Things are getting serious with CO2-reduced steel. Both suppliers and potential customers have no doubt that the future belongs to him. The financiers are also playing along. Example Salzgitter AG.
The automotive supplier Snop and Salzgitter Flachstahl GmbH have signed a Memorandum of Understanding (MOU). To make its own production more sustainable, Snop will use CO2-reduced steel from the Salcos route in the future. With the Salcos (Salzgitter Low CO2 Steelmaking) transformation program, the Salzgitter Group will gradually convert its steel production to hydrogen-based processes. The goal is to achieve virtually CO2-free production from 2033. The aim is to replace the classic blast furnace route with a production route using direct reduction and electric arc furnaces.
Salzgitter Flachstahl can already supply its customers with CO2-reduced steel via the so-called Peiner Route. The slabs are produced there from scrap using the electric arc furnace. This well-known process generally and historically produces about 70 to 75 percent less carbon dioxide.
Snop is a long-standing partner of Salzgitter Flachstahl and is supplied with mainly surface-coated flat steel products. In addition to locations in Germany, Salzgitter Flachstahl also supplies to Slovakia, Poland, the Czech Republic and France. Jan Selbach, Senior Director Purchasing, Snop Automotive Cologne GmbH: “The reduction of emissions is an important topic for us and the challenge for the future. Through our partnership with Salzgitter, we are actively working to secure the supply of climate-friendly steel.”
Phillip Meiser, Sales Director Salzgitter Flachstahl GmbH, adds: “Our cooperation with Snop is now being extended more strongly to sustainability. We are pleased that we are convincing more and more customers of our Salcos project, because transformation can only succeed if everyone works together.”
Financing secured
Salzgitter Klöckner-Werke GmbH, a wholly owned subsidiary of Salzgitter AG (“Salzgitter Group”), has successfully concluded a new syndicated financing of € 1,030 million. The existing credit line of €560 million was increased to €680 million and a new guarantee facility of €350 million was integrated into the credit agreement.
The term is five years and can be extended twice for one year each time. The new facilities replace the existing syndicated financing of €560 million from 2017. For the new syndicated loan, the first-time implementation of a sustainability/ESG component is in preparation.
“We have set ourselves on a binding path to achieving our decarbonization targets and will invest more than two billion euros in the first Salcos expansion stage alone. In addition to the subsidies provided by the German federal and state governments of around one billion euros, we are pleased that our core banks are also actively supporting us on the debt side in the conversion of our steel production to greater sustainability,” says Gunnar Groebler, CEO of Salzgitter AG.
Burkhard Becker, the CFO of Salzgitter AG, adds: “Our new syndicated financing is a very strong pillar in our financial strategy. The higher volume gives us further financial flexibility for the transformation towards green steel production.”
The financing was arranged by Bayerische Landesbank, BNP Paribas S.A. Niederlassung Deutschland, Commerzbank Aktiengesellschaft, Deutsche Bank AG, Norddeutsche Landesbank – Girozentrale – and UniCredit Bank AG and syndicated among an extended group of banks. Commerzbank Aktiengesellschaft also acted as documentation agent and facilities agent. Deutsche Bank AG coordinates the sustainability/ESG component for the Salzgitter Group.
