Transformation of the Steel Industry

daily wire & Tube: Mr Zappe, the Salzgitter AG takes a pioneering role in the steel and technology industry, particularly in the circular economy. Could you tell us more about your vision and the steps you are taking towards sustainability?

Martin Zappe: As one of Germany’s leading steel and technology groups, Salzgitter AG is focussed on driving sustainable innovation and transformation in our steel production, steel processing, trading and technology divisions. With our “Salzgitter AG 2030” strategy and the guiding principle “Pioneering for Circular Solutions”, we are striving to set new standards in the industry. One of the ways we achieve this is through the SALCOS® programme - Salzgitter Low CO2 Steelmaking, through which we focus on reducing CO2 emissions and actively promote the development towards a circular economy in partnerships and networks.

What does the SALCOS® programme involve and what progress have you made so far?

SALCOS® stands for Salzgitter Low CO2 Steelmaking and is our flagship project for the transformation of the steel industry towards climate-neutral production processes. We are implementing the programme in stages, taking into account the changing project framework conditions. We have received almost 1 billion euros in public funding for the first stage of SALCOS® - 700 million from the federal government and 300 million from the state of Lower Saxony. Salzgitter AG is investing an additional 1,2 to 1,4 billion euros for this stage. This makes us the first German steel group to receive such funding. The central units for the first stage of SALCOS® have already been ordered and all areas are in the manufacturing and construction phase. We plan to launch products via the SALCOS® route by 2026, with the aim of establishing an almost CO2-free steel production by 2033.

What is the status of the project?

We have already made significant progress, including the commissioning of a 100 MW electrolysis plant from the Andritz Group for the production of green hydrogen, which will produce around 9,000 tonnes per year from 2026. We have also contracted Tenova, Danieli and DSD Steel Group for the DRI plant and Primetals Technologies for the electric arc furnace. Construction work is progressing. Several hundred concrete piles have already been installed. The work on the foundations and the steel construction in the area of the buildings for the electric arc furnace are in full swing.

What conditions are crucial for the success of SALCOS®?

The expansion of renewable energies, the development of a hydrogen infrastructure and economically viable production routes are essential for the success of SALCOS®. The transformation will require large quantities of renewable electricity and green hydrogen. The availability of green electricity and hydrogen at internationally competitive prices is therefore a key prerequisite for future competitiveness. To achieve this, we need political support, for example through a competitive industrial electricity price and the creation of green lead markets in the form of minimum standards, premium models or targeted crediting options. The EU Carbon Border Adjustment Mechanism is to replace the free allocation of CO2 certificates in EU emissions trading as a carbon leakage protection instrument from 2026. The instrument must function effectively as long as there is no global level playing field with regard to climate protection costs.

And how will the transformation affect your employees?

The transformation is essential for the future viability of our company and serves to secure jobs. We are encouraging our employees to undergo further training and actively participate in the transformation. Due to demographic change, we can adjust the required number of employees in a socially responsible manner and without job cuts.

What role does SALCOS® play for your customers, particularly in the automotive industry?

Our Scope 3 emissions are a critical factor for the automotive industry, as they represent a significant lever for reducing the CO2 footprint of vehicle production. The importance of this topic is emphasised by our partnerships with OEMs (Original Equipment Manufacturers), with whom we work together via instruments such as volume assurance and so-called closed loops to actively drive the transformation of steel production forward together. This topic will also be explored in greater depth at the Destination Green Summit, where I will be giving a keynote speech on “SALCOS® - Partnering with the automotive industry” at the wire & Tube in Düsseldorf on 15 April (Editor's note: postponed to October). We are seeing a strong response from our partners, who are increasingly focussing on sustainable materials.

Finally, what challenges do you see on the way to realising SALCOS® and how are you tackling them?

The challenges are many, but first and foremost they include securing the necessary infrastructure for renewable energies and hydrogen, as well as creating an economic framework that ensures the competitiveness of our transformed production routes. A reliable political framework is essential for this. We are in close dialogue with political decision-makers in order to drive the transformation forward. We are also working closely with our partners to overcome the challenges together and realise the transition to a more sustainable industry. We are also working closely with our partners to address the challenges together and make the transition to a more sustainable industry a reality.

Mr Zappe, thank you for the interview.