2024-01-15 05:15:00
The €1 billion investment project to decarbonize ArcelorMittal’s steel headquarter in Gijón – with the replacement of one of the two blast furnaces with a direct reduction iron ore (DRI) plant with green hydrogen and a hybrid furnace electric arc – had two faces. The positive, that in addition to cutting emissions and generating activity and employment with the works, the future of steel activity in Asturias was guaranteed and an industrial-scale supply of green hydrogen that could be a new business attraction factor for Asturias. The negative side, that steel production capacity and direct employment were lost as the new facilities required fewer personnel due to the automation of processes. ArcelorMittal has now informed the Government of Spain that it is leaving one of the legs of the project, the DRI plant, on hold, and giving it up would increase the negative effects of the plan.
“With the decarbonization project, a cut of nearly 1,000 workers was proposed with the closure of the blast furnace and the facilities linked to it. If, in addition, the DRI plant is dispensed with, we would be at a higher figure,” he said. Jose Manuel Castrogeneral secretary of CC OO at ArcelorMittal.
The multinational has only confirmed, for now, the investment to build the hybrid electric arc steel plant in Gijón, which will have a production capacity of 1.1 million tons of steel and will be fed with a mixture of pre-reduced iron and scrap. The pre-reduced ones were scheduled to be manufactured in the DRI plant planned next to the electric furnace, but according to what has been transferred from the multinational to the Ministry of Industry, a plan B is being explored that involves importing the pre-reduced ones from Brazil. Last year, ArcelorMittal closed the purchase of Companhia Siderúrgica do Pecém (CSP), with a direct port connection to the Atlantic, and plans to incorporate direct reduction facilities for iron ore.
Arcelor has suspended its investments in DRI plants in Europe due to energy costs and without the planned plant in Gijón – which was also going to supply pre-reduced materials to Sestao’s electric furnaces – the job cuts of the decarbonization plan will increase and disappear the tractor effect expected with green hydrogen. Furthermore, the Asturian steel industry will lose production capacity because with a single blast furnace there will not be enough pig iron to cover the demand peaks of the Avilés steel plant.
The Principality still keeps the door open to an agreement with Arcelor
Vicente Montes
The announcement to park the investment in the DRI plant and wait for better conditions coincides with the company’s forecast to stop one of the two blast furnaces in Gijón starting in April if demand for steel in Europe does not improve. “With these announcements and the blocking of the agreement, the perfect storm is breaking out,” said José Manuel Castro.
The Principality does not close the door for Arcelor to finish carrying out its great green investment in Asturias. Although according to the sources consulted by this newspaper, the multinational has informed the central Executive that the project is on hold, sources from the Principality stressed that they have no confirmation that there has been “a decision made or that the project has been put on hold.” In fact, they indicated in the Executive, the regional government continues “working with the company” in that scenario. “All the processing of the plans that were the responsibility of the regional administration has been carried out and that part is already completed,” they indicated. In this sense, they referred to the environmental authorizations for Arcelor’s green projects in Gijón. Regional duties, the same sources highlighted, are done despite their “complexity.”
However, the regional Executive emphasizes that Arcelor’s green plan “is fundamental for Asturias and key for the Asturian steel industry.” This plan consists of the installation of an electric furnace, already approved by the company, and the construction of an iron ore direct reduction plant based on green hydrogen. This is precisely the thorniest issue and on which Arcelor has not commented since it signed an Expression of Interest in July 2021 to undertake the investment. The central government obtained the support of the European Union to subsidize the operation with 450 million, already available but on which the company has not commented.
All eyes are on the possibility of a meeting between Pedro Sánchez and Aditya Mittal in Davos, in the coming days, in order to find solutions that will unblock an investment whose twins in the rest of Europe are also subject to uncertainty.
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