ArcelorMittal puts French EAF conversions on hold

Global mining and steel producing company ArcelorMittal has paused some of its previously announced plans to build direct-reduced iron (DRI) plants and undertake blast furnace/basic oxygen furnace (BOF)-to-electric arc furnace (EAF) conversion projects.

While the company does not refer to specific locations in its announcement, projects at ArcelorMittal sites in Dunkirk and Fos-sur-Mer, France, reportedly are among those to be delayed.

“In May, we commenced construction on a 1.1 million metric tons EAF at our long products plant in Gijón, Spain," the company adds. "Good progress is being made with our efforts to increase production to 1.6 million metric tons by 2026 at our flat products plant in Sestao, Spain, where we have two EAFs. Once complete, much of this production will be our XCarb recycled and renewably produced low-carbon emissions steel.”

The European steel sector has had difficulty with profit margins since Russia’s invasion of Ukraine in early 2022 and subsequent shifts in energy supplies.

Earlier this week, Germany-based Thyssenkrupp Steel presented a plan for its future that involves shutting one blast furnace/BOF steel mill complex in Germany and slashing 5,000 to 11,000 employees from its payroll.

Luxembourg-based ArcelorMittal says its previously announced intention to invest in lower carbon emissions "hydrogen-ready" DRI-EAF facilities to replace several blast furnaces across its European business is a key strategic first step toward reducing emissions. In all cases, the host countries offered funding support for these projects, with the approval of the European Commission, according to the company.

The steelmaker says the projects were premised on a favorable combination of policy, technology and market developments that would facilitate decarbonization investment by helping offset the significantly higher capital and operating costs that this transition strategy would involve, including being able to use natural gas until green hydrogen became competitive.

“[However,] European policy, energy and market environments have not moved in a favorable direction," the company adds. "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 company also has expressed concern about “significant weaknesses” in the carbon border adjustment mechanism (CBAM) system that could need to be strengthened in response to increasing imports given Chinese overcapacity.

Regarding XCarb and the notion of a premium for such low-emissions grades of steel, the company says customers have a "limited willingness" to pay premiums for low-carbon emissions steel.

“ArcelorMittal remains absolutely committed to decarbonization,” Chief Executive Aditya Mittal says. “It is the right thing to do, both for the company and the planet. I remain confident that we can still achieve our net zero by 2050 target, but the shape of how we will achieve this could differ from what was previously announced.”

In a request for more government attention, Mittal adds, “We have been very grateful for the support offered to date by different governments to help accelerate this process. But the scale of the challenge requires further policy initiatives to unlock increased investment.  We would have liked to move faster, but the reality is the regulatory environment required to support the business case for investments is not yet in place.

“I hope to see new policies coming into play that will support an accelerated transition. The Green Deal Industrial Plan and the Steel and Metals Action Plan, and the legislation flowing from them, will be important, as well as regulation to stimulate the demand signal. While we do have customers that want low-carbon steel, those that do and are willing to pay a premium are still very much in the minority.”

The company says that before making final investment decisions, it is necessary to have full visibility on the policy environment that will ensure higher cost steelmaking can be competitive in Europe without a global carbon price.

ArcelorMittal specifically says next year, a scheduled review of CBAM, an anticipated review of EU steel safeguards and the publication of an EU Steel and Metals Action Plan will provide the parameters needed to shape the business case for decarbonization investments in Europe.

Although the company says demand for low-emissions steel is disappointing, it also casts a vote of confidence for its XCarb product and for recycled-content steel.

The company says XCarb can be made with a carbon footprint of as low as 0.3 tons of emissions per ton of steel produced, and that sales of XCarb in 2024 are on track to double compared with the prior year, to about 400,000 metric tons.

In the meantime, we are continuing with engineering work, as well as analyzing a phased approach that would first start with constructing EAFs [that] can also be fed with scrap steel to significantly reduce emissions," the company says.

“I expect policy decisions taken in 2025 will help bring clarity on how we will move forward to decarbonize our assets, taking advantage of our unique global profile, superior technology and raw materials mix and industry-leading innovation,” Mittal adds.