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'Gray' steel to become obsolete in EU once 'green' steel advances: Salzgitter CEO

Highlights

Customer demand seen for hydrogen-based steel

Green steel to be shipped to Mercedes Benz this year

"Gray" steel will eventually be obsolete in Europe as "green" steel gains competitiveness, Gunnar Groebler, CEO of German steelmaker Salzgitter, a pioneer in the development of hydrogen steelmaking, said Aug. 11.

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"In the short term we expect higher prices, or price premiums, for green steel in the EU due to added green value to the customer and a supply shortage up to the mid 2020s," Groebler told analysts on a H1 company results call.

"In the medium- to long-term the price premium will diminish following increased supply. There will be higher competitiveness of green vs. gray steel due to CO2 regulations and rising prices generally. Eventually gray steel will be obsolete in Europe due to price pressure on the gray steel given oversupply vis a vis demand."

For these reasons Salzgitter believes "green steel is marketable, fundable and economically viable... we see strong interest from customers for green steel produced via the hydrogen route," the CEO said.

The steelmaker is already developing so-called "green" steel and will ship low volumes of this product to vehicle maker Mercedes Benz for structural body parts production this year, Gunnar said.

It is also commissioning 30 MW capacity at its own windpower installations and working together with miner Anglo American on optimizing iron ore products to supply DRI plants to reduce carbon footprint.

Hydrogen initiatives

Salzgitter continues with ambitions to achieve its first hydrogen-based steel production by end-2025 under its SALCOS initiative.

The steelmaker has joined the GetH2 initiative as part of a consortium of seven companies in various industries which plan to together reduce emissions by 60 million mt in 2030, said Groebler on the call.

The company is building a hydrogen-based direct-reduction plant at Salzgitter and is also involved in a consortium which is undertaking a feasibility study into construction of a 2 million mt/year DRI plant at Wilhelmshaven, a deepwater port on Germany's North Sea coast which also involves construction of an upstream hydrogen electrolyzer.

"There is strong political support to develop this area," Gunnar said. The consortium has applied for innovation funding backing from state sources for this project that could potentially provide Eur900 million ($1.06 billion) or above 50% of its total cost, he said, adding that there was no clear timeline yet for this project to go ahead.

The SALCOS initiative aims to reduce Salzgitter's own CO2 emissions of 8 million mt/year at present by 30% by 2025, by 50% by 2030 and by up to 95% by 2050, with use of DRI installations, an electrolyzer, and greater EAF capacity, eventually phasing out BF usage, Gunnar said. Use of natural gas will be phased out as green hydrogen becomes available and viable.

"We have applied for EU and federal and state programmes to get support of the first phase (of the SALCOS plan, up to 2025)," he said. A binding response on the financing requests may come by early 2022, he added.