Ares(2020)3900681 - 24/07/2020
Ref. Ares(2020)5071176 - 28/09/2020
14 July 2020, 17h30-18h00
You will have a conference call with
ArcelorMittal, the world’s leading steel and mining company
(headquartered in Luxembourg) and the largest producer of steel in Europe with 74,000
employees working in 400 locations and an industrial presence in 18 countries.
At present, a key challenge for the EU steel sector is how to implement the green
transition to clean steel production
in the context of strong global competition, excess
production capacity and unfavourable economic conditions, further reinforced by the
already had a call with Commissioner Hogan in January, with Executive Vice-
President Timmermans on 14 May and with Commissioner Breton on 8 June.
He would like to discuss the following issues with you:
Enabling policies required to kick start investments urgently for carbon
by 2050 and the 2030 reduction target (30%).
would like to share
ArcelorMittal’s view of the ‘right’ design of the Carbon Border Adjustment mechanism
and the Emissions Trading System guidelines for compensation of CO2 costs in power
Sustainable Finance Taxonomy
: the need to include realistic criteria for steel and all
low-carbon technologies including Carbon Capture and Storage Utilisation.
– ArcelorMittal believes that a new policy is needed to stay effective.
Current situation in the steel sector
Arcelor Mittal has been heavily-hit by the COVID-19 crisis. Despite the current
circumstances, Arcelor Mittal remains committed to maintaining its CO2 reduction goals
(minus 30% by 2030) and has recently published a roadmap towards achieving this
In general, the whole steel sector has been heavily hit: according to the latest (24 June)
data from the steel industry association EUROFER, over 66,000 steelworkers are on
reduced working or temporary layoffs. A further 8,329 steelworkers are being considered
for layoffs or partial employment. In Northern Europe, this percentage amounts to 44.8%,
in Southern Europe to 28.6%.
Many steel companies have severely cut production since mid-March, compared to the
same period of 2019. The reduction amounts to 7.26 million tonnes (slightly worse than
the 7.17 million tonnes reported in the last survey). This amounts to a year-on-year
reduction of 28.3% of the surveyed companies’ production already implemented
Northern Europe, production cuts amount to 27.6%, in Southern Europe to 30.8%.
The impact on orders is greater, with orders since mid-March falling by 20%-45%.
flat products, the drop in order has been of 45% (reaching 48% in Southern Europe, 44%
in Northern Europe), for long products it was 31% (33% in Southern Europe, 30% in
Positions of ArcelorMittal
The steel industry generally welcomes the Recovery plan but believes that the positive
effects will only materialise in the medium term (1-5 years). Steel safeguards
have assured protection in the short-term but industry claims they are not fit for purpose
since the tariff-free import quota should have been reduced significantly to achieve this.
On the green transition
, the position of
is aligned with that of the EU steel
industry. ArcelorMittal is committed (the company published its Climate Action Plan on 25
14 July 2020, 17h30-18h00
June, through which it aims to reduce its carbon emissions by 30% by 2030 and become
climate-neutral by 2050), but clean steel is costly
and demand for steel is purely price-
ArcelorMittal and the European Steel Association (EUROFER) are very supportive of the
quick introduction of a Carbon Border Adjustment Mechanism
. The Green Deal clarifies
that this would be an alternative to the current measures
to avoid risk of carbon
leakage (in particular free allocation of Emissions Trading System allowances).
ArcelorMittal however would want it to be combined with the continuation of the
allocation of free allowances.
The second area where ArcelorMittal would like to see Commission action towards a level
playing field is in the upcoming review of State aid guidelines for energy and
The European steel industry has called for State aid to adjust the price of
green electricity and hydrogen to an internationally competitive level. This would provide a
reliable and viable cost basis for investment decisions in CO2-lean steel plants. The cost
of making the transition is not currently economically viable and in the opinion of
ArcelorMittal, the cost differential would need to be bridged by subsidies/State aid,
irrespective of the technology used (as was the case for wind energy).
(virtual) meeting with Executive Vice-President Timmermans on 14
said that investment in the technology required would be impossible
without financial support (similar to what was done for renewables). He reiterated the
need for carbon border adjustment to ensure a level playing field. He said that the EU
needs to make a choice as to whether it wants to keep steel in Europe.
As Europe’s largest steelmaker, Arcelor Mittal is a member of the European Steel
Association (EUROFER), which has set out some concerns with the technical screening
criteria proposed by the Technical Expert Group on Sustainable Finance
manufacture of steel, which are the basis for the Commission’s ongoing work.
Objectives of the meeting
What we want:
that the Commission is continuously monitoring economic
developments to ensure the good functioning of the industrial ecosystems and
reassure him about the perspective for investment
Highlight that the Green Deal is Europe’s new growth strategy
and that the
industrial and research agenda will support this transition.
Remind him that the primary purpose of a carbon border adjustment
safeguard the environmental integrity of climate action and that we are currently
What the interlocutor wants:
To discuss the significant impact of COVID-19
on the steel industry and possible
means of recovery from the crisis.
To discuss the framework conditions necessary in his view for realising the
European Green Deal
while preserving European industrial competitiveness.
To seek reassurance on the Commission’s support for the steel industry in the
, which will influence investment decisions by ArcelorMittal in the
next few years.
may express disappointment
with the outcome of the second review of
the definitive safeguard measures
in force since February 2019, where the
Commission decided against scaling down the percentage increase of the quotas
as requested by the European Steel Association (EUROFER).
14 July 2020, 17h30-18h00
On a Carbon Border Adjustment mechanism
We will make a proposal for a Carbon Border Adjustment Mechanism in 2021.
carbon border tax on imports is one option. Other options exist such as the inclusion of
importers in the EU Emissions Trading System.
We will assess the economic, environmental and social impact of possible measures.
These measures must also be compatible with our international commitments, in
particular the rules of the World Trade Organization and our trade agreements.
We intend to engage actively with stakeholders and third countries
introducing the measure. An online public consultation will be launched soon.
Such measures could first be put in place for selected sectors
. They will be an
alternative to existing measures
aiming to address the risk of carbon leakage.
Both the revenues from auctioning under the EU Emissions Trading System and the
Carbon Border Adjustment Mechanism have been mentioned in the Next Generation
EU package as possible own resources
for the EU budget.
On State aid rules in relation to the green transition of industry
As laid out in the Green Deal Communication, the relevant State aid rules (Emission
Trading System state aid guidelines
and the Energy and Environmental aid
) will be revised in order to support a cost-effective and socially-inclusive
transition to climate neutrality by 2050.
We will revise the rules to provide, on one hand, a clear, fully updated and fit-for-
in the industry in the context of the Green Deal.
On the other hand, the revision of the rules will also aim to limit the distortions of
competition on the internal market
and to ensure a level playing field across the
While preparing for the new rules, the Commission acknowledges the renewed
ambitions of Member States to achieve their 2030 targets and the further
decarbonisation of the electricity sector and the economy by 2050. The current
for environmental protection and energy already allow support for
decarbonisation investments, including investments for carbon capture and
On sustainable finance taxonomy
The Commission is currently assessing the recommendations
of the Technical
Expert Group on Sustainable Finance, on which economic activities
substantially contribute to climate change mitigation and adaptation, and the conditions
for them to do so.
We take note of the concerns
you raise in relation to the recommendations by the
Technical Expert Group for the manufacturing of steel and iron.
The Taxonomy Regulation sets a number of requirements for the Commission to
consider when preparing the Delegated Act on the climate objectives, based on the
Technical Expert Group recommendations. The criteria for economic activities to
qualify should not only be coherent with EU law, but should also promote a high level of
environmental ambition, avoid market distortion and be designed to facilitate their
14 July 2020, 17h30-18h00
No final decisions have yet been taken
. The Commission will carefully consider your
arguments in weighing these requirements in drafting the Delegated Act, due to be
adopted by the end of this year.
On Crisis/Recovery measures that could be used for the steel sector
The outbreak of the coronavirus pandemic has changed the economic outlook for the
years to come in the European Union. Investments and reforms are needed more than
ever to ensure convergence and a sustainable economic recovery.
The European Commission is responding to this situation with a powerful recovery
and investment support package
to help the Member States, and the European
economy as whole, to exit from the current crisis stronger, more resilient and prepared
for our green and digital transition.
On Industrial strategy initiatives for energy-intensive industries
The transition needs to serve all – it needs to support both green technologies and the
transformation of existing industries. That is why our focus in the energy-intensive
industries is on breakthrough technologies
, creation of lead markets
and avoiding carbon leakage
e.g. through the use of a carbon border adjustment mechanism. We
also need to ensure access to affordable clean energy
for the transition to a low-
carbon industry and the appropriate infrastructure for clean energy.
The Industrial Strategy
presents a comprehensive toolbox, including new industrial
The newly launched Clean Hydrogen Alliance
will bring relevant stakeholders
together to identify technology needs, investment opportunities and regulatory barriers
and enablers to build a clean hydrogen ecosystem in the EU. Hydrogen is one of the
key technologies to move from fossil fuels to greener energy sources, in particular in
the field of mobility and in energy-intensive industries such as steel.
On the EU’s safeguard measures for steel
The adjustments to the steel safeguards that came into force on 1 July were very
ambitious and will be effective in response to the needs of the Union industry in these
I know from your previous discussions with my Cabinet, and with DG TRADE, that you
and several Member States had called for a more drastic approach.
I can again reassure you that we turned every possible stone
. However, accepting
certain requests would have seriously jeopardised the legality
of our measures. The
measures must be WTO-compatible, that is a red line for us.
Contact – briefing coordination:
Electronically signed on 28/09/2020 13:43 (UTC+02) in accordance with article 11 of Commission Decision C(2020) 4482