ArcelorMittal pauses decarbonization investments claiming policy uncertainty

ArcelorMittal has announced a significant pause in its decarbonization investments in Europe, citing a lack of supportive political and market conditions. The company, which had previously committed to transitioning its steelmaking operations to “hydrogen-ready” direct reduced iron (DRI) and electric arc furnace (EAF) technology, has now stated that it will delay final investment decisions until regulatory and market frameworks become clearer.

In a press statement, ArcelorMittal emphasized that its decarbonization projects were contingent on a favorable mix of policy, technology, and market dynamics, including the availability of green hydrogen and interim use of natural gas. However, the company now acknowledges that progress in these areas has been slow, with natural gas-based DRI production remaining uncompetitive and green hydrogen far from being a viable fuel source.

The company also criticized existing European Union policies, pointing to weaknesses in the Carbon Border Adjustment Mechanism (CBAM) and insufficient trade protection measures against increasing imports driven by overcapacity in China. Furthermore, ArcelorMittal noted limited demand for low-carbon steel, as most customers are unwilling to pay a premium.

Awaiting Policy Clarity in 2025

ArcelorMittal highlighted 2025 as a pivotal year for decarbonization plans, with several key policy developments expected, including a review of the CBAM, updates to steel trade safeguards, and the EU’s Steel and Metals Action Plan. “These initiatives will provide the parameters needed to shape the business case for decarbonization investments in Europe,” the company stated.

Until these policies are clarified, ArcelorMittal will focus on preparatory engineering work and explore phased approaches, such as initially building EAFs to reduce emissions by recycling scrap steel. However, large-scale investments aimed at transforming steel production will remain on hold.

Decarbonization Plans Delayed but Commitment Remains

While halting immediate plans, ArcelorMittal reaffirmed its long-term commitment to achieving net-zero emissions by 2050. The company cited progress on smaller-scale projects, such as the construction of a 1.1 million-tonne EAF in Gijón, Spain, and increasing production of its XCarb® low-carbon emissions steel at its Sestao plant. Nevertheless, the broader transition to hydrogen-based steelmaking will depend on future policy support and market readiness.

CEO Urges Policy Action

Aditya Mittal, CEO of ArcelorMittal, stressed the importance of regulatory clarity to unlock investment. “We remain committed to decarbonization—it is the right thing to do for the company and the planet,” he stated. “However, the reality is that the regulatory environment required to support the business case for investments is not yet in place.”

Mittal expressed hope that upcoming policies under the EU’s Green Deal Industrial Plan would create the conditions necessary for accelerated decarbonization. “We would have liked to move faster, but we need the right framework to make higher-cost steelmaking competitive,” he explained, adding that clarity on policy measures expected in 2025 will be decisive in shaping the company’s next steps.

Source and Photo: ArcelorMittal