German steelmaker ThyssenKrupp Steel Europe is evaluating its decarbonisation plans, partly as a result of increased costs.
The steelmaker may scrap its plans to build a direct-reduced iron (DRI) plant in Duisburg, a participant close to the company told Argus last week.
"The situation is currently being reviewed. We currently assume that the direct reduction plant can be implemented under the given framework conditions," a Thyssenkrupp Steel Europe spokesperson said.
Potential cost increases for the planned DRI plant have no impact on the confirmed federal and state subsidies, the steelmaker said.
The European Commission earlier this year approved Germany's plan to allocate up to €2bn to Thyssenkrupp for its decarbonisation efforts in Duisburg. Specifically, the breakdown indicated Thyssenkrupp would receive a direct grant of €550mn to build a DRI plant and two melting units expected to commence operation by 2026 in Duisburg.
Abandonment of the project would most certainly mean the forfeiture of the €550mn provided by the German government.
Europe currently faces a competitiveness issue when it comes to decarbonisation, given that electricity costs on the continent are estimated to be 2-3 times higher than in Asia and the US, ArcelorMittal's head of governmental affairs and decarbonisation, Stephane Tondo, said at an industry event last month. Gas prices are also higher, and DRI is typically fed with gas.
With electricity making up 60-80pc of the cost to produce hydrogen, this could cause issues for ThyssenKrupp and other steelmakers that plan to decarbonise in the EU. Green hydrogen will be too expensive in the EU, head of ArcelorMittal Flat Carbon Europe Geert Van Poelvoorde has said.
And geographically speaking, Germany finds itself in a disadvantageous position compared with the peripheries of Europe that benefit from a greater availability of wind and solar energy sources.
Fellow German steelmakers Salzgitter and SHS have yet to announce any changes to their own decarbonisation plans, which involve the construction of DRI assets.
