Salzgitter considers scaling back Hüttenwerke-Krupp Mannesmann operations

German steel producer Salzgitter Group plans to reduce the scale of operations at Hüttenwerke-Krupp Mannesmann (HKM) in Duisburg, SteelOrbis reports, citing German media.

At the same time, the company intends to maintain production within the revised structure and volumes.

Currently, the plant, which produces semi-finished products, has an annual capacity of about 4 million tons. Thyssenkrupp owns 50% of HKM’s shares, Salzgitter owns 30%, and French pipe manufacturer Vallourec owns 20%. Thyssenkrupp and Vallourec intend to exit the company.

Salzgitter intends to reduce capacity at HKM as part of efforts to improve competitiveness and align production with current market demand. This move is driven by current challenges in the industry, including low margins, high energy costs, and competitive pressure in European markets.

However, the company has confirmed that HKM will continue to operate, preserving jobs and production in a reduced format.

It should be noted that HKM also needs a positive response to its application for €200 million in funding for a new electric arc furnace, as Salzgitter CEO Gunnar Gröbler said in an interview with the WAZ newspaper. In addition, constructive negotiations are underway with the federal state of North Rhine-Westphalia, which also include a possible state guarantee for Hüttenwerke-Krupp Mannesmann.

As Gröbler noted, in order for Salzgitter to continue to operate HKM independently, a negative purchase price is necessary. According to the company, an important benchmark is the losses that would result from a potential closure.

It should be recalled that in December last year, Thyssenkrupp called on all shareholders to find a solution for Hüttenwerke Krupp-Mannesmann. However, a contentious issue was Salzgitter’s lawsuit against Thyssenkrupp, which is currently being considered in court.