German steel industry needs state aid, alliances, IG Metall says

FILE PHOTO: Thyssenkrupp's logo is seen outside the elevator test tower in Rottweil, Germany, January 21, 2020. REUTERS/Michaela Rehle

FRANKFURT (Reuters) - Germany’s steel industry needs state aid and deeper alliances to manage the shift toward green fuels for blast furnaces, Joerg Hofmann, head of Germany’s largest union, IG Metall, told Reuters.

Steel companies including Thyssenkrupp and Salzgitter rely on coal for heating their blast furnaces but face pressure to shift toward renewable energy sources such as hydrogen as a way to cut their carbon emissions.

“For the switch to green steel, billions of investment spending is needed. The individual providers, whether it’s Saarstahl, Salzgitter or Thyssenkrupp cannot do this on their own. A cooperation between the makers is a given,” Hofmann said.

Despite the need for alliances, Hofmann cautioned that a broader consolidation involving takeovers could be risky, particularly if it involves a merger between Thyssenkrupp and Salzgitter.

“You cannot strengthen a weakened company through a merger,” Hofmann said. “Thyssenkrupp is a unique case which requires a special solution.”

Reporting by Jan Schwartz and Ilona Wissenbach; Writing by Edward Taylor, editing by Emma Thomasson