BERLIN/FRANKFURT (Reuters) - Germany is planning to make around 2 billion euros ($2.1 billion) available to help fund a green steel plant that Thyssenkrupp (ETR:TKAG) aims to build at its base in Duisburg, one of the struggling conglomerate's key turnaround projects.
The 2 billion euros, unveiled by Germany's Economy Ministry on Monday, include 700 million euros of funds pledged by the German state of North Rhine-Westphalia, where Thyssenkrupp's headquarters is located.
It also marks a major commitment to support one of Germany's industrial icons. Thyssenkrupp depends on external funds to pay for decarbonising steelmaking, which is one of the most polluting industrial production techniques.
"To this end, we are in close contact with the European Commission. Because one thing is clear: we also need steel production in Germany and Europe in the future," a ministry spokesperson said in an emailed statement to Reuters.
Economy Minister Robert Habeck on Monday travelled to Essen and Duisburg to hold talks with Thyssenkrupp's management and labour representatives after weeks of criticism over what workers fear is lacklustre backing by Berlin.
While welcoming the public expression of support by Berlin, Thyssenkrupp Chief Executive Miguel Lopez pointed out that the EU Commission still needs to approve the planned aid package but that the company needed clarity quickly.
"We must not lose any time in this process," he said.
Under its hydrogen-based climate strategy for steel production, dubbed tkH2Steel, Thyssenkrupp plans to commission a so-called direct reduction iron (DRI) plant for the climate-friendly production of 2.5 million tonnes of steel annually, with a production start scheduled for 2026.
The company, which like its peers is under pressure to retool its entire production process and make it carbon neutral, estimates the costs for the site as well as required infrastructure at over 2 billion euros.
($1 = 0.9352 euros)