Salzgitter to reduce size and continue operation of HKM steel mill
German steel producer Salzgitter has outlined a strategy for maintaining production processes at the Hüttenwerke Krupp Mannesmann (HKM) steel plant in Duisburg, despite the fact that its joint venture partners are preparing for the exit. However, the company has made it clear that continuing operations will require a significant reduction in production capacity.
Currently, KM is owned by Thyssenkrupp Steel, which owns 50% of the shares, Salzgitter - 30%, and the French pipe manufacturer Vallourec, which owns the remaining 20%. Both thyssenkrupp and Vallourec announced their intention to withdraw from the company, prompting Salzgitter to evaluate scenarios in which the plant could continue to operate.
According to Salzgitter, the continuation of production activities is likely to entail a sharp reduction in capacity, from the current level of about 4.2 million tons per year to about 2-2.5 million tons. The restructuring plan under consideration also provides for the replacement of blast furnace production with electric arc furnace technology and a significant reduction in the workforce, potentially from about 3,000 to almost 1,000 people.
The company stressed that any takeover of the remaining shares would depend on clear preconditions. These include cost-sharing by exiting shareholders for restructuring and layoffs, as well as thyssenkrupp's firm commitment to steel purchases for the next two to three years.
The uncertainty about the plant's future is compounded by the ongoing arbitration between Salzgitter and thyssenkrupp. These disputes relate to financial obligations related to the restructuring and post-withdrawal obligations, the consequences of which may significantly affect the ability of HKM to continue operations.
Although Salzgitter does not rule out the future of the Duisburg plant, the company's statements emphasize that any continuation of construction will be fundamentally different in scale and structure from the current HKM configuration.
Author: SteelRadar Editorial Team
Steelradar.com