Meeting with ArcelorMittal,
Brussels, 23/07/2024, 14:00, CAB SCHMIT/2214
Commissioner Schmit
Jobs and Social Rights
Meeting with ArcelorMittal Europe
Short bilateral meeting
Brussels, 23/07/2024, 14:00
(with complete address/BERL/floor/CAB room)
Contact of the counterpart:
Member of Cabinet in charge:
Main contributors:
Briefing coordination:
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Meeting with ArcelorMittal,
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Scene setter
You are meeting the
ArcelorMittal Europe1 delegation upon their request.
The meeting wil take place on
23 July 2024 in CAB office.
The agreed agenda covers one topic:
- The risks of the EU steel industry, with a specific focus on decarbonisation.
What ArcelorMit al wants:
- Inform the Commission on the deteriorated competitiveness of the sector.
- Raise concerns about the decarbonisation process if it results in a de-
industrialisation and massive carbon leakage.
- Inquiry on the Commission priorities on industry for the new mandate.
- Inquiry on the follow-up of the Antwerp Declaration and the Clean Transition
Dialogues from the Commission side.
What we want:
- Emphasise that the Commission is actively working on safeguarding the
European steel industry, by promoting fair and green transition.
- Point out the importance of social dialogue in steel industry.
- Inform ArcelorMittal on the possibilities to address climate targets without
reducing capacity of the European industries.
On 22 March 2024, the Commission held the
Clean Transition Dialogue on Steel.
ArcelorMit al welcomed the initiative and outlined specific challenges: taxations, flaws
in the Carbon Border Adjustment Mechanism, WTO rules, and steelmakers leaving
Europe. On this occasion, EVP Šefčovič explained that the Commission will explore the
possibilities to keep steel companies profitable, and to guarantee high levels jobs, also
taking the social dimensions into account.
You may wish to use the opportunity to ask ArcelorMittal to make use of both the
Transition Pathway for Metals and the Sectoral Social Dialogue Committee for the
Steel industries for having more in-depth exchanges with the employees on this topic.
Table of Contents
Speaking points .............................................................................................................. 3
Defensives ...................................................................................................................... 6
Background .................................................................................................................... 9
Annexes........................................................................................................................ 16
1 ArcelorMittal Europe is the European branch of the world’s leading steel and mining company, with
154,352 employees of 134 nationalities in more than 60 Countries, and steelmaking operations in 16
Countries. In 2022, approximately 54% of ArcelorMittal’s crude steel was produced in Europe.
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Speaking points
Opening remarks
• I welcome your commitment on ensuring ambitious competitiveness in
Europe. Safeguarding steel production in the EU is crucial for the future
of the green transition.
• As noticed by your letter, the steel industry is going through many
challenges due to a fierce international competition putting pressure on
the competitiveness of the sector, a lower demand and high energy
prices due to the consequences of the war in Ukraine.
•
The EU is currently the second biggest global producer of steel
[after China]. Also, we have the goal of
decarbonising the steel
production by 30% by 2030, while remaining competitive.
• Looking forward to the
next Commission mandate, a
resilient Europe
and a level playing field both within Europe and internationally can be
achieved if we keep ourselves
on track towards climate neutrality by
2050 and explore a range of
cost-effective solutions that preserve
the
competitiveness of the European industry.
• The Commission recognises the need for
further investments and
enhanced coordination in the context of
infrastructure developments,
whilst also ensuring
synergies and coherence between the
circular
economy and climate policies.
• However, some steelmaking sites in Europe face financial and other
difficulties – for instance, related to the supply chain. These difficulties
result in the production capacity being reduced and layoffs of workers.
• This is the case of Liberty Steel or the former ILVA facilities in Taranto
(IT). On the first case, I also met the trade unions some weeks ago.
• Ensuring an enabling environment for boosting the steel industry in
Europe and a competitive strategic European autonomy, is a key building
block for successfully overcoming all crisis and managing the transition.
• The Commission heard the call for action for a European Industrial Deal
to complement the Green Deal in the
Antwerp Declaration.
• Our
social model, with social dialogue at its core,
can strongly
contribute to a new Industrial Deal.
• We share the concerns about the need for predictability and for working
with the major players across the industrial ecosystems to develop
climate solutions for Europe.
• I welcome ArcelorMittal sustainability agenda and projects to invest and
decarbonization of its European operations.
• About 60 of the 80 total clean steel projects around the world are
planned in Europe. As of today, about 10 projects have already received
public support, either via state aid or via the EU Innovation Fund.
• Since 2023, almost EUR 3 bil ion of state aid in 4 Member States have
been approved to the benefit of ArcelorMittal for the partial
decarbonisation of its steel production processes.
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The Commission support for the European steel sector
• The global excess capacities, decarbonisation efforts as well as shrinking
steel industry require urgent and concrete EU-wide solutions.
• In the short term, to support the impact of the energy prices crisis, the
Commission adopted the
Temporary Crisis Framework (TCF) in March
2022, allowing Member States to compensate for the high energy prices.
In 2023 the TCF was amended, including provisions for aid to support
sectors critical for the transition. Rules relevant to energy-intensive
businesses wil be in place until 30 June 2024.
• On the decarbonisation process, several European instruments are
available to support the green and digital transition for steel, such as the
Clean Steel Partnership under Horizon Europe, the Innovation Fund,
and the Just Transition Fund, which provides support to businesses in
territories negatively impacted by transition.
• The Commission made available additional funding to Member States in
the context of the
REPowerEU, through the Recovery and Resilience
facility (RRF) - an additional EUR 20 bil ion in grants, alongside
significant amounts of loans.
• On the level playing field, the Commission is fully commit ed to using the
185 trade defence instruments to address unfair trade in the sector.
The Commission prioritises effective steel import measures, staying
vigilant against exporters' duty evasion tactics. For instance,
investigations into potential circumvention of stainless-steel cold-rolled
flat products (SSCR) from Indonesia through Taiwan, Türkiye, and
Vietnam are underway.
• On the
Green Lead Markets, the Commission has put in place the
Batteries Regulation, the Construction Products Regulation, the End-of-
Life Vehicle Regulation proposal, the Critical Raw Materials Act, and the
Net-Zero Industry Act (NZIA).
• To harness the potential of the purchasing power of public authorities
towards green industries, the Commission has proposed the inclusion of
green public procurement mandatory requirements in sectoral
legislation, rather than continuing to recommend voluntary green public
procurement criteria. Incentives for green lead markets through public
procurement are included in EU legislative initiatives mentioned above.
• The new
Ecodesign for Sustainable Products Regulation (EPSR)
rules aim to establish common definitions, improve transparency for
consumers and set requirements for green and circular goods, in a life-
cycle perspective.
Steel is one of the first intermediate products likely be
regulated under the first ESPR Action Plan, via a
Delegated Act.
• The technical work will establish environmental information and/ or
performance requirements, leading to a first European definition of
green
steel. Once adopted, the Ecodesign requirements would enable to
differentiate steel products based on their environmental performance,
supporting the creation of green lead markets.
The Clean Transition Dialogues
• The Dialogues showed that all social partners are strongly
committed to
the climate goals but have
growisg concerns about the lack of a level
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playing field globally, the risks of carbon leakage and insufficient access
to finance.
•
The Commission took stock of the outcomes by delivering a
Communication on 10 April. The Communication sets out actions for
the Commission, co-legislators and Member States.
• During the
Clean Transition Dialogue on steel on 22 March, EVP
Šefčovič with EVP Vestager took note of concerns on the European
competitiveness, the international playing field, the secure supply of
energy and the European steel action plan for greener steel made in
Europe. These insights confirm the need for a strengthened industrial
approach.
• Member States should identify skil s gaps and work with industry and
social partners to mobilise actions to address them, in accordance with
the
Action Plan on labour and skil s shortages in the EU.
• As part of the EU Industrial Strategy, the
Transition Pathway for the
metals wil serve as a blueprint for further action. It aims to provide an
updated analysis of the sector in Europe and its global competitiveness,
identifying the scale, cost, long-term benefits, and conditions needed to
accompany the twin transition for the metals sectors.
• The Pathway document wil inform about the current challenges, suggest
recommendations, and propose potential actions. The Commission
intends to publish recommendations in the Pathway by September 2024.
The Commission intends to follow up and implement the Transition
Pathway in agreement with stakeholders and social partners.
The role of European Social Dialogue
• Social dialogue is a key driver for economic and social resilience,
competitiveness, fairness, and sustainable growth. It also fulfils a crucial
role: it gives workers and employers a voice in policy making and in
shaping economic and labour market policies.
• I welcome the employers’ commitment
in several Sectoral Social
Dialogue Committees (SSDCs)
at the forefront of the just transition,
such as the Steel Committee.
• After the signature of the Antwerp Declaration, 10 out of the 44 SSDCs
2
discussed and/or reached joint positions on the Declaration.
• The Commission has
an excellent collaboration with the social
partners.
• At the same time, we
count on social partners to bring to us concrete
and relevant information concerning our policies, for a better-
informed policy making process and implementation.
Closing remarks
• Let me express my gratitude for your constructive input.
2 Extractive Industries, Steel, Shipbuilding, Chemical, Electricity, MET, Paper, Textile &
Clothing, Tanning & Leather, Footwear.
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Defensives
Social Dialogue and Green Transition
How do you see the role of social dialogue in the green transition?
• Social partners
play a central role in helping to anticipate, address and
adapt the employment and social consequences of economic
restructuring and the transitions to a digital and climate-neutral economy.
• Social dialogue is crucial for ensuring fair transitions to a climate neutral and
digital economy, as it allows for the
structured involvement of
workers/employers in this process to find balanced solutions as well
as supporting up- and reskil ing and job transitions.
• Social partners also play a key role in
understanding the trends and
demands in the labour market – including as regards labour shortages –
by contributing crucial knowledge and experience of the situation ‘on the
ground’.
• The
Council Recommendation on ensuring a fair transition towards
climate neutrality adopted in June 2022 also highlights the important role of
social partners in managing the green transition in the frame of a ‘whole of
society approach’.
Ensuring competitiveness and fair transition for European industries
How can the Commission ensure a stable and coherent regulatory
environment for our industries?
• Competitiveness ranks high in the Commission of political agenda. The goal
is to make Europe the first climate-neutral continent by 2050 and this is to be
done by boosting the energy transition while reinforcing industrial
competitiveness.
• In March 2023 the
Communication on Long-term competitiveness
identified 9 drivers and 17 KPIs to monitor and measure progress. As shown
in the
Annual Single Market and Competitiveness Report adopted in
February 2024, recent
challenges include climate change, geopolitical
shifts, technological acceleration, high energy prices, demography, labour
and skil s shortages, strategic dependencies, unfair international
competition, and insufficient regulatory harmonization between Member
States.
• The
Antwerp Declaration for a European Industrial Deal that
representatives of energy-intensive industries adopted in February 2024
stresses some of these challenges for the EU. The Commission has heard
this call for action and
wil continue to work together with the players
across the industrial ecosystems towards enhanced competitiveness and
resilience.
• The 2024 Annual
Single Market and Competitiveness Report published in
February provides our views on relevant areas and initiatives to boost the
EU’s competitiveness.
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• The Commission is aware of the challenges ahead and no action is taken
lightly. At the High-level Conference on the European Pillar of Social Rights
in La Hulpe gathered in April, Mario Draghi warned that we need to redefine
the concept of competitiveness.
[“Without strategically designed and
coordinated policy actions, it is logical that some of our industries will wind
down capacity or relocate outside the EU”.]
• In its conclusions of the 17 and 18 April meeting the European Council has
called for
a new competitiveness deal anchored in a fully integrated Single
Market. The European Council has also openly acknowledged the role of
industrial policy to
enhance the EU global competitiveness and
attractiveness as a business location. These initiatives confirm the
political relevance of this goal also in the future.
• In the same vein, the May Competitiveness Council endorsed a set of
conclusions on industrial policy that provide
the way forward towards a
new European competitiveness deal.
• These orientations, together with the upcoming Draghi report on
competitiveness, wil contribute to
shape the political guidelines of the
new Commission, reinforcing the prospects of businesses.
• The
2023 Long-term competitiveness strategy set the goal to
reduce
reporting burdens by 25%. The Commission has delivered an initial set of
41 measures amounting to reporting cost savings of at least
EUR 3.6 billion
(and more measures are to be quantified, adding to this amount). For
example, the postponement of the deadline for the adoption of the sectoral
European Sustainability Reporting Standards which will benefit
companies in the scope of the Corporate Sustainability Reporting Directive
(CSRD) and allow them to adapt. Another example is reducing the
frequency of
reporting for InvestEU implementing partners from every 6
months to once a year.
• The
Fit for Future Platform, a high-level expert group chaired by EVP
Šefčovič, also assists the Commission to identify opportunities to simplify
and modernise legislation. The Platform has so far adopted 33 opinions
aiming to help reduce administrative burden. In 2024, it works on further 8
opinions that wil also address reporting requirements.
• The developments mentioned so far complement and reinforce our
REFIT
programme, which aims to ensure that al our evaluations and fitness
checks systematically explore opportunities for administrative simplification.
Our impact assessments are also analysing policy options, ensuring that the
costs do not outweigh the benefits of our initiatives.
• The introduction of a
competitiveness check in all impact assessments
and the systematic application of the
SME test wil ensure that our initiatives
support competitiveness. Against the backdrop of these changes, the
Regulatory Scrutiny Board has been reinforced by two members.
How can the Commission ensure a just transition for industries and
workforce?
• With the
Green Deal industrial Plan adopted in February 2023 a clear
action plan has been set to foster manufacturing of net-zero technologies in
the EU.
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• Reflecting the EU chemical industry’s need to invest in clean technologies,
the
Net Zero Industry Act provides different instruments, such as shorter
permitting procedures and regulatory sandboxes, for supporting industry to
build industrial leadership in clean-tech.
• The
Just Transition Mechanism provides targeted support to help mobilise
around EUR 55 bil ion over the period 2021-2027 in the most affected
regions, including territories with concentrated energy-intensive industries
(such as chemicals). It provides EUR 3 bil ion for the training and skil s
development of workers. The JTM is complemented by the
Social Climate
Fund (EUR 86.7 billion including national contributions), which will mitigate
the impacts of the new ETS-2 on vulnerable households, transport users
and micro-enterprises.
• With the
Council Recommendation on fair transition, the Commission
has issued comprehensive policy guidance for Member States’ employment
and social policies, in line with its competences, in order to better promote
access to quality jobs, especially for the most affected workers, jointly with
Public Employment Services and promote education, training and lifelong
learning and equal opportunities.
How can the EU scale up markets for low-carbon steel and technologies
made in Europe?
• With the
Critical Raw Materials Act and the
Net Zero Industries Act, we
provide the first, important step to strengthen the competitiveness of the
EU’s strategic value chains.
• Competitiveness will also come from policies on the demand side, to
stimulate markets for green leads products.
• We need to leverage the single market: instruments such as public
procurement, standards, incentives to business will be crucial.
• We are working on product specific legislation that will create a pull effect on
the market:
End-of-life vehicle Regulation, Construction products,
Ecodesign for Sustainable products (ESPR).
• Under ESPR, steel is a candidate product to be regulated under the first
ESPR Action Plan, via a delegated Act.
How can Ecodesign rules improve the competitiveness of the European
steel?
• Ecodesign criteria on steel improve the competitiveness of the steel industry
by creating demand for low-emissions products and materials.
• For high energy and emissions-intensive sectors like steel, the green and
digital transition is a demand-side opportunity. New rules, incentivising the
demand for green products will become increasingly relevant to allow the
initial ‘green volumes’ to find customers ready to pay a green premium.
• Steel has been identified as one of the first intermediary products to be
regulated under the Ecodesign for Sustainable Products Regulation Action
Plan due to its high potential for improvement of the environmental impact.
• A
Delegated Act on steel could identify the sustainability, including
circularity potential and carbon footprint of steel and could establish
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environmental information and performance criteria. These criteria could
lead to a first of a kind legal definition of low-emission/sustainable steel.
Role of skills
How do you see the role of re-skilling and up-skilling?
• Reskil ing and up-skil ing wil be the key to the future in many cases as they
wil support workers adapt their skil s to the needs of the labour market and
employers find workers with the right skil s.
• The
Pact for Skil s now covers all 14 industrial eco-systems of the EU
industrial strategy through 20 large scale stakeholder partnerships and
includes over 2,500 members. Through its activities, the
Large-scale skills
partnerships on Energy Intensive Industries (including chemicals) aims
to promote upskil ing and reskil ing of 50% of the workforce each year by
2030.
• According to the Pact’s annual survey, in 2022 and in 2023 members have
already upskil ed 3.5 mil ion people and committed EUR 310 mil ion
investments in skil s. They have
pledged to train 25 mil ion people until
2030 overall.
• The
European Year of Skil s gave additional impetus to skil s initiatives,
with 2000+ events across Europe. A pre-EYS survey found that 19% of
respondents intended to follow training, whereas a recent re-run suggests
the share has jumped up to 64%.
• The MFF 2021-2027 and NextGenerationEU support investments of around
EUR
64.8 billion in skilling, re-skil ing and up-skilling. The European
Social Fund Plus is making EUR 5.8 bil ion available for green skil s and
green jobs.
• Following the
Val Duchesse Social Partners Summit of January 2024, the
new
Action Plan to tackle labour and skil s shortages drives further
action as part of a collective effort at EU, national, regional and social
partner level.
• Skil s are just one lever to tackle labour shortages: Fair
labour mobility can
help also address shortages that are particularly acute in some countries or
regions, while being less prevalent in others. In the 2023 Communication on
Skil s and Talent Mobility, the Commission thus set out to explore the
possibility of a
broader reform of the EU system on the recognition of
qualifications and validation of skil s, to ensure that the existing legal
framework, tools and systems (e.g. Directive 2005/36/EC on the recognition
of professional qualifications) are future-proof, ambitious and contribute to a
well-functioning Single Market.
Background
1. The Antwerp Declaration for a European Industrial Deal and its follow-up
The
Antwerp Declaration for a European Industrial Deal – initially launched,
as
reported by Politico.eu, by the European Chemical Industry Council (CEFIC) - that
representatives of energy-intensive industries adopted on
20 February 2024 stresses
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key challenges for the EU.
The Declaration is now signed by more than 1300
organisations, calling for
a European Industrial Deal.
The Declaration outlines 10 urgent actions for the restoration of competitiveness and
generating and keeping quality jobs in Europe, whilst making European industry
resilient and more sustainable, further supporting the climate goals indicated in the
Green Deal and providing a broad enabling framework for the two equally important
objectives of pursuing a just transition and competitive sustainability.
The only signatory for the trade unions was IndustriAl Europe, advocating for:
• Social conditionality in public investment,
• Essential importance of high-quality jobs,
• Strengthening social dialogue,
• Re-/upskilling.
On 15 May, social partners and industry associations
3 from the manufacturing sector
joined the
Antwerp Dialogue focused on the quality of jobs for workers in Europe’s
industrial sector.
This meeting was initiated by CEFIC and IndustriAl Europe to
bring the social perspective to the Antwerp declaration and to discuss ways to
ensure quality jobs for European workers in Europe in the frame of the green
transition. Over 40 representatives from government, trade unions, associations and
companies discussed:
• Ensuring a just transition for our industries and workforce.
• Developing a reskil ing and upskil ing agenda.
• Promoting social dialogue and social partners’ involvement.
• Ensuring a stable & coherent regulatory environment.
15 social partners and industrial associations handed over their joint statement
“A European Industrial Deal focused on ensuring quality industrial jobs in
Europe” to the Commissioner.
In his intervention, Commissioner Schmit noted that:
• A European industrial policy must consider the necessity of industrial
transformation towards
just transition, which requires a reflection on its
approach: specifically, how to combine progress while maintaining Europe's
industrial base.
•
Modernization strategies aligning with climate neutrality objectives through
new technologies and addressing competition concerns are needed.
• The new challenge has shifted to
implementation and financing. Public
funding will be fundamental in this phase, also in view of the need for a
European financial instrument and for a growing internal market (mention to
Letta and Draghi reports).
•
Social dialogue has a key role in the industrial transformation: a greater
reliance on sectoral social dialogue is advocated. Sectors will be affected
differently by the transition; therefore, it’s essential to examine sectors and
regions to determine which jobs will change and be created, together with the
social partners. Val Duchesse Summit and La Hulpe Declaration have set the
right perspective.
•
Skills are crucial in this transformation. Highlight on the Pact for Skills,
European Year of Skills, and Action Plan on Skills and Labour Shortages. The
3 IndustriAl , ECEG, Ceemet, Acea, CEC, Ceramie – Unie, CEPI, IMA Europe, Sea Europe, Euromines,
Eurometaux, Cotance, Eurofer, UEPG, CLEPA, Eureletric, Euratex.
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skill issue must be discussed on different levels (European, national, sectoral)
by and with social partners.
Social partners raised various themes.
•
Competition and trade policy issue: sectors suffering from global and unfair
competition.
•
Skills: need for up-skilling and re-skilling.
•
Social dialogue: collective negotiation to find shared and functioning solutions;
systematic involvement of social partners in policy making.
•
Regulatory burden (
ed. mostly from employers): need for a simplified and
more enforceable regulatory framework.
[
if needed: ongoing follow-up discussions of the Sectoral Social Dialogues Committees on the
Antwerp Declaration]
On 8 April 2024 (SSDC Extractive Industries), IndustriAl , Euromines, Eurocoal,
IMA Europe, Aggregates Europe – UPEG and APEP referred to the Antwerp
declaration announcing a social partners’ joint statement on Just Transition and
Industrial Deal with the aim of having it ready by September.
On 9 April 2024 (SSDC Steel industries), IndustriAl and EUROFER focused on the
Antwerp Declaration in a broader agenda item dedicated to the feedback of the EU-
High Level Steel summit gathered on 22 March in the frame of the Clean Transition
Dialogue for Steel. IndustriAl presented the Declaration as a positive example
mentioning social guarantees following the trade unions’ core demands towards
national ministries for bet er supporting public procurement in steel production.
On 17 May 2024 (SSDC Shipbuilding), IndustriAl and SEA Europe debated on the
Antwerp Declaration. IndustriAl raised concern about the lack of attention towards
sectoral bargaining, explaining the need of ensuring a proper follow up on the social
angle. SEA Europe welcomed those pleas.
On 27 May 2024 (SSDC Chemical industries), IndustriAl and ECEG appreciated
the current multisectoral follow-up debates proving that there are similar types of
challenges for many industrial sectors.
On 4 June 2024 (Joint SSDC Textile and Clothing, Tanning and Leather,
Footwear), IndustriAl , EURATEX, COTANCE and CEC adopted a Joint Statement
on demands for the next EU mandate starting from the Antwerp Declaration.
On 6 June 2024 (SSDC Electricity), IndustriAl , EPSU and EURELECTRIC focused
on quality jobs as part of the solution on labour shortages.
On 19 June 2024 (SSDC Paper), IndustriAl and CEPI announced a sectoral joint
statement to be published after summer.
2. The Liberty Steel crisis: an essential outline
Liberty Steel Group is a global company with around 18 000 employees in Europe and
30 000 in total globally, belonging to the GFG Al iance, owned by tycoon Sanjev
Gupta. In the EU, they produce primary and engineered steel products in
Czechia
(Ostrava),
Romania (Galati),
Poland (Częstochowa),
Belgium (Liège)
Luxembourg
(Dudelange),
Italy (Magona-Piombino),
France and
Hungary (recently acquired
Dunaferr). Until 2019, Ostrava, Liège, Dudelange and Magona sites were integrated
into the production system of ArcelorMittal.
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Since the collapse of its main lender, Greensil Capital (2021), Liberty Steel has been
trying to keep its operations alive. On 15 May, the Group announced that it was open to
sell the Liège (BE), Dudelange (LU) and Magona (IT) sites. On 10 June, the Group
announced the permanent closure of the two coke ovens at Dunaújváros (HU). The
combination of adverse steel market conditions and the GFG Al iance Group’s lack of
liquid capital led to the activation of
insolvency proceedings at Ostrava (CZ) and
Częstochowa (PL).
As of 21 June, Liberty Steel/GFG Al iance faces this level of crisis:
• Bankruptcies at Ostrava (CZ, 5,000 direct / 30,000 indirect jobs involved) and
Częstochowa (PL, 1,000 jobs);
• Crisis divestments at Liège (BE, 400 jobs), Magona (IT, 480 jobs), Dudelange
(LU, 150 jobs);
• Site at serious risk at Dunaújváros (HU, 3,000 jobs);
• Minimal production (RO) as one last blast furnace is running.
The situation in Ostrava seems the most problematic, because of debts and lack
liquidity. Liberty Ostrava has an annual capacity of 3.6 mil ion tonnes. The energy
supplier, Tameh Czech, declared insolvency because of unpaid bil s. The bone of
contention is a major legal fight on energy prices between ArcelorMittal, who co-owns
the energy plant, and Gupta’s Liberty steel, who depends on that energy. Trade Unions
criticized the Commission (DG COMP) for allowing the acquisition of Ostrava (former
ArcelorMit al’s asset) by Liberty Group in 2019, whom they had warned was an
unreliable buyer.
On 6 February 2024, IndustriAl wrote to the President (Letter to Ms U. von der
Leyen - Urgent EU high-level meeting requested on behalf of European steel workers
at GFG Al iance Liberty Steel), calling on the Commission to facilitate a dialogue, and
to set up a crisis taskforce. On 14 April, Commissioner Schmit replied on behalf of the
President. On 25 June, he met IndustriAl Europe.
The Commission pointed out the
importance of social dialogue, emphasised the active support on safeguarding industry,
by promoting fair and green transition, and informed on the possibility of the European
Globalisation Adjustment Fund for Dismissed Workers.
3. Steel decarbonization: overview of the State aids and background information
Today, the steel industry is responsible for around 5% of the CO2 emissions in the EU
and 7% globally. It needs to develop and commercialise new low-CO2 technologies
within the next 5-10 years to be in line with the EU’s climate targets. Since 1990, the
EU steel industry has reduced its emissions by 26%. According to Eurofer data, the
European steel industry is on the path to cut CO2 emissions by 55% by 2030,
compared to 1990 levels, and to achieve climate neutrality by 2050.
Ongoing clean steel projects: Today, the European steel industry reports about 60
projects that can achieve such reduction. These projects are planned to start before
2030 and have the potential of reducing CO2 emissions by 81.5 mil ion tons per year
by 2030. This is equivalent to a cut of more than 1/3 of direct and indirect
CO2 emissions of the European steel industry. First volumes of low-emission steel are
expected to be commercialized in 2026/2027.
Challenges:
Funding: These projects wil require huge investments in capital and operational -
expenditure. The financial needs until 2030 are estimated today at €31 bil ion for
capital expenditures (CAPEX) and €54 bil ion for operating expenditures (OPEX),
totalling €85 bil ion. (Eurofer data, 2023).
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Energy: Another important prerequisite for the transition is ensuring access to
available, cost-competitive, and clean energy (especially electricity and hydrogen) and
related infrastructure (including for CO2 transport and storage). The 60 mentioned
projects wil require about 75 TWh electricity per year for the operation of steel
processes and about 2.12 mil ion tonnes of hydrogen (about 90 TWh of electricity if this
hydrogen is produced via water electrolysis), which means a need for about 165 TWh
of decarbonised electricity by 2030. This is the equivalent of the
double of Belgium’s
yearly electricity consumption. This corresponds also to an increase of 100% of
today’s electricity consumption of the EU steel industry (estimates by Eurofer).
Scrap availability: The green transition towards hydrogen- based steelmaking wil also
require more high-quality scrap to feed into the furnaces. Europe is currently a net
scrap exporter of scrap. In 2021, the EU exported 20 mil ion tonnes of ferrous scrap
(iron and steel). One of the reasons why scrap leaves Europe is the low-quality level.
Financing the Transition to Clean Steel: The EU’s strong climate ambitions
combined with the unprecedented energy prices crisis and the economic downturn in
recent times, have made investment into the decarbonisation of the European steel
industry difficult. The EU is working on building a regulatory framework that wil provide
the necessary incentives to support the business case for cost-competitive clean steel
in the coming years.
Public funding: So far, seven large European steel decarbonisation projects have
received substantial state aid approval under the State Aid Guidelines for Climate,
Environment and Energy (CEEAG) and two green steel projects have been awarded
under the Innovation Fund (Hybrit and H2 Green Steel - both in Sweden).
From October 2022 to February 2024,
the Commission approved over EUR 8 bil ion
of State aid for 7 individual steel decarbonization projects that were initially
selected by Member States to be part of Important Projects of Common
European Interest (IPCEIs) on hydrogen (on 4 October 2022, the Commission
approved a EUR 1 bil ion German measure for Salzgit er; on 17 February 2023, a
EUR 460 mil ion Spanish measure for ArcelorMittal; on 23 June 2023, a EUR 280
mil ion Belgian measure for ArcelorMit al; on 20 July 2023, a EUR 850 mil ion French
measure for ArcelorMittal and a EUR2 bil ion German measure for ThyssenKrupp; on
19 December 2023, a EUR 2.6 bil ion German measure for Stahl-Holding-Saar; and on
23 February 2024, a EUR 1.3 bil ion German measure for ArcelorMit al).
These projects aim at converting part or all of the steel production capacity from the
blast furnaces route, using coal, by investing in direct reduction plants and electric arc
furnaces
4. This new production route enables the industry to replace coal by natural
gas in a ramp-up phase, and then by clean hydrogen. These projects contain two main
innovations: the direct reduction technology has never been implemented yet at such a
large scale, and never with such a high share of hydrogen in the process. This
technology shift enables greenhouse gas emissions savings of around 80% compared
to the previous situation.
Since October 2022,
there have been intense exchanges between DG COMP and
the Member States to assess the compliance of these measures with the CEEAG.
Given the amounts of aid and the similarities between the projects, particular attention
has been paid to ensuring consistency in the assessment of the projects while
understanding and taking into account the specificity of each project.
4 Except for the Thyssenkrupp’s project that consists of investments in a direct reduction plant and two
melting units or ‘submerged arc furnaces’.
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The uncertainties related to the nascent nature of the market on renewable hydrogen
had in particular a large impact on the financial assessment of the measures, and
pragmatic solutions have been found to introduce flexibility when required to tackle this
issue, in terms either of timeline of the hydrogen ramp-up or possibility to procure low-
carbon hydrogen instead of renewable one for a limited period of time for example.
Furthermore,
the Commission has approved several industrial decarbonisation
schemes in several Members States which wil or can also benefit the steel industry
like EUR 1.1 bil ion Slovak schemes, a EUR 550 mil ion Italian scheme, a EUR 4 billion
German carbon contract for difference scheme and a EUR 2.5 bil ion Czech scheme.
4. The EU Climate policies and the Steel sector
The Commission analysis shows that, with the
right accompanying policies in place,
the green transition wil lead to
net job creation, while demanding adjustments and
active support in many sectors.
Jobs are and wil be mainly created in
green sectors, while we see that
labour
shortages in sectors crucial to the (accelerated) green transition are growing.
Energy intensive industries (such as the steel industry) wil need to decarbonise
their system. This has an impact on workers as well, entailing significant labour
reallocation and skil s needs. In the EU-27, from 2010 to 2019 employment in energy-
intensive sectors decreased marginally, reaching 3.08% of total employment.
The
Communication on the 2040 Climate target plan recommends a 90%
greenhouse gas reduction by that date, ahead of reaching climate neutrality by 2050. It
calls for the right mix of private and public sector investments to make our economy
both sustainable and competitive. The Communication specifies that
tailor-made
support wil be needed for energy-intensive industries to bridge the transition period.
That includes the Innovation Fund, as well as the Horizon Europe programmes, which
fund cutting-edge R&I to help move low-carbon technologies. The
Clean Steel
Partnership under Horizon Europe is a clear example.
Future production of steel in EU is likely to maintain current levels, according to the
Impact Assessment accompanying the Communication. The Impact Assessment also
found that
emissions from the iron and steel industries could be reduced by up to
70% by 2040 (when compared to 2030 levels under scenario S3).
Decarbonisation of steel production wil happen mainly through the increase of
electric arc furnace share and a larger use of hydrogen in the reduction of iron ore. A
more efficient use of steel and an increasing recycling rate could lead to a decrease in
primary production and an increased share of secondary steel, reducing overall
demand by up to 15-17% in the period 2040-2050 compared to the most recent years.
The green transition wil increase demand for steel. The International Energy
Agency (IEA) estimates that clean energy technologies and infrastructure account for
2-3% of steel demand today, and this value wil increase to 7% 2050.
The
Transition Pathway for the Metals Sectors is advancing fast, with a broad
number of stakeholders involved. This includes Commission’s services, Member
States, industry representatives, unions, and civil society. The Pathway aims to provide
an updated analysis of the sector in Europe and its global competitiveness, identifying
the scale, cost, long term benefits and conditions needed to accompany the twin
transition for the metals sectors. This work wil inform about the current challenges
faced by the sector and suggest recommendations in fields such as trade, energy,
climate, raw materials and environment. The recommendations wil propose potential
policy actions for the short-term to mid- and long-term serving as a compass for all the
actors in the sector.
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Within the Fit for 55 package and in line with the commitment not to leave any person
behind in the transition, the Commission put forward a
Council Recommendation on
ensuring a fair transition towards climate neutrality.
The Recommendation, adopted in June 2022, EU Member States commit to put in
place
comprehensive policy packages to ensure fair transitions at national and
regional levels, addressing notably the employment, social and distributional impacts of
the green transition.
The Commission wil continue to monitor the implementation of this Council
Recommendation and work towards
strengthening the just transition framework in
the EU. Action will include
strengthening the evidence base e.g. on green jobs,
energy and transport poverty and the distributional impacts of the transition. In addition,
we will set up a
European Fair Transition Observatory, to facilitate data collection,
sharing of best practices, and stakeholder involvement.
5. Support in case of industry redundancies: the European Globalisation
Adjustment Fund (EGF)
More specifically for addressing industrial crisis, if redundancies could not be avoided,
the
European Globalisation Adjustment Fund for Dismissed Workers (EGF) might
help. EGF is a special instrument to support European workers who lost their jobs due
to a major restructuring event and to help them find new jobs. EGF provides
personalised measures, such as help with looking for a job, career advice, education,
training, and re-training, mentoring, and coaching, or entrepreneurship and business
creation. Although EGF does not co-finance social protection measures such as
pensions or unemployment benefits, it can provide training or subsistence allowances,
allowances for carers, mobility and relocation allowances, and recruitment incentives
for employers. EGF co-financing rates align with the co-financing rates set for the
European Social Fund Plus and can reach 85% for Member States with at least one
less-developed region, such as
Czechia. However, no EGF funding may flow to a firm
or industry to keep companies in business, or to help them modernise, or restructure
uncompetitive businesses.
6. State of play of the former ILVA facilities
Back in 2018, ArcelorMittal acquired assets of the ILVA Steel plant. This deal
combined ArcelorMit al, the largest producer of flat carbon steel in Europe and
worldwide, with the main assets of ILVA, notably its steel plant in Taranto, Italy, which
is Europe's largest single-site integrated flat carbon steel plant. The Commission had
approved under the EU Merger Regulation the acquisition of ILVA by ArcelorMit al.
ArcelorMit al pledged to make investments to secure the environmental situation at the
site and increase production.
Today the site has decreased production, and we
understand is not in line with the investments initially planned. ArcelorMittal
alleged increase in energy prices and a drop in rolled steel coil prices, had a negative
impact on ILVA, who ran out of cash and accumulated huge debts with suppliers. The
public partner and the Italian government accused ArcelorMittal of not acting in good
faith. Currently the assets are again close to bankruptcy. The Italian government took
charge of ArcelorMittal’s plants in Italy, under a special administration procedure.
7. The Clean Transition Dialogues and their follow-ups
During the Clean Transition Dialogues, participants highlighted the need to strengthen
the
business case for a resource-efficient and competitive economy; confirms the
need for a reinforced industrial approach. The Dialogues emphasized
5 building
blocks that wil contribute to that reinforced industrial approach: an effective and
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simplified regulatory framework for businesses to deliver on the transition; action on
energy prices; modern infrastructure; easier access to finance; and a stronger Single
Market in a globally competitive environment.
The Commission wil provide further guidance to support industry and Member States
in applying EU legislation and wil strengthen the focus on burden reduction. The
Commission estimated that the transition could create
1 million to 2.5 million
additional jobs by 20305
, particularly in sectors such as construction, energy, water
supply, sewerage and waste management, some of which may face labour and skil s
shortages
6.
8. The Sectoral Social Dialogue Committee for the Steel industries
The European Sectoral Social Dialogue Committee was established in 2006. The EU
social partners in this Commit ee are IndustriAl Europe for the trade unions, and
Eurofer for the employers. IndustriAl is member of ETUC. Eurofer participates in the
activities of the European Employers Network (EEN) of Business Europe but is not a
member.
There is a specific attention from social partners in bringing together
national membership from both Western and Eastern EU Member States.
According to ESTEP
7,
in 2021 the steel sector in EU employed 308,000 people
directly and was responsible for up to 1.53 mil ion indirect jobs (supply chains,
logistics, maintenance, and other supporting functions). Over 20% of employees in the
European steel industry work for two large steel-producing companies:
ArcelorMittal
and ThyssenKrupp Tata Steel.
Germany, Italy, and Spain have the larger number
due to the relative size of the economy, as
Czechia and Slovakia.
The topics of mutual interest of the social partners are:
o
Energy and climate change policies;
o
Trade policies;
o
Evolution of the EU steel market and skills needed;
o
Research.
The SSDC has so far discussed and taken joint positions on the ETS, energy prices,
trade policies in non-EU countries, the ageing workforce and OSH, the standardisation
(low carbon steel), the circular economy and the trade-related issues. Currently, there
is the interest in reaching out the Clean Transition Dialogue for Steel and the Transition
Pathway for Metals sectors.
Annexes
5
Employment and Social Developments in Europe 2023. This is a substantial number as such, but to
be seen in the context of total employment in the EU (202 mil ion workers aged 15-74 in 2022).
6
Skil s in transition: The way to 2035 (europa.eu)
7 European Steel Technology Platform,
Highlights 2021, here
.
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Document Outline
