Stahl-Holding-Saar (SHS) has started above-ground construction on its Power4Steel project, a €4.6 billion steel-decarbonisation programme in Saarland, Germany. The project involves replacing coal-based blast furnaces with a direct-reduction plant and two electric-arc furnaces. Superstructure work has begun at the Dillingen and Völklingen sites, marking the first of approximately 120 planned buildings to reach completion. This milestone was highlighted during a visit by Chancellor Friedrich Merz and Saarland Minister-President Anke Rehlinger on September 28.
The Power4Steel project aims to significantly reduce emissions, with a target of cutting emissions by up to 55 percent by the early 2030s and achieving climate-neutral steel production by 2045. An interim target is to reduce emissions by 4.8 million tonnes per year within six years of plant contracts. The project will also involve the production of high-purity cubic silicon carbide for the semiconductor market through SHS's Y-SIC venture, a partnership that will start production in Dillingen next year.
The direct-reduction unit at Dillingen, designed by Midrex Flex technology, will have a capacity of about 2 million tonnes of direct-reduced iron annually and will stand roughly 140 metres high, comparable to a 45-storey tower. Primetals Technologies, Midrex Technologies, and DSD Steel Group have been contracted to build the direct-reduction plant and the electric-arc furnaces. The project is financed by €2.6 billion of public support from the German federal government and the state of Saarland, and a €1.7 billion bank loan package secured in October 2025.
Commissioning schedules set the Völklingen electric-arc furnace for 2028, followed by the Dillingen furnace and direct-reduction plant in 2029. The project will also involve a ten-year contract with French developer Verso Energy to supply at least 6,000 tonnes of green hydrogen per year from 2029. This is a fraction of the up-to 120,000 tonnes the group may use in later expansion phases, highlighting the project's potential for future growth and increased use of renewable energy sources.
The Power4Steel project is SHS's flagship transformation programme, targeting an initial crude-steel output of 3.5 million tonnes per year. The programme involves significant investment in new technology and infrastructure, demonstrating SHS's commitment to reducing its environmental impact while maintaining its position in the steel production industry. The project's progress was marked by a visit from high-ranking officials, underscoring its importance to the region and the German economy.
The Y-SIC venture, introduced during the same visit, is a partnership to produce high-purity cubic silicon carbide for the semiconductor market. Production is slated to start in Dillingen next year, representing a new business direction for SHS and an opportunity to diversify its product portfolio. This development highlights SHS's efforts to adapt to changing market demands and invest in innovative technologies.
The start of above-ground construction on the Power4Steel project marks a significant milestone in SHS's decarbonisation efforts. With a total investment of €4.6 billion and a focus on reducing emissions, the project is set to have a lasting impact on the steel production industry in Saarland and beyond. As the project progresses, it will be closely watched by industry stakeholders and policymakers seeking to balance economic growth with environmental sustainability.
Key points
- SHS aims to cut emissions by up to 55 percent by the early 2030s and achieve climate-neutral steel production by 2045.
- The Power4Steel project involves a €4.6 billion investment and targets an initial crude-steel output of 3.5 million tonnes per year.
- The project includes a ten-year contract with Verso Energy to supply at least 6,000 tonnes of green hydrogen per year from 2029.
