ArcelorMittal abandons investment of more than a billion euros in the decarbonization of its factories in Germany: "The profitability of this transition is not sufficient"

The world's second-largest steelmaker, ArcelorMittal, which is grappling with a historic steel crisis in Europe, announced on Thursday, June 19, that it was abandoning a major investment in the decarbonization of its sites in Germany, citing "the lack of profitability" of low _-CO2 steel production.

The group "unfortunately cannot proceed with its plans to decarbonize its factories" in Bremen (north) and Eisenhüttenstadt (east), according to a press release from the steelmaker, which has finalized a transformation plan estimated at 2.5 billion euros, including 1.3 billion euros in public aid.

At the end of 2024, ArcelorMittal announced it was reassessing its decarbonization investment plans in Europe, calling for more measures to protect European steel from competition, particularly from China. The steelmaker also announced a cost-savings plan in Europe this year, including more than 600 job cuts in Dunkirk, France , at the heart of a political standoff.

The state-backed project to transform the two German sites was part of an effort to save this traditional industry, now under threat in Europe's largest economy. The two sites in Bremen and Eisenhüttenstadt were to be equipped with electric furnaces and direct iron reduction units using gas or hydrogen (without coal), the first step in producing carbon-free steel.

"Even with this [public] financial support , the profitability of this transition is not sufficient, which shows the scale of the challenge to be met," observes Geert Van Poelvoorde, CEO of ArcelorMittal Europe, quoted in the press release.

Furthermore, "current electricity prices in Germany are high, both in international comparison and with neighbouring European countries," the group underlines, pointing to a problem that the new government has made a priority in an attempt to revive economic activity.

ArcelorMittal claims to "maintain its objective of further improving the carbon footprint of its facilities" , but it is becoming "increasingly unlikely to achieve _CO2 emission reduction targets by 2030" , while "green hydrogen is not yet a viable energy source" and the process of directly reducing iron from natural gas "is not competitive as a transitional solution" .

European steel is caught between falling consumption on the Old Continent, competition deemed unfair from low-cost products, particularly from China, high energy prices in Europe and, now, new customs duties.

Another European steel giant, Germany's ThyssenKrupp, announced its intention to cut 11,000 jobs in the country by the end of 2024.