Germany's SHS launches green hydrogen tender for Saarland steel plants

German steel producer Stahl-Holding-Saar has launched a tender to buy up to 50,000 mt of locally produced renewable hydrogen for its Dillinger and Saarstahl plants in Saarland, the company said March 26.

SHS and its subsidiaries are due to produce up to 3.5 million mt/year of green steel from 2027/28.

The closed tender process is part of SHS's Power4Steel decarbonization project, under which up to 70% of production will be converted to lower CO2 output in a first step.

The tender aims to identify green hydrogen suppliers along the cross-border MosaHYc hydrogen network in the Grande Region, to supply SHS's direct reduction iron plant from 2027. The tender is due to be completed by the end of 2024.

SHS is constructing a DRI plant at Dillingen and an electric arc furnace at Dillingen and Voelklingen, which will use hydrogen.

The company's hydrogen demand is expected to reach up to 50,000 mt/year by 2030, rising to 120,000-150,000 mt/year thereafter.

Dillinger and Saarstahl will focus on the use of hydrogen, electric steel production and recycling steel scrap. SHS plans to decarbonize progressively by 2045, commissioning its Dillingen DRI plant by 2030 and using two electric arc furnaces in Voelklingen and Dillingen with about 3.5 million mt/year crude steel capacity starting in 2027-28 and closing one blast furnace, with CO2 emissions reductions of about 55%.

Hydrogen is used to convert iron oxide into metallic iron, replacing natural gas in the DRI process. Blast furnaces, by contrast, use mainly met coke and other coal-based fuels to convert iron ore. Metallic iron products are then processed into steel.

Dillinger and Saarstahl are two of the Germany's largest steel plants, making about 5 million mt/year of finished steel products.

The company plans to commission a third EAF by 2045 at the latest, with capacity of around 1.2 million mt/year of crude steel.

The tender from SHS comes after Thyssenkrupp issued a tender in February seeking large volumes of green and blue hydrogen delivered by pipeline for its Duisburg steel plant in Germany from 2028.

Thyssenkrupp signed a realization agreement with gas transmission system operators Nowega, OGE and Thyssengas on March 21 to connect the Duisburg plant to the GET H2 hydrogen pipeline network in 2028 as it seeks to decarbonize its operations.

Platts, part of S&P Global Commodity Insights, assessed the cost of producing hydrogen via alkaline electrolysis in Europe at Eur4.49/kg ($4.86/kg) March 26 (Netherlands, including capex), based on month-ahead power prices. Proton exchange membrane electrolysis production was assessed at Eur4.92/kg.