The European Commission this Friday authorized a State aid of 460 million to ArcelorMittal to contribute to the introduction of an innovative technological change that will allow the partial decarbonization of Asturias steel mills and the production of steel without carbon emissions. It ensures the future survival of the steel industry in the Principality in the face of the stringent climate neutrality requirements set in the European Union (EU).
Nineteen months from now comes the decisive community clearance (estimated to reach 1,600 million) for the multinational to implement its ambitious investment plan of over €1,000 million for this first phase of decarbonisation. ArcelorMittal and the Spanish Government signed the public investment support agreement in July 2021 and requested mandatory community approval.
The European Commission authorized this Friday under the principle that the medium-term cost of hydrogen as an energy source to replace coal is still uncertain due to the high investment cost and the incipient nature of technologies to produce clean steel. and natural gas in the steel process, the company “does not invest in ecological steel production without public assistance” and thus gains “incentive” factor status.
The EU’s executive body, in turn, argues that the public funds awarded will contribute to the realization of the objectives of the EU’s “core policies”: supporting a clean industry and reducing greenhouse gas emissions, promoting domestic hydrogen production – which in turn contributes to Europe’s external dependence on energy. It will contribute to reducing the dependency on fossil fuel supply from Russia and supporting the transition to renewable energy sources.
In the view of Community officials, the requested assistance will have “limited impact on competition and internal trade” and the amount “will correspond to actual financing needs”. In turn, the Commission recalls that guarantees have been introduced. One of them is that “if the project is very satisfactory and provides additional net income”, ArcelorMittal must return some of the aid it received to the Spanish State. In turn, to ensure that public aid does not replace free competition, ArcelorMittal must share its know-how with other European steelmakers through this jointly funded project with government resources.
The project will be subject to verification of its progress in reducing CO2, eliminating coal and gradually replacing natural gas as primary energy sources and using renewable hydrogen in the steelmaking process.
Project
The investment plan for which the aid is now released will consist of the replacement of blast furnace A (whose useful life will in principle expire at the end of 2024 or early next year) and sinter B (an installation supporting the blast furnace) in 2025. furnace) by a new direct reduction iron ore (DRI) furnace. This is a rare technology (Arcelor-Mittal has a pilot plant in Hamburg) that will use green hydrogen instead of coal and syngas produced from metallurgical gases and wastes to convert iron ore into pre-reduced iron. The facility will have a production capacity of 2.3 million tons. It can temporarily revert to natural gas until there is enough green hydrogen supply.
The previously reduced ones will supply both the existing ArcelorMittal electric furnace in Sestao (to receive one million tons) and the future hybrid electric furnace, to which the remaining 1.3 million tons will be allocated, which will replace the existing Gijón steelworks.
The total of both plants will make it possible to release 70.9 million tons of CO2 emissions per year into the atmosphere. Today, 2.3 tons of CO2 is emitted per tonne of steel, and it is aimed to reduce this to 1.5 tons. disappears only when renewable energy is used.
The project will reduce capacity and employment, but guarantee the viability of the sector
The aid to be processed under the PERTE (Economic Recovery and Transformation Strategic Project) for decarbonisation, now approved and approved by the Government on 27 December and presented in Gijón this Friday, will be allocated exclusively to DRI. The hybrid furnace of the future, which will consume both pre-reduced and scrap and replace the current Gijón steelworks, has begun to receive other types of public support – some already approved – under other programs.
What is being launched this Friday with such actions and community approval is the first phase of decarbonisation of the Asturian solid steel industry. ArcelorMittal and the Spanish Government signed an agreement in Davos in 2022 to discuss its future plan to replace the existing steel mill at the Avilés plant with a hybrid electric furnace similar to the one to be built at the Gijón plant. And the most modern is that it emits less CO2 than furnace A, as it is suitable for the consumption of gases from coke batteries, which do not expire until 2032, and therefore at the same time lower energy costs and gain emission rights.
The decarbonisation plan, now released for part of the Gijón plant with European approval of public subsidies, will ensure the survival of the Asturias steel industry, but it will also eclipse it: it will mean the loss of 900 jobs (most of them in Asturias, where 4,900 people work). And while the capacity of the electric furnace in Gijón will be 1.1 million tons (200,000 more than the existing steel mill), the total production capacity of the Asturias plants, which can now reach 5 million tons per year, will be reduced by 1.5 million tons. 1 million tons. All this requires negotiating a deal with the unions, according to the company.