Thyssenkrupp reviews plan to wean itself off fossil fuels
Summary
The company has been trying to turn the fortunes of its steel business around while making operations more sustainable, an effort complicated by rising costs and market conditions.Thyssenkrupp said it was reviewing plans to wean its steelmaking operations off fossil fuels due to high costs, making it the latest company to rethink energy-transition pledges.
The assessment comes as the steel business of the German industrial group undergoes a broader review of its business plan. Thyssenkrupp has been trying to turn the fortunes of its steel business around while investing in making its operations more sustainable, an effort that has been complicated by rising costs and tough market conditions.
Executives at Thyssenkrupp Steel Europe recently warned the supervisory board of the business that plans to produce fossil fuel-free steel at its site in Duisburg, Germany, could cost more than envisioned.
“The situation is currently being reviewed based on this information," the company said.
The statement followed a weekend report by German newspaper Handelsblatt that cast doubt on whether the company would follow through on its plan.
Shares in the company fell by more than 4% in afternoon trading in Europe.
Thyssenkrupp’s review of its plans comes at a time when companies across a range of industries are rethinking efforts to reduce the carbon footprints of their operations or the products they sell.
Energy major Shell in July said it would pause construction of a biofuel facility in Rotterdam, which was set to be one of Europe’s largest, to curb costs amid weakened global demand for the fuel. In August, Danish shipping giant Maersk said it would increase its fleet of ships running on liquefied natural gas. Meanwhile, Swedish carmaker Volvo Car last month abandoned a target to sell only fully electric vehicles by the end of the decade.
Thyssenkrupp said it sees no way around the decarbonization of carbon-intensive steel production in the long run.
The company aims to achieve carbon-neutral steel production by 2045 at the latest. To get there, it is spending around 3 billion euros ($3.29 billion) with financial assistance from both the German state and the state government of North Rhine-Westphalia. The company said potential cost increases for the plant have no impact on its confirmed subsidies.
In 2023, Thyssenkrupp selected SMS Group to build a hydrogen-powered direct-reduction production plant to progressively cut out natural gas from its steelmaking processes. The collaboration was one of the largest industrial decarbonization projects globally, it said at the time. Commissioning of the plant is planned for 2027.
The company still assumes the plant can go ahead, it said Monday.
Thyssenkurpp isn’t the only European steelmaker bent on cutting polluting fossil fuels.
In April 2023, Salzgitter said it had received almost 1 billion euros in combined German and Lower Saxony government funding for its low-carbon steelmaking program, known as Salcos. The company aims to be near carbon-free in its production of steel by the end of 2033.
Luxembourg-based ArcelorMittal is investing 1.7 billion euros, including French government funds, to cut emissions at two of its sites in France. Last year, the company also received 460 million euros from Spain for efforts to partially decarbonise its steel production in Gijon. However, ArcelorMittal has also been vocal about the high cost of hydrogen making its use of the alternative fuel challenging.
Write to Pierre Bertrand at pierre.bertrand@wsj.com