EU Commission declares the funding for Salzgitter AG’s low CO2 steel production permissible
05.10.2022 | Press release of Salzgitter AG
- EU approval for state aid obtained
- Funds of the Federal Republic of Germany and of the Federal State of Lower Saxony may therefore be disbursed
- Financing of low carbon steel production now close to finalization
The EU Commission has notified the application of Salzgitter AG concerning the funding of the SALCOS® - SAlzgitter Low CO2Steelmaking transformation program and has therefore declared the state aid measures applied for to be compatible with European law. Another essential precondition for the granting of the requested national funding has thereby now been set in place. Following the signing of an administrative agreement on September 15, 2022 by Minister President Stephan Weil and State Secretary Stefan Wenzel (BMWK) to mark the commitment of the Federal State of Lower Saxony and the Federal Republic of Germany to promoting SALCOS®, the EU Commission's approval has also been obtained.
Pending a positive, conclusive review and decision by the national funding authorities, Salzgitter AG now assumes that, in accordance with the administrative agreement of September 15, 2022, the Federal Government and the Federal State of Lower Saxony will contribute up to € 700 million and up to € 300 million respectively to promoting SALCOS®. Together with the funds already approved by Salzgitter AG in an amount of € 723 million, this would thereby secure financing the first development stage of SALCOS® for implementation by the end of 2025.
As Gunnar Groebler, Chief Executive Officer of Salzgitter AG, stated: “We appreciate this vote of confidence on the part of policy makers. Substantial public funding and our own considerable funds enable us in our pioneering role to accelerate industrial decarbonization in Europe. Yesterday’s EU decision shows that we are on the right track with our “Salzgitter AG 2030”, and that we will stay the course also in difficult times.”
SALCOS® is aimed at converting steel production at Salzgitter into low carbon crude steel production in three stages over the period up until 2033. The first stage with a crude steel capacity of 1.9 million tons a year is scheduled to go live as early as the end of 2025. As part of the full transformation, two direct reduction plants and three electric arc furnaces will be built and will then incrementally replace the blast furnaces and converters. The transformation will enable the steel production that was formerly based on coking coal to be replaced by a new hydrogen-based route. Approximately 95 % of the annual carbon emissions totaling around 8 million tons are to be saved, thereby avoiding approximately 1 % of Germany’s carbon emissions.