Head of European division believes low-carbon steel could be produced from imported DRI
Green hydrogen is too expensive to be used in ArcelorMittal's steel plants in the EU, despite the company receiving billions of dollars in subsidies for the equipment. The head of the corporation's European division, Gert van Poelvoorde told Dutch business magazine Trends, Hydrogen Insight reports .
According to him, this green steel will not be able to compete on international markets, but it can be produced from imported direct reduced iron (DRI).
«We already know that hydrogen will be expensive in Europe. We won’t be able to use it because we will move away from the market completely,” said Geert Van Poelvoorde.
Producers like ArcelorMittal hope to use hydrogen to decarbonize production at their steel mills, which are responsible for 7-8% of global carbon emissions.
Policymakers want manufacturers to eliminate emissions in the steel sector by using DRI produced with green hydrogen and by melting low-carbon steel using electric arc furnaces powered by renewable energy sources.
However, van Poelvoorde's comments, Hydrogen Insight notes, confirm fears that the new green steel plants planned by ArcelorMittal, which have been heavily subsidized by EU governments under the condition of a gradual transition to renewable hydrogen, will not use really this option for years.
The company expects to receive a grant of 850 million euros from the French government for a DRI unit and two electric arc furnaces at its Dunkirk plant, 460 million euros from the Spanish government to replace two blast furnaces with a DRI unit and EAF at its its Gijon facility, and a €280 million grant from Belgium for a DRI unit and two electric arc furnaces in Ghent.
ArcelorMittal also received a €55 million grant for an H2-DRI pilot unit in Hamburg, Germany. This will bring the total amount of planned subsidies for the company's green steel production to €1.65 billion.
ArcelorMittal is already a DRI producer (using gas instead of hydrogen as a reducing agent). However, the company needs hydrogen prices of around €2/kg to make low-carbon steel produced from it competitive, van Poelvoorde said, even with progressive European carbon taxes.
Currently, European electrolysis schemes can only produce H2 at a price of around 6-7 euros/kg, or 5 euros/kg with some optimization, said the head of the company's European division. He added that even importing “green” hydrogen would be impractical, as it costs 1.5 euros/kg to transport it from Africa, where it is produced at a cheaper price.
As Compraço previously reported, the decarbonization of the steel industry will continue to be a key theme in 2024, according to the Fastmarkets forecast. An adequate supply of clean hydrogen and renewable energy at competitive prices will be crucial in this process.
