Steelmakers in crisis as energy crunch hits output

STORY: Europe’s steelmakers face a mounting crisis as energy costs soar.

Many are being forced to cut output, threatening mass shutdowns that some warn could become permanent.

Aperam in eastern Belgium is one that has been forced to switch off some furnaces.

"Normally you would have molten steel that goes through this production facility, you would see a lot of activity here, it would be hot. Today it's very cold as you can feel, there is no activity because the steel plant is shut down."

The company’s European chief, Bernard Hallemans, says Aperam’s monthly cost for energy is what it used to spend in a year.

Its production is down by around a half, with over a thousand staff now risking temporary unemployment.

Major producers including ThyssenKrupp and Arcelor Mittal have also trimmed output.

The sector matters for Europe.

According to consultants McKinsey it employs around 330,000 people.

Germany’s steel federation has already warned of a wave of de-industrialization.

While the EU does plan to claw back some money from power producers, it’s not clear how much, or when payments might get to firms like Aperam.

Hallemans says things cannot go on as they are:

"We are doing everything to solve the situation or to cope with the situation with temporary measures and we have temporary levers to overcome a certain period, but this cannot last for years. If this lasts for years, we will see a de-industrialization of sectors like ours and Europe will also for base metals like ours become dependent on imports. This is not what Europe wants.”

What happens next matters for the environment, too.

If European steelmakers disappear, the region will have to import more metal from Asia.

Producers there have lower costs, but much higher carbon emissions.