Wedoany.com Report-Jun 26, ArcelorMittal Europe has decided to halt its decarbonisation initiatives at its steelmaking facilities in Bremen and Eisenhüttenstadt, Germany, citing challenging market and economic conditions. In November 2024, the company noted that final investment decisions for new Directly Reduced Iron (DRI) and Electric Arc Furnace (EAF) assets were unfeasible due to unfavorable energy costs and market dynamics.

The company had secured €1.3 billion in financial support from the German federal government for the DRI-EAF project, with a requirement to begin construction by June 2025. However, ArcelorMittal Germany informed the government that it cannot proceed with these investments under current conditions, particularly due to the high costs associated with low-carbon steel production.

Geert van Poelvoorde, CEO of ArcelorMittal Europe, stated: “We appreciate the financing offered by the Federal government of Germany and the state of Bremen as well as the support of the state of Brandenburg for this project. But even with the financial support, the business case for moving ahead with this transformation is not strong enough, which shows the scale of the challenge.” He added: “The most important priority right now is to ensure that there is a vibrant level of steel demand in Europe that is accessible to European steel producers. The high levels of imports are a major concern – we need imports for flat products to be limited to 15% – which means a reduction of around 50% compared with what we are seeing today. Once that is achieved, the industry will be in a much stronger position to be able to progress with decarbonization investments.”

The company highlighted additional challenges, including the slow development of green hydrogen as a viable fuel source and the high electricity prices in Germany compared to other European countries. As a result, ArcelorMittal plans to construct its next EAF in Dunkirk, France, where energy costs are more competitive. The company emphasized the need for predictable, low-cost electricity to make such projects financially viable.

ArcelorMittal remains committed to reducing carbon emissions but noted that achieving its 2030 carbon intensity target is increasingly challenging. The decision has sparked concern in the industry, with Jürgen Kerner, second chairman of IG Metall, stating: “This decision is strategically short-sighted, wrong from a business perspective, and extremely irresponsible with regard to both the employees and the consequences for society as a whole… It is unacceptable that France is creating facts through politically subsidised industrial energy, while Germany is laboriously searching for solutions that are consistent with European standards. Steel must also become a top priority for us.”

Moving forward, ArcelorMittal will focus on planning for EAF construction in Bremen and Eisenhüttenstadt, awaiting improved economic conditions to resume decarbonisation efforts.