Germany Raises Green Steel Aid for Salzgitter to €1.3 Billion
(Bloomberg) -- Germany will increase its funding for Salzgitter AG’s low-carbon steel project to €1.3 billion.
The steelmaker’s Salcos project that aims to use hydrogen to power a blast furnace will receive an additional €322 million to plug a funding gap, after other financial commitments fell through, the Lower Saxony government said in a statement. The proceeds will come from the nation’s climate and transformation fund.
A switch to green steel is a key element of Germany’s plan to achieve carbon neutrality by 2045, five years earlier than the European Union, and to strengthen an industry that’s crucial for the defense and automobile sectors. But Salzgitter is one of the few German steel producers still committed to the transition.
Salzgitter aims to build a 100-megawatt electrolyser, a direct reduction unit and an electric arc furnace. In a first phase, the company plans to burn natural gas instead of coal, switching to hydrogen at a later stage. Salzgitter took its final investment decision in 2022, with total costs pegged at €2.5 billion.
ArcelorMittal SA — despite also having received a €1.3 billion commitment from the government — dropped its transition plans last summer, while crisis-ridden Thyssenkrupp AG put its low-carbon steel project under review early last year. The aid to Salzgitter has been approved by the European Commission, according to the statement.
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