Thyssenkrupp and EPH in Constructive Talks for Steel Joint Venture
Thyssenkrupp is engaging in "open-ended discussions" with energy giant EPH, regarding the proposed separation of its steel division. A potential joint venture with Steel Europe, which EPH could bolster with its energy know-how, is under consideration, Thyssenkrupp revealed in Essen on a Wednesday. The specifics of a potential joint venture's form are still part of the ongoing negotiations.
EPH is owned by billionaire Daniel Kretinsky. The conglomerate includes lignite companies Mibrag and Leag in eastern Germany, aiming to produce more climate-friendly electricity from renewable sources in the future.
Germany's largest steel producer — Thyssenkrupp's steel division — is vowing to become climate-neutral. The first crucial step is constructing a "direct reduction plant" for steel production in Duisburg, set to replace a blast furnace. This plant, projected to cost around €3 billion, will initially operate with natural gas before transitioning to increasingly climate-neutral hydrogen.
The success of CO2-neutral steel production hinges on securing a steady supply of substantial "green" energy at competitive prices, the company reported. Consequently, Thyssenkrupp is engaged in dialogues with potential strategic energy-sector partners.
"Successfully navigating this transformation could significantly boost Steel Europe's competitivity and prepare the business for future green markets," said Oliver Burkhard, Chief Human Resources Officer. Co-determination plays a pivotal role in this transformation. It has been actively involved in the talks about the steel division's independence since their revelation in early October. The IG Metall trade union has cautioned against rushing this process at the expense of employees.
EPH's expertise in energy could considerably aid the steel industry joint venture between Thyssenkrupp and EPH. Trade unions, such as IG Metall, are committed to safeguarding employees' interests during this transformation.
Insights on the Partnership
- Shifting Steps: EPH has acquired a 20% stake in Thyssenkrupp's steel business. The joint venture aims to create a stand-alone solution for the steel business and aims to reduce production capacities from 11.5 to 8.7 to 9 million tons of steel per year due to overcapacities on the global market.
- Energy Mastery: EPH's background in taking over coal mines and power plants shows its extensive experience in managing and transforming existing energy infrastructure. It has extended the lifespans of facilities, rather than immediately closing them down.
- Positive Implications: The joint venture will focus on decarbonization, planning the replacement of two blast furnaces in Duisburg with a direct reduction plant powered by hydrogen and green electricity by 2030. EPH's expertise in managing complex energy systems could help hasten Thyssenkrupp's decarbonization efforts.
- Employee Considerations: Thyssenkrupp has announced plans to curtail its workforce by approximately 40% in the steel division. The joint venture may aid in restructuring more effectively, paving the way for sustainable employment opportunities in the long term.
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