ArcelorMittal to build first big zero-carbon steel plant in Spain

ArcelorMittal SA has signed a memorandum of understanding with the Spanish government for a 1 billion euro ($1.2 billion) investment to build the world’s first large-scale zero-carbon steel plant.

The company would build a unit that processes iron ore using green hydrogen at its plant in Gijon, a spokesperson for the firm said in a statement. That metal would then supply a mill in Sestao that would use renewable electricity to produce 1.6 million tonnes per year of carbon-free steel.

It would be the biggest green steel plant coming by 2025 globally.

Steelmaking relies on burning billions of tonnes of coal, emitting more carbon dioxide each year than cars, buses and motorbikes combined. Upgrading to zero-carbon production will require massive investment, something the usually low margin business may struggle to afford.

“This is a project that will require the support of many different partners to succeed,” said Aditya Mittal, chief executive officer of ArcelorMittal. “Our plan hinges on the supply of affordable, mass-scale hydrogen, access to sustainable finance and a supportive legal framework that allows us to be competitive globally.”

It’s not certain how much cash Spain will contribute. In the statement, ArcelorMittal said it expects support provided to be “at least half of the additional cost to enable its operations to remain competitive.” The company did not specify if it needed the aid as a grant or loan.

Spanish Industry Minister Maria Reyes Maroto said the government was exploring regulatory instruments to support industry in decarbonizing, including “compensation programs for electricity-intensive industries” and “instruments to promote industrial investments.”

It’s also contingent on competitively priced green hydrogen being available in Spain by 2025. The country has made the renewable produced gas a key part of its plans to invest funds borrowed as part of the European Union’s coronavirus recovery package.

ArcelorMittal also plans to add an electric arc furnace at its Gijon plant, replacing one of the blast furnaces there.

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