ArcelorMittal’s Dunkirk announcement: Still no decision, still no real shift
ArcelorMittal’s announcement on its “intention to invest in a first electric arc furnace (EAF) in Dunkirk” does not mark a breakthrough. Despite the headlines, this is merely a declaration of intent as the company has still not made a final investment decision.
Even if the EAF project goes ahead, it represents only a fraction of the original and much deeper decarbonisation plans for Dunkirk, which included a green hydrogen-based direct reduced iron (H2-DRI) unit. An EAF on its own without a secured supply of low-emissions iron is insufficient from a climate perspective. The company has not specified how and where iron will be produced. Ironmaking is the primary driver of emissions. Without a clear strategy on low-emissions iron procurement, an EAF alone will not produce green steel.
As the SteelWatch’s ArcelorMittal Corporate Climate Assessment 2025 recalls, the company has made no final investment decisions on any of its five flagship DRI projects in Europe and Canada. Globally, 87% of its ironmaking capacity still runs on coal. At Dunkirk, the company continues to invest in coal-based infrastructure, spending EUR 165 million in 2025 alone to prolong the life of blast furnace #4 with no announced retirement date.
Caroline Ashley, Executive Director of SteelWatch said:
“Announcing a smaller slice of an already delayed decarbonisation plan does not signal climate ambition or a future-proofed transition. ArcelorMittal needs to stop backtracking on its climate commitments and deliver a credible, near-zero emissions transformation, not piecemeal PR. The window for real climate action is closing. Announcing intentions is not the same as delivering action, and certainly not climate leadership.
“ArcelorMittal has already secured government commitments of over EUR 3.8 billion – including EUR 850 million alone in France – in public subsidies for decarbonisation. It now owes the public a genuine, science-aligned transformation. Until the company releases its overdue Climate Action Report 3 and commits to a full decarbonisation pathway with timelines, investments, and plant-level transition plans, its announcements remain just that: announcements.”
Despite its claims of uncertainty and caution, ArcelorMittal is not short of funds. Between 2021 and 2024, the company generated EUR 32.6 billion in operating cash flow, yet spent less than 2.5% of that, just EUR 800 million, on decarbonisation projects. In stark contrast, it returned EUR 12 billion to shareholders through dividends and share buybacks in the same 4 years. With profits per tonne higher than pre-COVID levels, ArcelorMittal clearly has the financial capacity to lead on climate. It simply chooses not to.
ENDS
Notes:
Are EAFs without DRI plants a viable decarbonisation strategy?
(Source: ArcelorMittal Corporate Climate Assessment 2025 / p. 15-16)
In November 2024, when it made public that its final investment decisions in DRI plants in Europe were conditional on a favourable policy environment, ArcelorMittal also hinted that it was “analysing a phased approach that would first start with constructing electric arc furnaces, which can also be fed with scrap steel to significantly reduce emissions.”
This approach seems to gain more and more traction: in its Sustainability Report 2024, ArcelorMittal mentions the transformation of steelmaking assets “through continuing the shift to electric arc furnaces” as one of the focus areas “over the course of the next five years”, whereas “transformational ironmaking”, whether based on green hydrogen or on carbon capture, utilisation and storage (CCUS), is pushed for after 2030.
The company is also proud of highlighting that “electric arc furnaces (EAF) now account for 25% of the Group’s global production, up from 19% in 2018”, though it should be added that this does not result from a net increase in EAF capacity, but from the fall in BF-BOF capacity.
A concrete example of this approach is at work at the company’s steel plant in Gijón, Spain, where construction of a new 1.1 Mtpa EAF started in May 2024. As a reminder, Gijón was where ArcelorMittal announced in 2021 with much fanfare it would set up a 2.3 Mtpa green hydrogen DRI unit that would feed “the world’s first full-scale zero-carbon emissions steel plant” in Sestao, Spain, but the DRI did not materialise. That plant in Sestao was supposed to start production before the end of 2025—a timeline now impossible to hold.
From a climate perspective, setting up an EAF without clearly ensuring a source of low-emissions electricity and iron, be it recycled iron and steel (scrap) or direct reduced iron (DR iron), raises a lot of questions on the overall GHG footprint. Whereas steelmaking in basic oxygen furnaces (BOFs) is generally coupled with blast furnaces which produce and melt iron at the same time, EAFs can be standalone units which melt iron by themselves. EAFs are primarily powered by electricity and therefore emit limited amounts of GHGs, though they often also consume fossil gas.
It follows that while the vast majority of the total GHG footprint of steel made in a BF-BOF plant originates on-site—they are “direct”, or “scope 1” emissions—the vast majority of the total GHG footprint of steel made in an EAF does not come from the EAF itself, but from the production of electricity needed to power the EAF (so-called “scope 2” emissions) as well as the production of iron processed by the EAF to make steel. From a company’s perspective, if this iron is sourced from external suppliers, the related GHG emissions would fall under its so-called “scope 3” emissions.
Even with grid electricity which is currently not low-emissions, producing one tonne of steel in an EAF 100% fed with scrap, which comes with a zero-emissions footprint, emits on average four times less CO2 than producing one tonne of steel in a BF-BOF plant. However, because it can be challenging to find scrap in sufficient quantities and/or of sufficient quality to meet steel product requirements—especially for the more demanding grades used in the automotive industry—scrap inputs might need to be complemented with “virgin iron” made from iron ore. This can be pig iron made in a highly-CO2-intensive blast furnace, or DR iron with a lower CO2 footprint.
On the electricity side, ArcelorMittal deserves credit for investing directly in renewable electricity generation, with a total capacity installed or under development of 2.3GW in India, Brazil and Argentina, and over 1 billion USD in investments.
On the iron side, everything else being equal, if ArcelorMittal is to massively expand its fleet of EAFs, it will increasingly struggle to find scrap in sufficient quantities and/or of sufficient quality, and will therefore have to feed its new EAFs with significant amounts of “virgin iron”.
In the public version of the state aid decision about the DRI-EAF project in Dunkirk, France, ArcelorMittal is reported to have “established a maximum of [30 – 50] % scrap and a minimum of [50 – 70] % DRI” in order to “achieve the minimum [steel] quality required for the orderbook”. In addition, because the planned DRI capacity is lower than planned steel production volumes, “ArcelorMittal France will also acquire [0 – 1] Mt of HBI. ArcelorMittal France’s policy is to acquire green HBI, i.e. HBI produced in a process with zero or negligible greenhouse gas emissions.”
If ArcelorMittal does not produce by itself or procure lower-emissions DR iron in sufficient volumes, regardless of whether this DR iron would be produced in Europe or not, there is a risk that the EAFs will eventually be fed with pig iron made in a highly-CO2-intensive blast furnace, or simply left underutilised. Therefore, EAFs without clear plans to feed them with low-emission iron are likely to underdeliver in terms of climate benefits.
This risk is all the more potent because ArcelorMittal’s 2030 climate targets only cover scope 1 and 2 and would therefore not include emissions associated with pig iron purchased from external suppliers.
Contacts:
Caroline Ashley
Director, SteelWatch (France, CEST)
[email protected] | +44 7947 691 911
Gozde IncegulCommunications, SteelWatch (France, CEST)
[email protected] | +90 537 583 5442
References:
- ArcelorMittal, ArcelorMittal provides update on its European decarbonization plans, 26 November 2024.
- ArcelorMittal, ArcelorMittal Sustainability Report 2024, p15, p2, 2024.
- World Steel Association, World Steel in figures 2024.
- SteelWatch, Explainer: Why the auto industry doesn’t need blast furnace steel, 22 January 2025.
- ArcelorMittal, ArcelorMittal Sustainability Report 2024, p15, 2024.
- European Commission, State Aid- France Aid to ArcelorMittal France, 20 July, 2023.
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