Industrial

ArcelorMittal hoovers up another €280m of subsidies for a 'green steel' plant that might never use green hydrogen

EU gives Belgium the green light to financially support project in Ghent, which aims to eventually switch from fossil gas to renewable H2

ArcelorMittal's existing hot strip steel mill in Ghent, Belgium.
ArcelorMittal's existing hot strip steel mill in Ghent, Belgium.Photo: ArcelorMittal
  • Polly Martin

The European Commission (EC) has today approved €280m ($307m) in Belgian state aid — made up of a direct grant and soft loan — towards ArcelorMittal’s pilot “green steel” project in Ghent, which will include a direct iron reduction plant and two new electric arc furnaces to substitute steel production from one of its two existing coal-fired blast furnaces.

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Steelmaking is an incredibly carbon-intensive industry, using vast quantities of coking coal to extract iron from iron ore by melting it and simultaneously removing oxygen from the raw material.

But while ArcelorMittal’s ambition is to eventually move towards only using renewable hydrogen for direct iron reduction, the Ghent facility will actually run on fossil gas upon start-up in 2026. There is also no timeline on phasing out gas and starting to use H2.
Additionally, the EC allows for the plant to be operated using “low-carbon” hydrogen — as opposed to renewable, definitions for which were signed into law this week — if not enough green H2 is available.

The facility, which is expected to produce 2.3 million tonnes of direct-reduced iron a year, will keep one coke-fired blast furnace as it was only built in 2021.

ArcelorMittal has previously been criticised for continuing to build coal-fired furnaces in India while collecting around $1.2bn of subsidies in Europe and Canada for its “green steel” pilot projects that will initially use natural gas — especially since the steel giant admits it will only start to use renewable hydrogen when “a sufficient, cost-effective supply” becomes available.
This could mean that, depending on whether green H2 can reach cost parity with natural gas, these pilot projects may only ever run on fossil fuels.

The steelmaker earlier this year received a €460m grant from the Spanish government following EC approval for its facility in Gijón, which is of a similar size to the Ghent project at 2.3 million tonnes of direct reduced iron production capacity. It will also initially — and potentially always — run on natural gas from start-up at the end of 2025.

In February, the EC also approved a €55m grant from the German government for a pilot in Hamburg, although this project, due on line in 2026, is specified to run only on renewable hydrogen and will only have capacity to produce 100,000 tonnes a year of direct reduced iron.

ArcelorMittal has also lined up further support from the French government for a project in Dunkirk, although the EC is yet to give approval for this state aid.

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ArcelorMittalgreen steelBelgiumEuropeEuropean Commission
Published 22 June 2023, 14:56Updated 22 June 2023, 14:58