Salzgitter takes full control of HKM and plans green transformation

Salzgitter AG will become the sole owner of Hüttenwerke Krupp Mannesmann (HKM) after reaching a final agreement with its former partners thyssenkrupp Steel Europe and Vallourec on the acquisition of their shares in the Duisburg-based steel producer.

The transaction marks the end of HKM's long-standing shareholder structure and places full responsibility for the future of the integrated steelworks in southern Duisburg in the hands of Salzgitter.

Green steel strategy for Duisburg

Salzgitter intends to continue steel production at the site while fundamentally restructuring operations around lower-emission technologies. Central to the strategy is the planned installation of an electric arc furnace, which the company says could reduce CO2 emissions from steel production by around 90% in the long term.

The transformation will be accompanied by a significant downsizing of the business. Employment at HKM is expected to decrease from approximately 3,000 employees today to around 1,000 over the longer term, while annual crude steel production is set to be reduced to approximately two million tonnes.

According to Salzgitter, the restructuring is considered necessary to ensure the site's long-term viability. Without a comprehensive repositioning of the business, the alternative could have been the closure of the integrated steelworks.

Integration into Salzgitter Group begins

Salzgitter CEO Gunnar Groebler said the negotiations with thyssenkrupp Steel and Vallourec had focused on securing a sustainable future for the Duisburg site.

"We are now taking full responsibility for a historic steelmaking location and intend to guide it towards a sustainable future through a consistent focus on the green transition," Groebler said.

The company indicated that the integration of HKM into the Salzgitter Group will begin immediately following the completion of the transaction.

thyssenkrupp and Vallourec exit joint venture

For thyssenkrupp Steel, the agreement supports its ongoing restructuring efforts and the concentration of steel production at its northern Duisburg locations. As part of the arrangement, the supply contract between HKM and thyssenkrupp Steel will end in 2028, four years earlier than originally planned.

Vallourec, which had previously announced plans to divest its minority stake in HKM, said the agreement was consistent with its strategy of focusing on core businesses and key markets.

Restructuring to continue through 2028

The restructuring process is expected to continue until the end of 2028 and will involve workforce reductions as well as the integration of HKM into Salzgitter's organizational structures.

Salzgitter stated that the transformation process would be implemented in close dialogue with employee representatives and with a focus on socially responsible solutions.

To support the transition, Andreas Betzler, currently managing director of several Mannesmann tube businesses within the group, is expected to join HKM's management team and report directly to the Salzgitter executive board.

The company plans to provide further details on the financial impact of the acquisition when it publishes its half-year results in August.

Source and Photo: Salzgitter AG