Thyssenkrupp is reconsidering its ambitious plans to produce “green steel,” a shift aimed at achieving climate-neutral production, according to an internal report cited by the German newspaper Handelsblatt. The company’s leadership, including CEO Miguel Lopez, has launched a comprehensive review of its direct reduction plant (DRI) project, initially set to commence operations in 2027. This facility was designed to utilize hydrogen in steel production rather than coal, a move towards more sustainable practices.
The German federal government and the state of North Rhine-Westphalia have pledged €2 billion to support the initiative, with €500 million already disbursed as state subsidies. If Thyssenkrupp decides to cancel the project, it would face the daunting task of repaying these funds. A spokesperson for the company stated, “The situation is currently being reviewed,” while maintaining that the DRI plant’s implementation remains feasible under the current framework, despite potential cost increases not affecting the subsidies at this time.
Thyssenkrupp’s steel division has been grappling with significant challenges, as evidenced by disappointing financial results reported in June, where both net income and profits saw dramatic declines amidst rising operating expenses. The steel unit has undergone a major management overhaul, resulting in the appointment of a new CEO, chair, and five directors following several high-profile resignations. These departures were fueled by a takeover battle initiated by Czech billionaire Daniel Křetínský, who acquired a 20% stake in the steel business and is poised to buy an additional 30%.
Additionally, the company faced a setback this week when the Court of Justice of the European Union upheld the European Commission’s 2019 anti-trust ruling against Thyssenkrupp’s proposed joint venture with Tata Steel Europe, which would have created Europe’s second-largest steelmaker.
Thyssenkrupp’s steelmaking division is under pressure from intense competition from Asian markets, alongside soaring energy prices and diminishing demand in Europe. These factors complicate the company’s ability to meet climate requirements, necessitating substantial investments for transition to more sustainable practices.
Despite these hurdles, Thyssenkrupp emphasized its commitment to transitioning to climate-neutral steel production. “There is no way around the decarbonization of CO2-intensive steel production in the long term,” the company stated. Following the news, Thyssenkrupp’s shares dipped nearly 5% during midday trading in Germany.
