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Commission approves €19 million German support to Salzgitter AG

The European Commission has authorised Germany to grant €19.1 million for an energy-saving steel production project run by Salzgitter Flachstahl GmbH, a subsidiary of the Salzgitter AG group.

The aid will allow Salzgitter to produce steel through an innovative production process, Direct Strip Casting (DSC), which consumes less energy than alternative processes. The aid is in line with EU guidelines on State aid for environmental objectives because on balance, the positive effects for the environment largely outweigh potential distortions of competition.

"The support will enable Salzgitter to produce better steel while using considerably less energy. This will directly contribute to environmental protection without unduly distorting competition," said Competition Commissioner Joaquín Almunia.

Under the project, Salzgitter will produce steel with a higher proportion of aluminium and silicon, resulting in high strength (HSD) steel, used mainly for car-manufacturing.

In this innovative project HSD steel is produced via Direct Strip Casting (DSC), where the liquid HSD steel is horizontally casted on continuously moving streamer producing thin HSD steel from 8 to 15 millimetres only. To produce one ton of HSD steel, the DSC process requires substantially less energy (savings of more than 85 %) compared to the currently available Electro-Slag Remelting (ESR) process, where the steel is casted in blocks (ingot casting), re-melted and further processed. The energy efficiency of the DSC process may also be further improved by future investments.

The Commission found that the aid was necessary and proportionate to develop the project and that the positive effects would outbalance the potentially negative effects on competition. In particular, to achieve the energy savings, the innovative process involves higher upfront investments than the alternative process. The Commission found that the HSD production would account for less than 1% of Salzgitter's current sales and that the effect on competition would therefore be very limited. Moreover, the success of the new product is still to be confirmed in the years to come.

The non-confidential version of the decision will be made available under the case number N 451/2009 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved.

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