’s governing bodies and a positive assessment of a going concern report, which Salzgitter has already commissioned. The agreement is also conditional on the third owner, Vallourec, also agreeing to sell its shares to Salzgitter.
HKM will continue to supply slab to thyssenkrupp Steel until the end of 2028, instead of previously planned 2032.
Thyssenkrupp closed its heavy plate mill, which used HKM’s slabs as feedstock, in 2021. In addition, under the restructuring proposal, thyssenkrupp planned to cut production from 11.5 mt/y to 8.7-9.0 mt/y and to separate from HKM – either by selling the asset or shutting the plant if no buyer was found.
“This agreement is an important milestone and brings us a good step closer to establishing a sound industrial future for HKM. It creates clarity for everyone involved in this process, while offering HKM’s workforce a positive perspective. HKM will thus become part of the process of transforming to low-CO2 steel production in the Salzgitter Group,” Gunnar Groebler, CEO Salzgitter, said.
To learn more about decarbonisation projects in Europe and globally – check Global Green Steel Profile.
HKM has a capacity of around 6 mt/y of crude steel, with semi-finished products manufactured via the blast furnace-basic oxygen furnace (BF-BOF) route.
Salzgitter’s announcement confirmed rumours that one of HKM’s shareholders was planning to continue production despite earlier plans to divest the asset as the mill can supply slab to the spot market to substitute imports.
European re-rollers, mainly producing heavy plate, rely heavily on imported slab, though the introduction of the Carbon Border Adjustment Mechanism (CBAM) on steel imports to the EU from January 2026 has resulted in a significant increase in costs. European re-rollers estimated CBAM duties for import slab at EUR40-80/t, but those numbers could be higher if the exporting steelmaker does not get emissions verification in time in which case the buyers would have to pay the duty based on default emission values.
A few market sources have reported revived domestic slab market activity in Europe with HKM offering slab on the spot market.
Salzgitter to downsize and continue operating HKM steel plant
German steel producer Salzgitter has outlined a conditional strategy to keep operations running at the Hüttenwerke Krupp Mannesmann (HKM) steel plant in Duisburg, even as its joint venture partners move toward an exit. However, the company made clear that continued operations would require a substantial downsizing of the facility.
HKM is currently owned by thyssenkrupp Steel with a 50% stake, Salzgitter with 30%, and French pipe producer Vallourec holding the remaining 20%. Both thyssenkrupp and Vallourec have signaled their intention to withdraw from the venture, prompting Salzgitter to assess scenarios under which the plant could remain active.
According to Salzgitter, a continuation of operations would likely involve a sharp reduction in capacity—from the current level of around 4.2 million tonnes per year to roughly 2–2.5 million tonnes. The restructuring plan under consideration also includes replacing blast furnace production with electric arc furnace technology and significantly reducing the workforce, potentially from about 3,000 employees to nearly 1,000.
The company stressed that any takeover of the remaining shares would depend on clear preconditions. These include cost-sharing by the exiting shareholders for restructuring measures and layoffs, as well as firm steel procurement commitments from thyssenkrupp covering the next two to three years.
Adding to the uncertainty surrounding the plant’s future are ongoing arbitration proceedings between Salzgitter and thyssenkrupp. These disputes relate to financial responsibilities tied to restructuring and post-withdrawal liabilities, with outcomes that could materially influence the feasibility of maintaining HKM operations.
While Salzgitter has not ruled out a future for the Duisburg facility, the company’s statements underline that any continuation would be fundamentally different in scale and structure from HKM’s current configuration.
Salzgitter posts slightly positive pre-tax result in Q3 2025
Salzgitter, achieved a slightly positive pre-tax result in the third quarter of 2025, supported by its performance improvement program P28, steady results from the KHS Group, and income from its participation in Aurubis AG.
In the first nine months of 2025, the Group generated revenue of EUR 6.9 billion (9M 2024: EUR 7.7 billion), EBITDA of EUR 224 million (9M 2024: EUR 320.6 million), and a pre-tax loss of EUR 72.7 million (9M 2024: EUR –141.2 million). The result includes a EUR 83.5 million contribution from the equity-accounted investment in Aurubis AG and –EUR 68.2 million in valuation losses on derivatives. Net income after tax amounted to EUR –46.5 million (9M 2024: EUR –197.7 million), corresponding to EUR –0.93 earnings per share, while return on capital employed (ROCE) stood at –0.4%. The equity ratio remained solid at 41.8%.
According to CFO Birgit Potrafki, the Group’s P28 performance program contributed an additional EUR 89 million to earnings in the first nine months, nearly achieving the annual target of EUR 97 million. “Market conditions have not improved significantly since the beginning of the year. With our own measures, we have largely offset these challenges. The positive quarterly result underlines this progress,” Potrafki said. She added that the EUR 500 million convertible bond issued in October 2025 strengthened the company’s financing structure and reflected investor confidence.
Looking ahead, Potrafki noted that newly proposed EU trade policy instruments could enhance the competitiveness of the European steel industry, while an expected economic recovery in 2026 may further improve results.
Despite a recent moderate price recovery, margins are expected to remain under pressure throughout 2025, with the positive effects of higher prices likely to materialize only next year. The Group therefore adjusted its full-year forecast as follows:
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Revenue slightly above EUR 9.0 billion (previously: EUR 9.0–9.5 billion)
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EBITDA between EUR 300 million and EUR 350 million (previously: EUR 300–400 million)
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Pre-tax result between EUR –100 million and EUR –50 million (previously: EUR –100–0 million)
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Return on capital employed slightly above the previous year’s level
Salzgitter emphasized that fluctuations in raw material costs, precious metal prices, exchange rates, and the valuation of the October 2025 convertible bond could significantly influence the final 2025 results.
Salzgitter delays Salcos hydrogen steel project by three years
Salzgitter, Germany’s second-largest steelmaker, said Sept. 22 in an emailed statement to Platts that it is delaying the expansion stages of the Salcos project by approximately three years, citing worsening market conditions and the lack of regulatory support from the federal government.
The decision was taken by the company’s supervisory board on Sept. 18, according to the emailed statement.
“Since 2022, the economic and political-regulatory conditions have significantly deteriorated,” it said, adding that the company is still awaiting the regulatory changes promised by the federal government.
Salzgitter added that the federal government must act to support the German steel industry by providing a sustainable, secure, and affordable energy supply; accelerating the ramp-up of the hydrogen market; supporting the adoption of carbon-accounted steel products; and advocating for consistent trade protection at the EU level.
The delay comes as European steelmakers grapple with weak demand, high energy costs, and competition from imports, particularly from China.
Revised project timeline
While Phase One, involving the construction of a direct reduction unit, an electric arc furnace, and an electrolysis plant, remains on track to launch in 2027, Salzgitter will now postpone an investment decision on Phases Two and Three until 2028/29, instead of 2026 as previously planned.
Similar projects by companies like ThyssenKrupp and ArcelorMittal have also faced challenges related to funding, regulatory support, and market conditions.
The Eur2.5 billion ($2.9 billion) Salcos project was officially launched in 2019 and is part of Salzgitter’s broader strategy to reduce CO2 emissions in its steel production processes and transition from traditional blast furnace to hydrogen-based steelmaking processes by 2033, cutting overall CO2 emissions by an estimated 95%.
The company started construction of the 100-MW phase one electrolyzer in February, which is to produce 9,000 mt/year of renewable hydrogen, supporting phase one requirements of 150,000 mt/year for steel production.
The electrolysis plant will be among the largest green hydrogen facilities in Europe to date.
In June 2024, Salzgitter opened a tender to source up to 120,000 mt/year of renewable hydrogen for the Salcos project.
The tender was for supplies from 2027, subject to connection to the planned German hydrogen pipeline network.
Salzgitter previously said it was planning to use up to a total of 150,000 mt/year of hydrogen at its steel production plant, including the 9,000 mt/year produced from its own 100-MW electrolyzer from 2026.
Platts, part of S&P Global Commodity Insights, assessed the cost of green hydrogen production via alkaline electrolysis in Germany, backed by renewable power purchase agreements, at Eur7.08/kg ($8.34/kg) on Sept. 19.
The assessment reflects one possible pathway for producing EU Renewable Energy Directive-compliant green hydrogen.
Germany’s Salzgitter steel certified for military use
Steel produced by Salzgitter has been approved for use in the defence industry by Germany’s armed forces, the company said on 8 July.
The approval allows the company to strengthen its position in the growing market for military applications.
The steelmaker received approval from the German Military Technical Center 91 (WTD 91) in accordance with TL (Technical Delivery Conditions) 2350-0000. This officially approves steel grade SECURE 500 in 6-16 mm thicknesses for military use, including vehicles or protective systems.
Salzgitter is already in the approval process for additional steel grades and after obtaining approval, plans to offer a range of products under the SECURE brand name for military use.
Growth of the European defence sector has been widely discussed in the market this year, and certification of products by the militaries of different EU states was identified as one of the issues that could slow down the process. Market participants said that although it is relatively easy for a steelmaker to alter its steel with additional heat treatment to achieve greater hardness for the needs of the defence sector, the certification process was more time consuming.
“Our SECURE 500 steels are quenched and tempered and feature a fine martensitic microstructure. With the granting of TL approval, these steels are now also approved for use by the German Armed Forces – this is a great success after extensive testing,” Thorsten Gintaut, managing director sales of Salzgitter Ilsenburger Grobblech said.
Earlier this year, two Central European heavy plate producers resumed operations partially supported by demand from the defence sector, namely Liberty Steel Galati in Romania and Częstochowa Steelworks in Poland.
In June this year, the European Commission proposed new measures to facilitate EUR800 billion of investment in the defence sector over the next four years. The investment is part of the vision set out in the White Paper for European Defence-Readiness 2030, which outlined actions needed to boost Europe’s defence preparedness.
Maria Tanatar Associate Director, Steel and Green Steel
Germany’s Salzgitter ends talks with consortium regarding its takeover
German steelmaker Salzgitter AG has announced that it has decided to end discussions with the consortium of GP Günter Papenburg Aktiengesellschaft and TSR Recycling GmbH & Co. KG regarding a potential takeover offer.
The decision was made based on significantly differing views on the current and future value of the company due to the positive impact expected from the incoming German government’s economic policy measures and its expanded performance program P28 launched with a savings target of €500 million.
“Salzgitter AG will remain an independent company. Under our expanded P28 performance program we launched additional measures to strengthen our competitiveness,” Gunnar Groebler, CEO of Salzgitter AG, said.
In January this year, the consortium increased its bid to acquire the company to €18.50 per share, valuing Salzgitter at approximately €1.1 billion, as SteelOrbis previously reported.
Hoberg & Driesch, Mannesmann Precision Tubes intensify collaboration
German steel tubes distributor Hoberg & Driesch and Salzgitter AG’s tubemaking subsidiary Mannesmann Precision Tubes have agreed to step up their long-standing partnership.
The move follows Hoberg & Driesch’s acquisition of parts of the tube distribution business from Salzgitter Mannesmann Stahlhandel GmbH.
The objective of the intensified collaboration is to further optimise the interaction between manufacturer and distributor, especially in the field of precision tubes, Hoberg & Driesch says. The partners plan to work together more closely on both stockholding and project business for end customers.
“Together, we can further develop both the stockholding business and end-user project business in a targeted manner, allowing us to offer even more tailored solutions,” says Hanns-Jörg Westendorf, chief executive of Hoberg & Driesch.
The company operates ten locations in 13 countries, with an inventory of 90,000 tonnes.
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.
