▲ Thyssenkrupp
As the global steel industry struggles to solve the problem of global warming, it has begun to have a direct or indirect impact on the steel M&A market.
While M&A(Mergers and Acquisitions) between global steel companies have been ongoing due to rapid changes in the business environment and deteriorating business performance, new "players" related to "renewable energy" are starting to enter the steel M&A market, which will be interesting to watch in the future.
Thyssenkrupp, Germany's largest steelmaker, recently announced that it will sell a 20% stake in its steel division (Thyssenkrupp Steel Europe) to EP Corporate Group a.s., an energy-related company controlled by Czech billionaire Daniel Kretinsky.
Subject to the approval of the relevant authorities and the Supervisory Board of ThyssenKrupp AG, the two companies will form a steel joint venture in which each company will hold a 50 percent stake, and negotiations for EPCG to acquire an additional 30 percent stake in ThyssenKrupp's Steel Division have been concluded.
The transaction will relieve ThyssenKrupp of the burden of its troubled steel business, which has been characterized by difficulties in trying to sell or merge with other steel companies and by operating losses over the last four years. Most importantly, the company will be able to reliably and economically secure the green power needed for the success of the ongoing project to build a hydrogen direct reduction plant with two blast furnaces at the Duisburg steel mill.
As ThyssenKrupp's new strategic partner, EPCG will use its energy expertise to ensure sufficient energy supplies in the form of hydrogen, green electricity and other energy products.
As an energy producer, trader, supplier and distributor, EPCG operates affiliated companies in nine European markets, with energy assets totaling 72.5 terawatt hours (TWh) last year, making it one of Europe's leading energy producers. The company currently owns approximately 22 GW of generating capacity in Europe and continues to expand into renewable energy, with plans to have more than 8 GW of renewable generation capacity in Germany alone by 2030. Wind, solar and biomass are the focus of EPCG's renewable energy projects, and the company has already begun construction of Germany's largest floating solar power plant.
For the global steel industry to successfully transition to greener production processes in the future, a common factor will be the availability of sufficient amounts of green energy at affordable prices. In this respect, the strategic alliance between ThyssenKrupp and EPCG is an example of a new idea for many steel companies.
As the energy costs for the production of crude steel slabs by the conventional blast furnace process account for about 10% of the total production costs, analysts estimate that this proportion will increase to up to 50% if the production process is converted to hydrogen-based production in the future. Attention is focused on the extent to which strategic alliances can be formed between steel companies and energy specialists by securing stable renewable energy.
by Scrap Insight
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