Spain’s Council of Ministers has finally approved a €450m ($492.4m) grant to steelmaker ArcelorMittal to replace its coal-burning facilities at its plant in Gijón, northern Spain, with equipment that can produce so-called “green steel”.

Hydrogen: hype, hope and the hard truths around its role in the energy transition
Will hydrogen be the skeleton key to unlock a carbon-neutral world? Subscribe to the weekly Hydrogen Insight newsletter and get the evidence-based market insight you need for this rapidly evolving global market

The two blast furnaces are set to be replaced by a 2.3 million-tonne direct-reduced iron (DRI) unit that can use green hydrogen to extract iron from ore, rather than coal, and a 1.1 million-tonne hybrid electric arc furnace that can melt iron and scrap steel using renewable energy.

The Spanish government had signed a memorandum of understanding on the plan back in July 2021, while the European Commission gave Spain the green light to proceed with the then €460m grant, under state-aid rules, on 17 February.

According to the commission, the plant will initially use natural gas, rather than hydrogen, but “ultimately, the plant will be operated using renewable hydrogen with syngas [a mixture of hydrogen and carbon monoxide] produced from waste and metallurgical gases”.

Coincidentally, the Gijón steel mill had to be evacuated on 22 March after one of its blast furnaces caused a fire due to an “unexpected reaction” during a halt for maintenance.

The Luxembourg-based steel maker, which is 37%-owned by Indian billionaire Lakshmi Mittal, has already received $655m from Canadian authorities for a “hydrogen-ready” green steel plant in Ontario, and is due to take a further €55m from Germany for a demonstration green steel project there.

And according to the company’s 2021 annual review, ArcelorMittal has letters of intent from the governments of Belgium and Flanders to invest in a green steel project in the city of Ghent, while it also has “support” from the French government for similar plans in Dunkirk.

Yet at the same time as taking more than €1.2bn from Western taxpayers, ArcelorMittal is continuing to build new coal-fired steel furnaces in India, which prompted US-based think-tank Institute for Energy Economics and Financial Analysis (IEEFA) to declare in February that the company’s decarbonisation strategy could be perceived as “greenwash”.

There is no guarantee that green hydrogen will be used at ArcelorMittal’s plants in Ontario or Gijón any time soon.

When beginning construction of the plant in Hamilton, Ontario, the company stated that the new furnace “will be constructed ‘hydrogen-ready’ so it can be transitioned to utilize green hydrogen as a clean energy input as and when a sufficient, cost-effective supply of green hydrogen becomes available”.

It could be many years before a “sufficient, cost-effective supply” is available, and the wording leaves the door open for ArcelorMittal to continue using natural gas at the site indefinitely.

Similarly, the company stated in 2021 that its Spanish facilities would only use iron made from green hydrogen if it was affordable to do so.

“Should green hydrogen not be available at affordable rates by the end of 2025, natural gas would be used to power the DRI furnace,” it said.,

Iron is usually extracted from its ore (iron oxide) by heating with coke, a form of coal, which not only melts the raw material but also removes oxygen at the same time, producing large amounts of CO2 in the process.

Hydrogen is the only commercially available clean alternative that can carry out both the heating and oxygen-removal functions.