Thyssenkrupp AG has entered discussions with the German federal government with a view to access state aid of up to €5bn ($5.9bn) for its ailing steel business unit, according to a Bloomberg report on Nov 9.
While talks are in the early stages, the company and German ministers have reportedly discussed accessing €2bn in liquidity from the government’s economic stabilization fund (Wirtschaftsstabilisierungsfonds – WSF) and €3bn in grants.
According to people familiar with the matter, the German government has signalled its willingness to provide financial support at a cost of transitioning the steelmaking unit into an environmentally friendly producer of steel.
As such, Germany may be prepared to offer grants equivalent to about 30pc of the €10bn transitional cost to fossil-free steel under a hydrogen-development programme in addition to any allocation from the WSF
On Tuesday, the North Rhine-Westphalia (NRW) state parliament’s main opposition party (SPD) have placed increased pressure on the ruling party (CDU) for NRW to take at least a 25pc equity stake in Thyssenkrupp Steel Europe by calling for a vote on Nov 13.
SPD insists that the government receive an equity stake and voting rights in the company for the exchange of aid, similar to the bailout plan offered to the country’s flag carrier – Lufthansa, earlier this year.
While Germany’s Federal Minister for Economic Affairs and Energy commented that “all instruments which we used for Lufthansa are also available for the steel industry”, he noted that “this doesn’t need to lead to a public stake.”
Market commentators have suggested that accessing funds similar to Lufthansa may prove challenging given that Thyssenkrupp Steel Europe had been struggling long before the COVID-19 pandemic affected the industry.
Thyssenkrupp Steel Europe has the capacity to produce up to 12mn mt of crude steel per year from its Duisburg facility, which is capable of manufacturing hot strip, precision strip, heavy plate, coated, organic coated, electrical, packaging, and composite steels.