Berlin, Brussels, Dusseldorf Federal Economics Minister Robert Habeck (Greens) has confirmed his support for the construction of a plant for climate-friendly steel production at Thyssen-Krupp in Duisburg. But for the group and its steel division with 27,000 employees there is still no sigh of relief.
The so-called direct reduction plant should go into operation at the end of 2026 and produce 2.5 million tons of steel annually – first with natural gas and then with green hydrogen, i.e. hydrogen produced by electricity from renewable sources. A large part of the transformation costs, which were last estimated at around 2.7 billion euros, should come from the federal government. But the process, which has been dragging on for two years, is not easy.
So far, the approval of the funding failed due to a bureaucracy confusion between Berlin, the EU Commission and the industrial group. According to information from the Handelsblatt, no formal application has yet been received in Brussels – for this reason, no decision on the funding decision is possible.
“We stand by our funding commitments and will do everything we can in exchange with the European Commission to ensure that this aid is possible,” said Habeck on Monday during a visit to Thyssen-Krupp’s steel division in Duisburg. The politician had previously visited the company’s headquarters in Essen together with NRW Economics Minister Mona Neubaur (Greens) to talk to the group management about the topic.
The new ThyssenKrupp boss Miguel Ángel López Borrego thanked the federal and state governments for their support in the green transformation of steel production. “We appreciate them very much,” said the manager, who has been in office since the beginning of June.
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Overall, however, the project is not yet at the level it should be. “The state aid approval procedure at the EU Commission is ongoing. However, we now need planning and legal certainty for the implementation of the next steps of the green transformation,” said López. “We mustn’t lose any time in this.”
Group CEO Miguel Ángel López Borrego (right) spoke to NRW Economics Minister Mona Neubaur and Federal Economics Minister Robert Habeck on Monday about the still missing funding decision.
(Photo: dpa)
People familiar with the process report that the competent authorities in the EU are working flat out to approve the decision. However, the parameters have often changed on the part of the federal government and Thyssen-Krupp in recent months. A formal application is still missing, it said. The Federal Ministry of Economics presents it differently: “We have submitted the necessary documents to Brussels,” said a spokeswoman.
It is unclear whether changes on the part of the federal government, the industrial group, or the EU Commission are delaying the submission of the application. “We are in close and continuous contact with Brussels,” said the ministry spokeswoman.
The required documents have been submitted. But with such project planning there is new data and assumptions that must be submitted later if necessary. This exchange is common in the context of so-called IPCEI processes, the funding programs for decarbonizing industry with the help of hydrogen.
The Economics Ministry is angry about the EU Commission
In general, the duration of an approval depends on a number of factors, the EU Commission explained on request. Among other things, these are mainly the timing of the information provided by the Member State concerned and the complexity of the applications. One is in exchange with the German authorities.
The Berlin Ministry of Economic Affairs is increasingly upset about the Commission’s actions. It is “always the same plague” that state aid approvals would take so long, according to ministry circles. Thyssen-Krupp is currently showing this very clearly. Brussels has made the approval processes bureaucratic and politicized.
The ministry is trying to finally clarify things for Thyssen-Krupp. The topic is currently “top priority”. Only recently Minister Habeck in a personal conversation again influenced the responsible competition commissioner Margrethe Vestager, it was said from negotiating circles.
Allegations that the ministry itself is to blame for the lengthy process are rejected by officials. It is common in state aid procedures that things go back and forth and new inquiries arise. However, one is in contact with the Commission every week to advance the Thyssen-Krupp process and always submits everything that is required in the form of documents.
Subsidy application for Salzgitter has already been approved
The EU Commission had already approved the funding application from competitor Salzgitter for the group’s transformation program at the beginning of October 2022. After the formal registration by the German authorities, the EU cleared the way for the EUR 1 billion investment.
While there were no more changes to Salzgitter’s application from the corporate or federal side, there was still potential for discussion on several occasions when it came to the promotion of Thyssen-Krupp, as the Handelsblatt learned from company circles. This led to the chaos that has delayed the approval of the funding decision to this day.
On the one hand, the planned direct reduction plant, which is more expensive than the plants of other steel manufacturers, raised competition law issues. Unlike in the case of Salzgitter, two so-called melters are being built for the Thyssen-Krupp plant in Duisburg, which has driven up costs.
The group wants to convert production to be climate-friendly – but is still waiting for funding.
(Photo: picture alliance / Jochen Tack)
Both plants use hydrogen to produce pig iron. For further processing, however, Thyssen-Krupp relies on the melter instead of an electric furnace as at Salzgitter. On the one hand, this is due to the fact that there is no comparable electric steelworks at the Duisburg location.
The European automotive industry is still the Group’s most important customer. However, Thyssen-Krupp is bound by certain quality criteria that can only be guaranteed with the melters.
After the industrial group expanded the project at the beginning of 2022, the funding amount had already been reduced by around 20 percent, according to company circles. While the group initially expected help of 2.35 billion euros, an amount of two billion euros is now being targeted. Overall, the cost of the conversion is around 2.7 billion euros – 700 million has to be borne by the group itself since the cut.
According to company circles, this led to internal discussions about the investment decision and thus the future of the entire steel division. But the delay can no longer be justified with discussions about the funding amount. The group did not want to comment on the entire process on request.
Thyssen-Krupp: Employees fear for jobs
The news of “massive resistance in Brussels and Berlin”, which endangers the approval of the subsidy, led to an open letter from the Thyssen-Krupp employee representatives and IG Metall to Minister Habeck. In the letter, they urged the payment of the funding without further cuts.
It was feared that if the permit failed, the entire green transformation of Thyssen-Krupp Steel and thus the existence of the steel division would be at stake. Another cut would lead to another intensive discussion in the supervisory board about withdrawing the investment decision, the letter said.
The Supervisory Board’s decision was postponed to June 23. Until then, the steelmakers are hoping for approval from Brussels and Berlin. Still, they keep up the pressure. For June 14, employee representatives and the workforce are planning a large demonstration in front of the gates of the steelworks in Duisburg, to which they have also invited Robert Habeck.
“We recognize the Minister’s will to support us,” explains Jürgen Kerner, Vice President of the Supervisory Board of the industrial group, in a press statement from the employees. However, it is also part of the job description of a federal minister to secure the funding commitment from Brussels. “Time is running out. Thousands of good, collectively agreed jobs are at stake.”
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