Leading European steel producer ArcelorMittal has abandoned the planned EAF-DRI project in Germany due to poor economic conditions and "lack of economic viability," the company said on June 19.
This step includes the cancellation of related subsidies from the German government. The total amount of 1.3 billion euros was pegged to the start date of construction in June 2025.
"Since the 1.3 billion euro financing contract with the German government stipulated that construction work on the project would begin by June 2025, ArcelorMittal was required to officially notify the government that it could not continue construction. The investments were made due to the market situation and the lack of economic feasibility of producing steel with a reduced CO2 content," the company said in a statement.
"We highly appreciate the financing of this project from the German government and the State of Bremen, as well as the support from the State of Brandenburg. But even with financial support, the economic viability of this transition is not sufficiently secured, which highlights the scale of the problem," said Geert Van Poelvoorde, Executive Director of ArcelorMittal Europe.
"The European steel industry is currently under unprecedented pressure to maintain its competitiveness, and even without the additional costs required for decarbonization, imports are a major challenge," Van Poelvoorde said. "We need a 15% limit on imports of flat rolled products, which means a reduction of about 50% compared to the current level.
"Once this is achieved, the industry will also be in a much better position to attract investment in decarbonization," he added.
Instead of building DRI modules and focusing on EDPS in Bremen and Eisenhuettenstadt, ArcelorMittal hopes to "prepare for the moment when production using electric arc furnaces becomes economically feasible."
The company also stated that environmentally friendly hydrogen is not yet a viable energy source, and DRI-based natural gas production is uncompetitive as a transitional solution.
It said that using hydrogen in existing DRI modules in Europe would currently be too expensive to be competitive, as hydrogen prices currently stand at around 5-8 euros ($5-8) per kg. A trade source in Northern Europe said that the price of hydrogen should be "about 2.50-3.00 euros per kg, so that it would be commercially profitable for steel production."
Another source said that 3.00 euros per kg is just a break-even price for hydrogen.,
