German industrial conglomerate thyssenkrupp has agreed to sell a 20% stake in its steel business to EP Corporate Group (EPCG), it said April 26.
The transaction was expected to close during the current financial year, subject to approval from relevant authorities and the supervisory board of thyssenkrupp, the steelmaker said.
It said they were also discussing EPCG acquiring a further 30% in the steel business, called thyssenkrupp Steel Europe, which would form an equal 50:50 joint venture.
On an April 26 media call on the strategic partnership, thyssenkrupp CEO Miguel Lopez said both parties had agreed to not disclose the economic aspects of the transaction.
EPCG is an umbrella company that owns all strategic shareholdings of Czech billionaire Daniel Kretinsky and his top-management team, including energy company EPH.
EPCG Member of the Board Jiri Novacek said on the call that EPCG saw thyssenkrupp Steel Europe as a good candidate for its portfolio, as EPCG was a significant player in the energy sector and was searching for opportunities in industries that were exposed to higher energy costs, which it aimed to help become more resilient and robust through cooperation with an energy player.
Novacek said energy was becoming one of the most important items in the cost structure, so the cooperation with an energy player was “something that is natural and we see other examples in Europe as well.”
“We’re convinced that the JV concept will serve as a good basis for a much more resilient position from where thyssenkrupp Steel Europe will benefit,” he said.
“This is especially true in the situation in which the entire European steel sector will undergo a very similar transformation, as we have seen and are still seeing in the energy sector,” he said, adding that a robust and resilient thyssenkrupp Steel Europe would enable security of supply for customers.
“Together, we will also make an important contribution to the decarbonization of the steel industry,” Novacek said.
thyssenkrupp previously mentioned taking on a strategic partner in November 2023, saying at the time that it was in negotiations with EPH over a potential JV as part of its aim to secure energy for the decarbonization of the steel operations.
It said previously that the tinplate plant Rasselstein will also be part of the steel JV.
The thyssenkrupp steel mill accounts for 2.5% of Germany’s entire CO2 emissions.
thyssenkrupp is building its first direct reduction plant in Duisburg, where it plans to start using hydrogen in 2028 and move to 10% hydrogen use in 2029.
Lopez said on the call that the project was considered to be a blueprint for the decarbonization of the industry.
The company invested Eur3 billion ($3.22 billion) in the plant, which includes the support of Eur2 billion from the German government.
“The demand for green power will increase in the forthcoming years and for the hydrogen operation of the first DR plant, 10 TWh/year is needed,” Lopez said.
“The successful transformation of the steel industry depends upon the fact whether we can make it to produce green power in sufficient quantities in marketable conditions,” he added.
Novacek explained that thyssenkrupp Steel Europe would not be obliged to offtake green energy from EPCG, but rather it would act as a backup or fallback scenario.
“Which, especially in the pioneering project like the buildup of the DRI project in Duisburg, is always useful because, obviously, the assumptions are that such high volumes of energy will be at hand and will be at place, but especially in the initial periods of time, it is often that this is not the case,” Novacek said.
“Our aim is to make thyssenkrupp Steel Europe ready to launch the project and to ramp up the project in the way it is envisaged, but not to make it a commitment … it’s not only the actual capacity that matters, but also the trading robustness on which thyssenkrupp Steel Europe could rely on,” he said.
EPCG did not aim to be a passive investor, Novacek added, but wanted to have an influence on how thyssenkrupp Steel Europe’s strategy was formulated and implemented.
“That is also the reason why we approached the opportunity in this two-stage process. First, to be allowed at the table and contribute to the discussion in forming the strategy for the future,” he said.
Platts, part of S&P Global Commodity Insights, assessed domestic HRC prices in Northern Europe at Eur625/mt ex-works Ruhr April 25, down 8.8% since the start of 2024.
Jacqueline Holman
