Posted on 23 Jul 2025
The planned direct reduced iron (DRI) and hydrogen plant to decarbonise the Dunkirk site is currently cancelled, Alain Le Grix de la Salle, ArcelorMittal France chief has said.
He made the comments to the economic affairs commission at the Senate in Paris, which was broadcast and seen by Kallanish.
It had planned a DRI plant and two electric arc furnaces at Dunkirk, with an initial investment of €1.8 billion ($2.1 billion), with an €850m financing agreement signed with state agency for energy transition Agence de l'environnement et de la maîtrise de l'énergie (ADEME) in 2024.
However, the project has been delayed due to limited visibility on international markets, insufficient protection against unfair imports and delays in the implementation of the Carbon Border Adjustment Mechanism (CBAM).
ArcelorMittal has not received ADEME funding yet. One of the conditions was that the DRI plant would be operated using green or low-carbon hydrogen in the long term. While the facility may initially run on natural gas, the funding agreement stipulates that it must switch to hydrogen as soon as it becomes available.
“The project was studied before the start of the Ukrainian-Russian war which has caused the strong increases of gas costs. Volatility and lack of visibility on the price of gas make this model unfeasible… Today the cost of a coil produced from blast furnace including CO2 expenses is equivalent to the cost of a coil produced using DRI fed by gas. There is no economic model that justifies today the switch to a DRI plant [production model],” De la Salle says.
Hydrogen produced via electrolysis derives approximately 70% of its cost from electricity. For hydrogen to be economically viable in DRI-based steelmaking, the target price is €2/kg, compared to current market levels of around €7/kg. Achieving this would require electricity prices to reach around €25/MWh.
“The DRI solution in Europe will take longer than expected and that it will depend on the cost of natural gas and electricity.” De la Salle argues.
“Given current electricity costs, there is no viable short-term economic model to support the development of industrial hydrogen projects in France,” he adds.
Despite this, the company plans to invest €1.2 billion for its first electric arc furnace in Dunkirk, with operations expected to begin by late 2028 or early 2029, with a final decision to be made after the summer.
He adds that DRI may be implemented where “energy market conditions are favourable, allowing us to be competitive.”
Europe accounts for 55% of ArcelorMittal’s deliveries, making it a strategically vital market.
Between 2019-2025, it invested €1.5 billion in maintenance and upgrades at the Dunkirk site and related subsidiaries, equating to approximately €250m annually in both opex and capex.
The group’s broader strategy focuses on investing in high-growth regions such as South America and India, as well as in high value-added markets like the United States. In Europe, the priority remains decarbonisation. Nearly 30% of its global investments over the past three years have been allocated to Europe, with 25% directed specifically to France.
Source:Kallanish
