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| Salzgitter Salcos Project |
Challenges Delay Salzgitter’s Green Steel Project Expansion
German steelmaker Salzgitter has postponed its green steel production expansion by three years due to challenging market conditions and slow hydrogen technology development. The Salcos project aims to reduce CO2 emissions using hydrogen-based steelmaking but will now delay further phases until 2028-2029. This postponement reflects the sluggish hydrogen market and delayed government regulations. CEO Gunnar Grebler cited the economic environment as unprepared, impacting investment decisions originally set for 2026.
Impact on Steel Production and Industry Outlook
Currently, the first Salcos phase includes a 100 MW electrolyzer, a direct reduction plant, and an electric arc furnace, targeting a 30% emission cut for 2 million tons of steel by 2027. However, the delayed expansion limits Salzgitter’s ability to cut emissions by 95% as planned. The postponement may save about €1 billion in near-term investments but also highlights broader challenges. Notably, ArcelorMittal abandoned similar carbon-neutral conversion plans in Germany, underscoring the difficulty in implementing hydrogen strategies amidst high energy costs and regulatory uncertainties.
Market Performance Reflects Industry Headwinds
Salzgitter’s steel output dropped 12.1% in H1 2025 compared to 2024, with external sales falling 11% to €4.66 billion. The company reported a net loss of €88.9 million, worsening from €18.6 million the previous year. These figures indicate significant market pressure amid green transition delays. Therefore, the postponement of the Salcos project underscores the need for stable policy frameworks and market readiness to accelerate green steel adoption in Europe.
ScrapInsight Commentary
Salzgitter’s delay signals broader uncertainty in Europe’s green steel transition amid slow hydrogen market growth and regulatory delays. This may extend pressure on scrap metal demand as traditional steel output contracts. Policy clarity and hydrogen infrastructure development remain crucial for scaling green steel production and advancing circular economy goals.
