January 31, 2014 / 10:51 AM / 4 years ago

ArcelorMittal warns German energy reform would curb investment

FRANKFURT/DUESSELDORF, Jan 31 (Reuters) - ArcelorMittal , the world’s biggest steelmaker, warned that Germany’s proposed energy reforms would prompt companies to scale back investments as it becomes harder to make money in Europe’s biggest economy.

Germany’s cabinet last week backed a plan by Economy Minister Sigmar Gabriel to reform the way Germany supports renewable power production, including requiring industries that produce their own power to start paying charges as well, after rising costs have burdened household bill-payers.

“Nobody is saying that we’ll start closing plants tomorrow,” Frank Schulz, head of ArcelorMittal’s German business, told Reuters. “But if the threats become more concrete now, companies will be increasingly cautious when it comes to investments.”

Schulz said the proposed reforms would add 30 million euros ($40.7 million) a year to the cost of operating ArcelorMittal’s four plants in Germany, which employ about 8,000 workers and were unprofitable in 2012. Of that cost figure, more than 20 million euros would come from green surcharges.

The money goes to green energy producers under a feed-in tariff law guaranteeing them above-market earnings. Producers of power for their own use so far have been exempted from paying the surcharges.

To reduce waste and lower the amount of expensive power they have to buy to operate their plants, many companies recycle gases released as a byproduct of production to generate power.

Schulz said that imposing charges on existing on-site power facilities, which commonly cost millions of euros to set up, would create a disincentive for future investments.

“Gabriel’s plans have to be changed,” said Schulz, echoing criticism from other industrial companies operating in Germany such as German steelmaker ThyssenKrupp and chemicals giant BASF.

Schulz, who also oversees European government affairs for ArcelorMittal, added that he aimed to discuss the matter with the economy minister as soon as possible.

$1 = 0.7373 euros Reporting by Maria Sheahan and Tom Kaeckenhoff; editing by Jane Baird

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