A blast furnace is also a great machine for digesting economic stress, technological transitions, cost pressures and threats from Asian competitors. ArcelorMittal, the Indian-European steel giant, has two large blast furnaces in Spain and nine other industrial facilities that make it the main steel group in the country. It represents the big industry, that industry that competes internationally and for which any change in the price of electricity, raw materials or CO2 ends up disrupting the income statement in one way or another.
The assets in Spain are heirs to the Altos Hornos de Vizcaya, around which the national steel industry was formed. In the 1990s, Aceralia was created, which later would merge with the Luxembourg company Arbed and the French company Usinor to create Arcelor, acquired in 2006 by the Indian Mittal family. Today the world giant earns 8,600 million euros a year and invoices more than 74,000 million.
The pandemic brought the group's business to a standstill, but the recovery was explosive, with record profit in 2021 amid strong demand and tight inventory. The party continued until the first part of 2022, when the effects of the invasion of Ukraine forced the group to stop kilns in Germany, Poland and France by not covering energy costs on time. In Spain, the Sestao Basque steelworks is temporarily stopped.
From ArcelorMittal Spain they now describe the moment as an "authentic industrial revolution". If the cost of energy is a challenge, so is the cost of a ton of CO2, which has reached 100 euros and forces the group to undertake a major ecological transition. 4% of Spain's CO2 emissions come from the steel industry, forced to reduce them not only for environmental decorum, but for its own economic survival in an increasingly demanding European Union.
The challenge is to replace the factory engines. A kind of change from a combustion car to an electric car, but on a much larger scale. The intention is to invest 1,000 million euros so that the blast furnaces in Gijón are fed with hydrogen and electricity. It is not a declaration of intent because there is a calendar and a budget: in 2025 they will begin to operate initially with natural gas and there is already aid of 465 million euros approved by the European Commission with Next Generation funds that the Government will transfer to the company soon.
"It is the great project of the company for Spain", they indicate from the company. It is also a question of survival because Europe's blast furnaces must be transformed to accompany the ecological transition. ArcelorMittal Spain's goal is for hydrogen to reach it from not far away, from the Hydeal project that Enagás is preparing in Zamora. Through a gas pipeline, the green fuel will be transported to the Asturian blast furnaces and also to other Fertiberia facilities and industries in the north.
Decarbonization will help to overcome the cost of CO2 emission rights. To this is added the Iberian exception, the mechanism to contain the price of electricity in Spain, which the company cites as a determinant to maintain competitiveness with respect to other European factories. The third threat is carbon leakage, that is, the arrival of non-EU steel produced at low cost and without the same environmental standards. "These imports are suffered much more in southern Europe than in the north," warn the sources.
Brussels is aware of the problem and has set itself apart with an innovative solution: the border adjustment system. Chinese, Turkish or Indian steel that reaches the EU will have to pay compensation for having emitted more CO2 in its production. ArcelorMittal is working with the European employers' association Eurofer so that there is also an output adjustment in which, when European steel is exported, it will help to compensate for its greater environmental effort.
