The European Union is looking to prop up Europe’s steel and metals industry with a new action plan. Sector organizations welcome the plan, but say the crisis that began with spiking energy costs at the end of 2021 now needs to be addressed with urgent actions if the EU has a chance to regain at least part of its competitiveness from before the energy crisis.
The high energy costs that have crippled the European metals industry have now combined with the U.S. tariffs to further undermine Europe’s steel and aluminum sectors, which have been in crisis for three years.
The EU needs to move from the action plans to immediate actions to protect what’s left from the European energy-intensive heavy industry, associations say.
The bloc unveiled this month the so-called European Steel and Metals Action Plan to address the challenges the metals industry faces—high energy costs, unfair international competition, decarbonization investment needs, and regulatory burden.
The EU industry remains threatened by global excess capacities and by global distortions from China and other countries that artificially support their domestic industries or circumvent EU trade defense measures and sanctions, the European Commission said.
The EU is the only major steelmaking region seeing a decrease in capacity, it added.
The bloc’s executive arm also selected 47 strategic projects to secure and diversify access to critical raw materials in the EU. These include lithium, nickel, cobalt, manganese, and graphite mining, processing, and recycling projects, which are expected to “particularly benefit the EU battery raw material value chain.”
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The selected projects will benefit from an accelerated permitting process and facilitated access to finance.
“This is a landmark moment for European sovereignty as an industrial powerhouse,” said Stéphane Séjourné, European Commission Executive Vice-President for Prosperity and Industrial Strategy.
This, and support for the steel and metals industries, could be a landmark moment if the EU acts now to address the challenges, particularly the high energy costs, industry associations say.
European competitiveness has been eroded in recent years by volatile and high energy prices, which are up to five times higher than those in the United States and China. The new tariffs from the U.S. are also hitting European metals industries. Some European facilities face an existential threat after years of trying to cope with the high energy costs.
All the action plans and lists of selected and priority projects aren’t easing the strain on Europe’s metals industry in the immediate future. Some production capacities may not have the time to wait for Europe’s action plans to turn into real action months and years from now.
EUROFER, the European Steel Association, said the EU has correctly diagnosed the industry malaise, but that action is urgently needed to address the issues.
“Despite the positive proposals from the Commission, energy remains the elephant in the room. High energy prices affect not only steel and metals production, but are dragging down entire European industrial value chains. Further work to reduce energy costs is crucial”, said EUROFER President Henrik Adam.
European Aluminium, the sector association, also welcomed the plan but called for urgent action—a need accelerated by the new U.S. tariffs on aluminum.
“There are certainly promising elements in the Plan. But strategy alone won’t keep our operations running,” said Paul Voss, Director General of European Aluminium.
“The situation is moving fast—global competitors are making decisions today that will shape markets for years to come,” Voss added.
“We need immediate, targeted interventions to stabilise the sector now, starting with energy costs and scrap leakage, but we also need long-term structural reforms to ensure aluminium production remains a key pillar of Europe’s industrial base.”
Without immediate action, the EU will lose what little it has left of its competitiveness and its much-hyped decarbonization goals.
By Tsvetana Paraskova for Oilprice.com
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