Thyssenkrupp Close to Steel Business Sale

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)

Summary

One of the biggest hurdles to Thyssenkrupp AG's sale of its loss-making steel business, Thyssenkrupp Steel (Essen, Germany), has been overcome following a deal with key workers unions. It clears the way for its potential sale to Jindal Steel International (New Delhi, India), a subsidiary of India's Jindal Steel Limited (New Delhi, India).

Thyssenkrupp Steel Sale Moves Closer

Thyssenkrupp AG (Essen, Germany) has agreed to a deal with German unions that opens the way for the sale of one of Europe's largest steel companies, Thyssenkrupp Steel (Essen, Germany), to India's Jindal Steel Limited (New Delhi, India).

The exact details of the deal hammered out with key German workers' union, IG Metall, have not been disclosed but it opens the way for restructuring and job cuts to begin across its European operations. The company said that the financing required for the restructuring period until September 30, 2030 has been secured. It expects to take an 800 million-euro (US$931 million) hit in 2026, blaming restructuring provisions at its steel unit. The agreement will broadly stick to a plan first revealed in 2024 but workers will have a greater say in restructuring and parent company Thyssenkrupp AG has agreed to "gradually develop all business units" into independent companies under the umbrella of Thyssenkrupp AG.

Last year, Industrial Info reported that the steel company, which employs 27,000 people, planned to shed up to 40% of its workforce - 11,000 people - to combat the impact from cheap steel imports from Asia. That plan called for 5,000 European steelworkers to be let go alongside 6,000 other positions replaced by outsourcing or the sale of other businesses. It also required a reduction in production capacity to a shipping level of 8.7 million to 9 million metric tons, while also guaranteeing investment for the installation of a green steel plant at its main German site in Duisburg.

'A Lot of Lay-offs'

Wilfried von Rath, chief human resources officer Thyssenkrupp Steel, said: "The agreement and signing of the collective restructuring agreement represent strong signs: together, the company and employee representatives have developed a forward-looking agreement for Steel. We have also got to be open and honest about this: there will be a lot of lay-offs and we will be making some swinging cuts. But we are doing this to become more competitive and secure as many jobs as possible for the future."

Speaking for the union, IG Metall, Jürgen Kerner, vice chairman, added: "The extension of the basic agreement is an important success in uncertain times. It creates security for employees and guarantees co-determination in the upcoming restructuring of the company. Especially in light of the impending restructuring, it is crucial that employees are involved on an equal footing and that their interests are fairly considered. The new basic agreement provides the foundation for this."

A Green Steel Future

The key project at the heart of Thyssenkrupp Steel's future is its green steel transition at the Duisburg steelworks. By 2027, a new direct reduction plant (DR plant) will be built at the site, which will use hydrogen and renewable energy instead of coal, replacing four existing blast furnaces. It will have a capacity of 2.5 million tonnes per year (mt/yr) of direct reduced iron (DRI) and avoid 3.5 million mt/yr of CO2 emissions. During the ramp-up phase, natural gas will serve as the reducing agent, with a gradual transition to hydrogen. The German federal government and the state of North Rhine-Westphalia have pledged 2 billion euro (US$2.3 billion) in funding for the project. Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Project can click here for the report.

A New Owner

India's Jindal Steel International (New Delhi, India) is in the frame to buy Thyssenkrupp Steel and made a non-binding offer in September which would see it invest 2 billion euro in the transition of Duisburg to green steel and another 2.7 billion to cover pension costs for workers. It continues to conduct due diligence on the business. It has guaranteed its support for the green steel transition from the start. Speaking recently to German magazine WirtschaftsWoche, the head of its European business, Narendra Kumar Misra, said: "We want to make the change because we firmly believe it makes economic sense. We believe in green steel, not least because of the regulations in Europe. Europe is the only place where you are rewarded for producing low-emission steel."

Key Takeaways

• Thyssenkrupp AG (Essen, Germany) does a deal with unions that clears the way for the sale of its troubled Thyssenkrupp Steel business. 
• 11,000 jobs - 40%- of the workforce in Europe will be lost to 2030 but workers have greater say in the restructuring process.
• Full-steam ahead for the multi-billion-euro green steel transition at Duisburg steelworks. 

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