MW ArcelorMittal delays green transition plans blaming lack of EU support

By Louis Goss

ArcelorMittal shares fell on Tuesday after the steelmaking giant said it would be delaying plans to replace its existing coal-fired blast furnaces with new "hydrogen ready" facilities, citing a lack of clear policy direction from the European Union.

The Luxembourg headquartered company said slow progress in the development of Europe's green hydrogen industry had left green steel manufacturers unable to compete against Chinese steel makers using coal-fired furnaces.

ArcelorMittal, in turn, said it would be delaying the plans it first set out in 2020 to replaces its blast furnaces with hydrogen powered DRI-EAF facilities, as it blamed the slow development of the green steel industry on a lack of support from the EU.

Shares in ArcelorMittal (NL:MT), listed in Amsterdam, fell 3% on Tuesday having lost 10% of their value over the previous 12 months.

ArcelorMittal explained that steel made using hydrogen powered furnaces continues to be significantly more expensive than steel made using coal powered furnaces, as it noted customers also remain unwilling to pay higher prices for green steel.

"These 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," the company said.

"European policy, energy and market environments have not moved in a favorable direction. Green hydrogen is evolving very slowly towards being a viable fuel source... There is limited willingness among customers to pay premiums for low-carbon emissions steel," ArcelorMittal added.

The European Commission previously put its support behind plans to replace the EU's existing coal-fired blast furnaces with hydrogen powered facilities in its 'Green New Deal' document that it approved in 2020.

The EU's plans included pledges to support development of Europe's green steel sector through the introduction of a carbon border adjustment mechanism (CBAM), that would place carbon taxes on goods imported into the European bloc.

ArcelorMittal, however, said there are still "significant weaknesses" in the EU's carbon border adjustment mechanism (CBAM) that have seen green steelmakers remain uncompetitive in the face of imports from coal fired steelmakers in China.

"Before taking 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," the steelmaker said.

ArcelorMittal, in 2020, previously outlined its own plans to transition into an entirely carbon neutral company by 2050, including through the use of hydrogen powered furnaces.

"ArcelorMittal remains absolutely committed to decarbonization. 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," ArcelorMittal CEO Aditya Mittal said.

-Louis Goss

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November 26, 2024 04:50 ET (09:50 GMT)

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