Steel Titan ArcelorMittal Shifts Production to the U.S. Due to High Green Hydrogen Costs in Europe

Steel Titan ArcelorMittal Shifts Production to the U.S. Due to High Green Hydrogen Costs in Europe

Amid efforts in Sweden to produce steel using hydrogen, giants like LKAB, SSAB, and Vattenfall under the Hybrit initiative, and H2 Green Steel with similar goals, have gained significant attention. However, the steel behemoth ArcelorMittal is now questioning the competitiveness of hydrogen in this sector.

Geert van Poelvoorde, the Europe Chief for ArcelorMittal, expressed skepticism about the viability of hydrogen in Europe due to its anticipated high cost. Speaking to the Belgian business newspaper Trends, he remarked, “We already know that hydrogen will be expensive in Europe. There is no viable business plan that makes hydrogen profitable.”

Highlighting the impracticality of hydrogen for competitive steel production, van Poelvoorde stated, “Using hydrogen would catapult us completely out of the market.”

Despite receiving billions in public funding similar to Hybrit and H2GS, primarily for hydrogen production, ArcelorMittal has decided against using hydrogen for its European facilities. The European Union has earmarked €430 billion over ten years for hydrogen initiatives under its Green Deal. However, van Poelvoorde finds the cost of hydrogen prohibitively expensive for steel production.

In Hamburg, plans for a pilot plant utilizing hydrogen have been shelved, and a consortium behind the initiative has disbanded due to lack of viable profitability forecasts. Even with €450 million in subsidies for its steel factories in Spain, the required €8 billion investment led to the collapse of this consortium as well.

Instead, ArcelorMittal is looking to the United States, where hydrogen production costs are more favorable. “For our steel factories in Texas, hydrogen is interesting. The cost of producing hydrogen there is €4 per kilo, with the American government covering €3 per kilo through the Inflation Reduction Act,” van Poelvoorde explained.

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The EU Commission’s strict requirements for the use of green hydrogen, regardless of market price, pose additional challenges. “Using hydrogen could reduce CO2 emissions by 90%. That sounds good, but the European Commission mandates steelmakers to use green hydrogen if available, regardless of cost, or forget about subsidies. We are willing to use hydrogen, but only if it keeps our furnaces competitive,” he concluded.

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