ArcelorMittal's Dunkirk move: €1.3 billion green steel EAF investment

ArcelorMittal officially announced its decision to build a €1.3 billion electric arc furnace (EAF) at its Dunkirk facility on 10 February. The furnace, with an annual capacity of 2 million tonnes, is planned to come online in 2029. Half of the investment will be covered by public resources through Energy Efficiency Certificates.

The new EAF will emit three times less CO2 than a blast furnace, producing 0.6 tonnes of CO2 equivalent per tonne. The furnace is designed to operate with a mix of scrap, direct reduced iron/hot briquetted iron (DRI/HBI), and pig iron.

CEO Aditya Mittal said: "I am very pleased to be able to launch this investment. This step confirms our group's long-term commitment to France."

From two EAFs and a DRI plant down to a single furnace

The most notable aspect is the narrowing scope of the investment. The Luxembourg-based steel giant had previously committed to building two EAFs and a 2.5 million tonne/year DRI plant at Dunkirk. Under the original plan, both furnaces were expected to start operations in 2027. Today, only a single EAF remains on the table, and the timeline has extended to 2029.

Behind the scaling back are high natural gas and hydrogen costs in Europe. ArcelorMittal's management had openly addressed this at the French Parliament last year. The global steel giant has also suspended the vast majority of its decarbonisation projects across Europe, citing competitiveness pressures.

The DRI plant's removal from the plans signals that ArcelorMittal will turn to importing DRI/HBI from abroad rather than building its own DRI production capacity. This represents a shift toward the "decoupled steelmaking" model, where iron production and steelmaking are geographically separated.

Risk of a sliding scale in green steel definition

The investment decision also intersects with debates over the EU's green steel policies. According to a leaked draft of the Industrial Acceleration Act (IAA), the European Commission plans to introduce a "sliding scale" mechanism for low-carbon steel labelling. In this system, a higher green classification is achieved as the proportion of scrap used in production decreases. In practice, this means DRI-EAF steel could obtain a better green label than scrap-based EAF production — despite having a higher emission profile.

The EU's independent EAF producers are fiercely opposing this mechanism. Their concerns are concrete: integrated producers would gain an advantage over secondary producers through the sliding scale in markets where low-carbon demand is concentrated, such as construction.

The broader dimension of the debate is the gradual separation of iron and steelmaking in Europe. The current trajectory of CBAM, permanent steel quotas, and green steel standardisation allows integrated producers to implement limited EAF conversions while closing the market to external imports but preserving access to cheap DRI/HBI supply. In this scenario, the risk emerges of primary steelmaking migrating outside the continent and domestic prices rising to levels that downstream industries cannot bear.

2025 results and 2026 outlook

ArcelorMittal reported $3.2 billion in net income in its 2025 results announced this week. The global steel giant expects a recovery in European steel prices and demand in 2026.