ArcelorMittal, a global steel giant, officially confirmed it has suspended its plans to build a direct reduced iron (DRI) plant and hydrogen facility in Dunkirk, France. The decision stems from the unprofitability of the investment, mainly influenced by soaring gas and green hydrogen prices. Alain Le Grix de la Salle, CEO of ArcelorMittal France, announced the move during a parliamentary finance committee hearing, citing economic challenges and market unpredictability.
Why ArcelorMittal Suspended Dunkirk DRI Plant Plans
The Dunkirk project initially involved constructing a DRI plant alongside two electric arc furnaces, with an investment budget of €1.8 billion. The company secured an €850 million financing agreement with the French Agency for Energy Transition (ADEME) last year. However, ArcelorMittal did not receive any funds yet, as the plant was required to operate long-term on green or low-carbon hydrogen.
The company faced major hurdles including volatile international markets, delayed Carbon Border Adjustment Mechanism (CBAM) implementation, and lack of protection from unfair imports. Moreover, high energy costs—especially for natural gas, electricity, and green hydrogen—rendered the project economically unsustainable. As a result, ArcelorMittal decided to pause the DRI plant, citing no viable short-term economic model for hydrogen-based industrial projects in France.
ArcelorMittal’s Strategic Shift Amid Energy and Decarbonization Challenges
Despite suspending the DRI plant, ArcelorMittal plans to invest €1.2 billion in its first electric arc furnace at Dunkirk, targeting operations by late 2028 or early 2029. The company will finalize this decision by the end of summer. This move aligns with its broader strategy to decarbonize steel production despite high energy prices.
ArcelorMittal recently abandoned plans to convert two German plants to carbon-neutral operations due to expensive electricity costs. Similarly, ArcelorMittal Poland has voiced concerns that steelmakers cannot shoulder decarbonization expenses alone, highlighting the persistent energy price barrier across Europe’s steel industry.
SuperMetalPrice Commentary:
ArcelorMittal’s suspension of the Dunkirk DRI plant underscores the critical impact of energy prices and regulatory uncertainty on green steel projects. The fluctuating cost of green hydrogen and electricity continues to challenge industrial decarbonization efforts, especially in Europe. While hydrogen-based steelmaking promises lower emissions, current market and policy conditions delay its large-scale adoption. Investors and policymakers must recognize that sustainable steel requires stable energy pricing and stronger carbon regulations, including CBAM enforcement, to create a viable economic environment. ArcelorMittal’s pragmatic shift to electric arc furnace investments reflects the ongoing balancing act between decarbonization ambitions and financial realities.
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