Strong signal for Salzgitter AG transformation program SALCOS®

• Lower Saxony Minister President Stephan Weil and Secretary of State at the Federal Ministry for Economics and Climate Protection Stefan Wenzel sign administrative agreements to provide funding
• Financing for low-CO₂ steel production further secured
• Important step in the transformation of steelmaking in Salzgitter

The agreement signed today by the state government of Lower Saxony and the German federal government sends a powerful signal in favor of SALCOS^® - SAlzgitter Low CO₂Steelmaking. Following the decision by the supervisory board of Salzgitter AG in July to release equity funds amounting to € 723 million for SALCOS^®, the agreement signed today by Minister President Stephan Weil and Secretary of State Stefan Wenzel at the Federal Ministry for Economics and Climate Protection (BMWK) represents another step towards securing financing for SALCOS^®.
 
On Thursday, 15.09.2022, Minister President Weil and Secretary of State Wenzel visited the Salzgitter AG works to sign a so-called administrative agreement between the state of Lower Saxony and the German Federal Republic to share the cost of funding the project. Only the notification from the EU Commission is now still awaited before the first stage of the SALCOS^® transformation program can be implemented in full.
 
At the same time, eleven additional agreements between the federal and state governments were also signed covering the joint financing of hydrogen projects in Lower Saxony.
 
As Stephan Weil, Minister President of the State of Lower Saxony, commented: “For the steel industry, SALCOS^® represents a genuine breakthrough; and a giant step forward towards sustainability for the company and for the region. The new climate-friendly processes necessitate large quantities of renewable energy and green hydrogen. In this respect, as wind energy state no. 1, and with seaports for the import and distribution of green hydrogen and high-volume underground formations to support the storage of hydrogen, Lower Saxony offers unique locational advantages. The significance of SALCOS^® extends far beyond Salzgitter. For us, it represents a very special beacon project.”
 
Stefan Wenzel MdB, Parliamentary Secretary of State at the BMWK, stated: “The federal government supports sustainable steps towards the decarbonization of the steel industry. In future, the SALCOS^® program will help to make the steel industry an innovative material producer that forms the foundation of numerous value chains and contributes to the success of “Made in Germany”. We in the federal government will support the development of pioneering green markets that are the key to the economic efficiency of low-CO₂ products and help to accelerate value creation, employment and the development of the hydrogen industry.”
 
Gunnar Groebler, Chief Executive Officer of Salzgitter AG added: “This agreement underscores the earnestness with which the climate protection goals that have been set are now being addressed politically. We are proud that with our pioneering industrial transformation project, we are able to make a significant contribution towards the targets here in Lower Saxony, and by extension in Germany and in Europe. In doing so, we are underscoring our ambition and commitment pioneering industrial decarbonization in Europe.”
 
The goal of SALCOS^® is, in three stages between now and 2033, to switch steelmaking in Salzgitter entirely over to low-CO₂ crude steel production. The first stage involving an annual capacity of 1.9 million tonnes of crude steel is scheduled to become operational by the end of 2025. As part of the transformation, two direct reduction plants and three electric arc furnaces will be built to incrementally replace the blast furnaces and converters. In this way, the previous process based on coking coal will be replaced by a new hydrogen-based route to steelmaking. Savings are expected in the order of 95 % of the current annual CO₂ emissions of around 8 million tonnes. That means that around 1 % of Germany’s emissions of CO₂ can be avoided.