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First steel company calls for government aid because of skyrocketing energy prices

2021-10-12T11:45:42.383Z

Electricity prices for industry are ten times as expensive as they were three years ago. Now the head of the Swiss Steel Group is calling for relief. The federal government must cap the prices - otherwise there is a threat of production stops.



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Steel production at the Swiss Steel Group

Photo: MICHAEL BUHOLZER / REUTERS

For a long time, companies were able to buy electricity cheaply on the electricity exchanges.

Companies sometimes paid just under 20 euros for a megawatt hour of electricity.

But those times are over.

Prices currently only know one direction: up.

In September they exceeded 200 euros, at their peak even 400 euros.

The last time there was a similar level was in 2008. There are similar developments in the case of crude oil, but also in the gas market.

Now a first company is sounding the alarm and demanding government support because of the high energy costs.

"We now need relief immediately," says the head of the Swiss Steel Group, Frank Koch, to SPIEGEL.

His company owns a number of steelworks in Germany that use electricity to produce new steels from scrap metal.

Around 4,000 employees work in the four locations of Deutsche Edelstahlwerke North Rhine-Westphalia.

Large amounts of electricity are required for this process.

But at the current prices, the company is no longer profitable, according to Koch.

"Even the stop of production or the relocation of shifts are conceivable at short notice," says the Swiss Steel boss.

The CEO is considering adding an energy surcharge to the agreed prices.

"As long as electricity prices do not stabilize at a medium-term predictable and cost-effective level, we as an industry have to add the strongly fluctuating costs to our prices," says the manager. The idea is to link the prices at Deutsche Edelstahlwerke to the development of energy prices. This is the only way to protect yourself as a company from such strongly fluctuating costs.

Swiss Steel Manager Koch reports that he is not alone in his position in the industry. Other steel companies, he heard, would also consider stopping production. At the high-level meeting of the Federal Ministry of Economics last week, the topic of state aid was already on the agenda. The managers presented their concerns to Federal Minister of Economics Peter Altmaier (CDU). State economics ministers from North Rhine-Westphalia, Lower Saxony, Saarland and Brandenburg were also present at the meeting.

There it was also about the transformation of the steel industry towards climate neutrality.

Companies like Swiss Steel need electricity from renewable sources for this.

The blast furnace operators like Thyssenkrupp, on the other hand, have to switch their production processes from coke to hydrogen.

This must also come from electricity that has been produced with the help of wind or solar energy.

Ecological renovation against subsidies

Swiss Steel boss Koch sees the dangers of the high energy prices for the climate transformation in Germany and justifies his call for state subsidies.

Compared to blast furnace steel, his company only consumes ten percent as much energy.

One would like the ecological conversion, assures Koch.

An industrial electricity price of 40 euros could help companies like his to make the changeover more quickly.

The chief executive hopes that the difference to the current much higher electricity prices would have to be paid by the state.

It is questionable whether this would be possible with a future federal government.

Such subsidization would also raise questions of state aid law in Brussels.

The EU Commission there is considering for its part how industry and consumers can be helped because of the high energy costs.

Source: spiegel

All business articles on 2021-10-12

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