EC clears Germany to back ArcelorMittal decarbonisation with EUR 1.3bn

Germany has received the green light from the European Commission (EC) to make available EUR 1.3 billion (USD 1.4bn) in state aid to a couple of ArcelorMittal SA (AMS:MT) subsidiaries to decarbonise part of their steel production processes.

The financial backing will be provided in the form of a direct grant to ArcelorMittal Bremen and ArcelorMittal Eisenhuettenstadt in part through the Recovery and Resilience Facility (RRF).

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At present, ArcelorMittal operates three coal-based blast furnaces and four basic oxygen furnaces producing crude steel in Bremen and Eisenhuettenstadt and wants to decarbonise a portion of its steel production processes there. The state aid will allow the company to build a direct reduction plant along with three new electric arc furnaces to replace two of those three blast furnaces. Half of the oxygen furnaces will also be replaced.

ArcelorMittal plans to gradually phase natural gas out of the steel production processes and switch to low-carbon and renewable hydrogen. It expects to finalise the installations in 2026 and to produce 3.8 million tonnes of green crude steel per year.

The German measure in this case was assessed under the Guidelines on State aid for climate, environmental protection and energy 2022 (CEEAG) rather than among the Important Projects of Common European Interest (IPCEI) because the EC determined that ArcelorMittal's project was better suited for the former scheme, it said.

The Commission found that the measure is necessary and appropriate, and comes with the necessary safeguards. The financial backing will have an ‘incentive effect' as it will push the company to develop a project that would not have been realised otherwise, it noted.

(EUR 1.0 = USD 1.086)