The European Commission has approved, under EU State aid rules, a €850 million French measure to support ArcelorMittal France in partially decarbonising its steel production processes. The measure will contribute to the achievement of the EU Hydrogen Strategy, the European Green Deal and the Green Deal Industrial Plan targets, while helping to end dependence on Russian fossil fuels and fast forward the green transition in line with the REPowerEU Plan.

The French measure

France notified to the Commission a €850 million measure to support ArcelorMittal’s project aimed to partially decarbonise its steel production in Dunkirk, where it operates three blast furnaces producing liquid hot metal from a mixture of iron ore, pellets, coke, coal and preheated air. It also operates three basic oxygen furnaces which convert the liquid hot metal into liquid steel.

See related article: EU Commission Approves €460 Million to Support ArcelorMittal Decarbonise its Steel Production

The aid will support the construction of a direct reduction plant (‘DRP’) and two electric arc furnaces (‘EAF’). The combined DRP/EAF installation will substitute two of the three existing blast furnaces and two of the three basic oxygen furnaces. Natural gas, initially used in the DRP, will gradually be phased out of the steel production processes. Ultimately, the new installation will operate using exclusively renewable or low-carbon hydrogen, biogas and electricity as energy inputs.

Under the scheme, the aid will take the form of a direct grant paid out in four instalments during the construction period of the DRP/EAF installation planned between 2023 and 2026. The combined DRP/EAF installation is envisioned to start operating in 2026 and it is expected to produce 4 million tonnes of low-carbon liquid steel per year. Once completed, the project is expected to avoid the release of around 70 million tonnes of carbon dioxide over the 15-year lifetime of the project. ArcelorMittal has committed to actively share the experience and technical know-how gained through the project with industry and academia.