German steelmaker Salzgitter has secured €1bn ($1.09bn) in federal and state government subsidies for its ‘Salcos’ decarbonisation programme, which aims to switch its site in Lower Saxony entirely to low-carbon processes by 2033 over three stages.

The first stage, capable of producing 1.9mn t/yr of crude steel, will involve the installation of two direct reduction plants using green hydrogen and three electric arc furnaces to replace blast furnaces and converters. The first stage is expected to begin operations by the end of 2025.

Salzgitter aims to reduce its scope one and two emissions from 2018 levels by more than 30pc by 2025 and 50pc by 2030, as well as reaching net zero by 2050. The steelworks emitted over 9.6mn t of CO₂ across all three scopes in 2022. It expects that, on completion of the third stage, it will be able to save 95pc of scope one emissions—equivalent to 8mn t/yr of CO₂ or approximately 1pc of Germany’s emissions.

“We are well on the way towards implementing green steel production” Groebler, Salzgitter

The federal government has committed €700mn towards the project, while the state government of Lower Saxony will contribute €300mn. Salzgitter has budgeted €1bn of its own funds toward Salcos.

“Having taken our investment decisions last summer, we are well on the way towards implementing green steel production, and we are working at full speed in Salzgitter to realize this goal,” says Salzgitter CEO Gunnar Groebler.

“With the final notice of funding, we now also have the policymakers fully on board, and we have the long-awaited certainty that support for Salcos will be forthcoming.”

Salzgitter has also this week announced it will partner with Leipzig-headquartered VNG on hydrogen supply to the steelworks with an initial study considering electrolyser options and supply of non-pipeline hydrogen derivatives such as ammonia or methanol. The firms will also analyse Salzgitter’s potential connection to a supraregional hydrogen grid in the long term.

---

Author: Polly Martin