Europe's largest steel producer ArcelorMittal and the Spanish government signed a MoU to contribute a total of € 1bn ($ 1.18bn) to green steel projects in northern Spain, including a direct reduction iron (DRI) plant and a hybrid electric arc furnace in Gijón.
ArcelorMittal expects the government to cover about half of the costs.
The investment will enable the company to reduce carbon emissions from its Spanish operations by 4.8 million tonnes per year, or about 50%.
The steel company will build a direct reduced iron plant in Gijon with a capacity of 2.3 million tonnes per year, which will be operational by 2025. The company relies on the Hydeal consortium to supply green hydrogen to the plant.
Hydeal includes Italy's Snam, Spain's Enagas and Naturgy, Germany's Open Grid Europe and France's Gazel Energie, GRTgaz and Terega, and is backed by the European Investment Bank. The consortium aims to supply Europe with 3.6 million tonnes of green hydrogen per year at a price of € 1.50 /kg ($ 1.80 /kg) by 2030 through the construction of 95 GW of solar energy and 67 GW of electrolytic capacity.
The hydrogen price of € 1.50 /kg will allow the smelter to compete with other European steel mills.
ArcelorMittal is investing an additional € 50 million in initiatives such as using hydrogen instead of natural gas to heat rolling slabs. The company plans to produce 1.6 million tonnes of carbon-free steel in Spain by 2025.