Salzgitter postpones Green Steel plan amid economic and regulatory difficulties
Germany's second-largest steel producer Salzgitter has postponed the implementation of its SALCOS decarbonization project amid poor market performance, Fastmarkets reported on Monday, September 22.
Regulatory uncertainty and deteriorating economic conditions have forced the company to rethink its plans. the decarbonization strategy of its flagship plant in Salzgitter, Lower Saxony.
"Economic, political and regulatory conditions have deteriorated significantly since 2022," a Fastmarkets representative said.
"Consequently, on September 18, the[Salzgitter's]supervisory board decided to postpone the second and third phases of the SALCOS project by about three years. Therefore, we will not discuss the next investments until 2028-2029, and not in 2026, as previously planned," the representative added.
Nevertheless, the company confirmed that it will continue to implement the first stage of the project, albeit with a delay in schedule.
"The first stage of SALCOS is currently under construction, which includes an electrolyzer, a direct reduction unit (DR) and an electric arc furnace (EDP). This will allow Salzgitter to reduce CO2 emissions by about 30%,[with]production scheduled to begin in 2027," the speaker told Fastmarkets.
Salzgitter is investing about €2.3 billion in the first phase of the project, with almost €1 billion of the total amount provided by the German Federal government and the Lower Saxony state government.
The SALCOS project aims to completely transform the Flagship company into Salzgitter Flachstahl metallurgical enterprises with low CO2 production of crude steel.
The company stated that as much as 95% of the annual CO2 emissions from its steel plant – about 8 million tons per year – will be gradually eliminated as a result of the SALCOS project.
Salzgitter Flachstahl currently has three blast furnaces with a total capacity of more than 4 million tons of pig iron, accounting for about 90% of the group's total CO2 emissions, the company said.
SALCOS of the project stages
Stage 1: Initial conversion (initially expected to be operational by the end of 2025 – postponed to 2027)
Dr. Plant for converting iron ore into sponge iron, replacing traditional blast furnaces
Chipboard for melting sponge iron, often using scrap steel
100 MW electrolyzers for the production of green hydrogen to power the entire process – initially you can use gas
Purpose: to produce "green steel" using hydrogen
Stage 2: expanding the use of hydrogen (initially expected to be on hold by 2030)
Additional DR plants, further reducing the use of conventional furnaces
Increased production