ArcelorMittal will delay final investment decisions (FIDs) on decarbonisation projects, including plans to build up green hydrogen-ready direct reduced iron (DRI) plants.
The world’s second-largest steelmaker previously unveiled its “Innovative DRI” pathway as a route to transitioning its blast furnace plants to DRI using green hydrogen and/or electric arc furnaces.
Having originally planned to commission hydrogen DRI sites in France and Spain by next year, ArcelorMittal also scheduled DRI installations at plants in Belgium and Germany for start-up in 2026. It had already secured €3.5bn in subsidies to support the plans.
However, the company, in a statement said the plans were “premised on a favourable combination of policy, technology and market developments” that would allow it to decarbonise while offsetting the large CAPEX and OPEX costs.
“This included being able to use natural gas until green hydrogen became competitive.”
ArcelorMittal said the European policy, energy and market landscape had not moved in a “favourable direction.”
“Green hydrogen is evolving very slowly towards being a viable fuel source and natural gas-based DRI production in Europe is not yet competitive as an interim solution,” the statement reads.
The steel major also cites “weaknesses” in the EU’s carbon border adjustment mechanism (CBAM), trade protection measures to shield the industry from cheap Chinese imports, and “limited willingness among customers to pay premiums for low-carbon emissions steel.”
Aditya Mittal, Chief Executive of Arcelor Mittal, said the firm was “very grateful” for the government support it had received, but added, “the scale of the challenge requires further policy initiatives to unlock increased investment.”
Expecting to see a review of the CBAM, steel safeguards, and the publication of the Steel and Metals Action plan in 2025, ArcelorMittal said they would provide the parameters needed to “shape the business case for decarbonisation investments in Europe.”
Saying it remains committed to achieving Net Zero by 2050, the firm plans to continue with engineering work.
It comes just months after a report by steel advocacy group alleged the company was “failing in its claim” to be a climate leader by spending just $500m of the $1.5bn it had pledged to invest into decarbonisation.
The organisation’s report said recent “backtracking” by ArcelorMittal suggested the company will continue to use fossil gas instead of hydrogen and/or delay various projects, something ArcelorMittal denied to H2 View.
Caroline Ashley, Director of SteelWatch, said, “ArcelorMittal makes a lot of shiny claims about cleaning up its operations, but it has no right to call itself a climate leader when it secures billions in government subsidies before backtracking on plans to end fossil fuel use.”
The group said such state support has come at a time of “record shareholder returns.”
In a right-of-reply response to H2 View, an ArcelorMittal spokesperson said, “[ArcelorMittal] has not backtracked on any plans and any statements indicating so imply a lack of understanding of both the plans we have set out and the availability of the clean energy the steel industry requires to transition to Net Zero.”
Read more:ArcelorMittal facing scrutiny over hydrogen subsidy use
