The state will finance the project in the amount of about €1.3 billion

ArcelorMittal’s steel mills in Bremen and Eisenhüttenstadt will receive large-scale financial assistance to transition to climate-neutral steel production. German Economy Minister Robert Habeck said this during a visit to one of the enterprises, the Mitteldeutsche Zeitung reports.

The state will finance the project for about €1.3 billion, which covers about half of the total investment.

According to Habeck, energy-intensive industries must be decarbonized. According to him, this costs money, and companies cannot bear these costs alone.

“In fact, we are faced with a choice: either companies will close at some point and liquidate their enterprises or they will receive political support,” the minister said.

Thomas Bünger, CEO of ArcelorMittal Flat Products Germany, said that thanks to the decision on government funding, the company has covered part of the costs required for the construction and operation of new plants.

ArcelorMittal plans to replace one blast furnace in Bremen and one in Eisenhüttenstadt with electric arc furnaces and a direct reduction unit by 2030.

The new plants are expected to use green hydrogen as soon as it becomes available at internationally competitive prices and in sufficient quantities. This will help reduce carbon emissions by up to 5.8 million tons per year, and the plants will produce 3.8 million tons of CO2-reduced steel annually.

The company has already entered into cooperation and partnerships with potential hydrogen suppliers such as EWE or organizations such as the BUND environmental protection association to prepare for the next steps.

Earlier, ArcelorMittal called on the German authorities to adopt a clear industrial policy to continue the green transformation of its assets in the country. According to the company, competitive energy prices are a decisive factor for the group’s final investment decision worth €2.5 billion, which is expected to be made no later than mid-2025.

ArcelorMittal is using different technological approaches in Europe to decarbonize steel production. In Germany, they are focused on converting blast furnaces to natural gas and later on to direct reduction hydrogen furnaces and electric arc furnaces. To be competitive, the price of hydrogen needs to be around €2 per kilogram, which is currently €7-9. In the long term, it is also difficult to ensure the cost-effectiveness of EAF due to the high price of electricity.