Salzgitter AG receives official notice of government funding for the SALCOS® low-CO2 steel production program
18.04.2023 | Press release of Salzgitter AG
- Federal Minister of Economics Dr. Robert Habeck and Stephan Weil, Minister President of Lower Saxony, hand over final confirmation at the Hanover Fair
- Funding from the Federal Republic of Germany and the State of Lower Saxony assured for development stage one of the SALCOS® - Salzgitter Low CO2 Steelmaking program
- Gunnar Groebler, Chief Executive Officer of Salzgitter AG said: “This is a green light for green steel production in Lower Saxony”
Federal Minister of Economics and Vice Chancellor Dr. Robert Habeck and Stephan Weil, Minister President of Lower Saxony, have today jointly handed over official notice of funding for the SALCOS® - Salzgitter Low CO2 Steelmaking transformation program to Salzgitter AG at the Hanover Fair. Following signature of an administrative agreement on September 15, 2022 by the Federal Republic of Germany and the State of Lower Saxony signifying joint support for SALCOS® and the subsequent necessary approval by the EU Commission in accordance with the subsidy regulations, with the presentation of the official notice of confirmation, the finally determined level of support, disbursement phases and exact terms of the support funding are now to hand.
As confirmed in this notice, the first development stage of SALCOS® will receive around € 700 million in federal funding and € 300 million from the state government. Taken together with the company’s own funds in excess of € 1 billion already approved by Salzgitter AG, financing is now assured for the first development stage of SALCOS® which is due to be implemented by the end of 2025.
Vice Chancellor and Federal Minister of Economics Robert Habeck said: “I am delighted to present Salzgitter AG with official notice of funding in the amount of around one billion euro. With this ambitious project the company is demonstrating that with modern technology, it is possible to decarbonize the steel sector which is currently the largest industrial emitter of CO2. At the same time, this program will safeguard the long term future of Germany as a center of steelmaking and secure a large number of jobs. Salzgitter can now move to the implementation phase and realize this beacon project This is a decisive step in the transformation to green steel.”
Minister President Stephan Weil commented: “Today is a great day for Salzgitter and for the whole of Lower Saxony. The support funding financed by the Federal and State governments will safeguard the future of domestic steel production over the long term. The new climate-friendly processes call for large quantities of renewable energy and green hydrogen. As the No. 1 wind energy state and with ports available for importing green hydrogen, Lower Saxony offers unique advantages. In terms of renewable energy, we are well ahead of those regional states in the south of the Republic. Nevertheless ,during the transition period, affordable energy prices will be a deciding factor in the competitiveness of SALCOS® and other energy-intensive production processes. We rapidly need clear decisions at Federal level regarding an affordable electricity price for industry.”
Gunnar Groebler, Chief Executive Officer of Salzgitter AG, added: "Having taken our investment decisions last summer, we are well on the way towards implementing green steel production, and we are working at full speed in Salzgitter to realize this goal. With the final notice of funding, we now also have the policymakers fully on board, and we have the long-awaited certainty that support for SALCOS® will be forthcoming. We are grateful as well as proud that with this display of confidence, the political decision-makers are willing to provide us with such sustained support on our way to virtually CO2-free steel production Our own considerable funding contribution coupled with substantial support from the public sector will enable us to continue to pioneer the industrial decarbonization of Europe. This decision is an important element in the implementation of SALCOS® and of our "Salzgitter AG 2030" strategy.
The goal of SALCOS® is, in three stages between now and 2033, to switch over steelmaking in Salzgitter entirely to low-CO2 crude steel production. The first stage with a capacity of 1.9 million tonnes of crude steel per year is scheduled to become operational by the end of 2025. As part of the complete transformation, two direct reduction plants and three electric arc furnaces will be built to successively replace the three blast furnaces and converters. In this way, the previous production process based on coking coal will be replaced by a new hydrogen-based route to steelmaking. Savings in the order of 95 % of the annual CO2 emissions of around 8 million tonnes are expected, meaning that around 1 % of Germany’s Co2 emissions can be avoided.