Salzgitter launches tender for at least 120,000 tonnes of low-carbon hydrogen for green steel production

German steel giant reiterates need for H2 pipeline connecting plant to wider network. Steel giant Salzgitter has officially launched its tender to buy more than 100,000 tonnes of low-carbon hydrogen for use at its new direct-reduced iron (DRI) plant in the German city of Salzgitter. Registration for the tender opened yesterday (Monday), with bids on the subsequent auction process due to follow — but execution of the plan will depend on Germany’s ability to build out a hydrogen pipeline network, the company said.

Prospective bidders must ensure that hydrogen qualifies either as a Renewable Fuel of Non-Biological Origin (RFNBO) under EU regulations, or as “low carbon hydrogen” that reduces lifecycle emissions by at least 70%, again calculated using the EU’s methodology.

The company needs 150,000 tonnes in total, commencing in 2027, to make DRI as part of Salzgitter’s Salcos (Salzgitter Low CO2 Steelmaking) decarbonisation programme — for which it has received more than €1bn ($1.07bn) in subsidies from the German government and the state of Lower Saxony, and to which it has committed €1bn of its own funds. Salzgitter expects to source about 9,000 tonnes from a 100MW green hydrogen plant it is currently building on-site, which is due to come into operation in 2026.

And it has signed a preliminary deal to source a further 20,000 tonnes from German utility Uniper from 2028 — again depending on the construction of a 280km pipeline — implying an outstanding need to tender around 121,000 tonnes.

While the company plans to begin production of H2-derived steel in 2027, Salzgitter has said it will accept bids for later hydrogen deliveries too.

Salzgitter once again reiterated that external supply for the plant must have access to a hydrogen pipline as part of Germany’s 9,700km “core” network, the completion of which was delayed to 2037 earlier this year.

“In order to fully exploit the CO2 savings potential of Salcos, we need a prompt connection of the Salzgitter site to the hydrogen core network,” said Gunnar Groebler, Salzgitter’s chairman. “We are counting on [regional gas operator association] FNB Gas submitting an application for the core network to the Federal Network Agency as soon as the state aid approval is available and expect a reliable timetable for the construction of the hydrogen core network, which must be tackled with determination.”

Last week, the European Commission approved Germany’s plans to guarantee up to €3bn of private sector spending on the hydrogen core network.