Biggest investment ever in green steel | Salzgitter approves 723 million euro spending on first stage of hydrogen-focused project

German steelmaker Salzgitter is to spend 723 million euros ($723 million) on the first development stage of its long-term plan to decarbonise its business – which accounts for 1% of Germany’s carbon emissions – by the end of 2033.

This is the largest investment in green steel to date. A handful of larger investments have been announced by rival steelmakers such as LKAB, SSAB and ArcelorMittal, but funding for these green steel projects has yet to be approved.

The Salzgitter plan, called Salcos (Salzgitter Low CO2 Steelmaking), will use green hydrogen to replace the coking coal currently used in its blast furnaces to extract iron from iron ore.

“This will be possible with the help of so-called direct reduction plants, in which iron ore is reduced to iron directly in the solid state by hydrogen”, explains the Salcos site. “This technology emits water vapor instead of CO2.”

The company explains: “Salcos aims to convert the integrated steel mill to low carbon crude steel production in three stages over the period to 2033. As part of the transformation, direct reduction plants and electric arc furnaces will be built and then replace blast furnaces and converters in stages.

“The new facilities will enable us to produce 1.9 million tonnes of green steel per year. Customers from various industries are already expressing strong interest. Accordingly, the Salzgitter Group has already agreed in recent weeks on possible deliveries with customers from various sectors, including manufacturers of household appliances, the automotive industry and winders.

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The car manufacturer BMW is one of the companies who agreed to buy green steel from Salzgitter.

The financing was approved earlier this week by the company’s supervisory board following previous approval by its board of directors.

“I am confident that the rapid implementation of Salcos will provide us with competitive advantages in the green steel market,” said Salzgitter CEO Gunnar Groebler, who was previously head of wind energy at the utility. Swedish Vattenfall.

The steel producer said that despite providing 723 million euros of its own funds for the Salcos project, it “still relies on public funding and therefore submitted the corresponding grant applications a few years ago. months – however final decisions are still pending”.

Although green steel is more expensive to produce than traditional steel, it would represent only a minimal additional cost in finished products. For example, it is expected to add only €150-300 to the production cost of a mid-size electric car. Volvo is already introducing the use of green steel in its trucks, while Mercedes-Benz and BMW will do so from 2025 and 2026, respectively.

Salzgitter aims to complete the first stage of expansion of Salcos, reducing CO2 emissions from its steel production by 30% by the end of 2025, with a second phase concluded by the end of 2030, accompanied by a 50% carbon reduction.

The full project is expected to be completed by December 31, 2033, reducing CO emissions2 emissions over 95%.

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