Thyssenkrupp is reassessing its ambitious plan to produce green steel at its Duisburg facility amid rising costs. The German government has invested billions of euros in subsidizing the project. The production of “green steel” by adapting a climate-neutral production method is being reviewed as per the internal reports.
According to the reports, the company’s senior management and CEO Miguel Lopez have initiated a fundamental review of the ongoing project of their direct reduction plant (DRI), which uses hydrogen in place of coal for steel production and was originally expected to initiate in 2027.
The federal government and the state of North Rhine-Westphalia have pledged €2 billion in funding for the project. Reports indicate that €500 million in state subsidies has already been disbursed. Should the project be canceled, the company would be required to repay these funds. However, Thyssenkrupp is yet to confirm the scrapping of the whole project, even though many newspapers have commented on the potential cost of such a scenario is still under review.
A spokesperson from Thyssenkrupp told Euronews Business: “The situation is currently being reviewed” adding that the company “currently assumes that the direct reduction plant can be implemented under the given framework conditions,” and that potential cost increases for the DRI plant currently have no impact on the subsidies.
The German industrial conglomerate reported disappointing results in June, with its net income and profit falling dramatically and its operating expenses rising.
Based on the recent reports by Euronews Business, there has been a major management reorganisation, particularly in the steel division. Resulting in the resignation of many officials, and instating a new CEO a new chair, and five directors. The resignations were triggered by an ongoing takeover battle at Thyssenkrupp after Czech billionaire Daniel Křetínský acquired 20% of the steel business with the possibility of buying a further 30%.
Meanwhile, Thyssenkrupp’s steelmaking division faces intense competition from Asia, compounded by high energy costs and declining demand in Europe, which are dampening the sector’s outlook. Additionally, the industry is under pressure to meet stringent climate targets, necessitating significant investments. Despite these challenges, transitioning to “green steel” remains a flagship initiative for both the company and the German government.
According to Euronews Business: “Thyssenkrupp remains committed to its green transformation and climate-neutral steel production. There is no way around the decarbonisation of CO2-intensive steel production in the long term.”
Thyssenkrupp’s shares were traded close to minus 5% in Germany.