LThe information was in the air. Last week, the Flemish socialist union ABVV was concerned about the possible suspension by the steelmaker ArcelorMittal of its plans to decarbonize its factories in Europe. The confirmation came this Tuesday, in the form of a press release from the global steel giant concerning the “update” of its plans to green its activities on the Old Continent. ArcelorMittal had announced its intention to invest in direct iron ore reduction (DRI) lines running on natural gas – and ultimately green hydrogen – to replace part of its coal-fired blast furnaces.
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Projects for which several countries had indicated their intention to support the steelmaker. This particularly concerned the Ghent ArcelorMittal site, for which the Flemish government had promised a subsidy of 600 million euros, while the federal government guaranteed access to carbon-free electricity – that of the two extended nuclear reactors – at a competitive price. for a period of ten years.
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This investment of around one billion euros will therefore not take place in Ghent. And nowhere else in Europe. “These projects were based on a favorable combination of regulation, technology and market developments that would have facilitated investments in decarbonization by helping to offset the significantly higher capital and operational cost requirements that this transition strategy would entail,” says ArcelorMittal in its press release. “This included the possibility of using natural gas until green hydrogen becomes competitive.”
Conditions not met
Conditions which, according to ArcelorMittal, are therefore not met. “European regulation, (prices of) energy and the market environment have not progressed in the right direction,” notes the steelmaker, for whom the green hydrogen market is evolving too slowly to constitute a source. of viable fuel, while the production of a natural gas DRI in Europe “is not yet competitive as an interim solution”. ArcelorMittal still highlights “significant weaknesses” in CBAM – the European border adjustment mechanism for carbon emissions which will come into force in 2026 – as well as in measures to protect the European market against imports due to excess production capacity in China, and “limited willingness among customers to pay a premium for low-carbon steel”.
“Before making a final investment decision, it is necessary to have full visibility into the regulatory environment that will ensure that higher cost steelmaking can be competitive in Europe in the absence of a global carbon price”, justifies ArcelorMittal, which says it expects in 2025 the announced revision of the CBAM as well as an anticipated reform of protection measures concerning steel, and the publication of an Action Plan from the European Commission to steel and metals. “Once completed, these actions will provide the parameters necessary to develop a business case for investments in favor of decarbonization in Europe.”
ArcelorMittal says it is still continuing its engineering work and analyzing “a phased approach that would start with the construction of electric arc furnaces, which can also be powered by scrap steel to significantly reduce emissions”. A project to build two of these electric ovens is also on the table in Ghent – where the ArcelorMittal factory employs 4,500 people –, weighing another billion euros of investment.
Regarding another decarbonization technique, CO capture2 with use or storage (CCUS) – an industrial unit is already operational on the Ghent site precisely – ArcelorMittal notes that like green hydrogen, “it will only make a significant difference after 2030”.
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