Salzgitter postpones expansion of green steel production project for three years

German steelmaker Salzgitter has decided to postpone further stages of its large-scale green project Salcos for three years. The project aims to reduce CO2 emissions in steel production through the use of hydrogen. This was announced by the company’s CEO, Gunnar Grebler, according to Reuters.

The total cost of the project is around €2.5 billion, of which €1 billion is financed by government grants. The first phase, which is already underway, involves the launch of a 100 MW electrolyzer, the construction of a direct reduction plant, and an electric arc furnace. This will reduce carbon emissions by approximately 30% in the production of about 2 million tons of steel starting in 2027.

However, the company has postponed the next stages, which were supposed to reduce emissions in the steelmaking sector by 95%, until at least 2028-2029. Previously, the investment decision was planned for 2026. According to Grebler, the development of the hydrogen market has been much slower than expected, and the regulatory changes promised by the government have not yet been adopted.

“The economic environment is not ready. We are still waiting for the regulatory changes that politicians have long promised but which are still not in place,” he said.

According to sources, the postponement will allow the company to save around €1 billion in investment costs in the near term.

The situation surrounding Salzgitter echoes the problems faced by other players. In particular, ArcelorMittal abandoned plans in June to convert two plants in Germany to carbon-neutral production, citing excessively high energy costs. This calls into question the success of Germany’s hydrogen strategy, launched by the previous government.

In the first half of 2025, Salzgitter AG reduced steel production by 12.1% compared to the same period in 2024, to 2.93 million tons. Total external sales fell by 11% year-on-year – to €4.66 billion. At the end of the period, the company reported a net loss of €88.9 million, compared to a net loss of €18.6 million in the first half of 2024.