Thyssenkrupp nears deal to ensure aid for €3 billion green steel site

By Christoph Steitz and Tom Käckenhoff

FRANKFURT/DUESSELDORF, Aug 13 (Reuters) - Thyssenkrupp is nearing a deal with Brussels to ensure its €3 billion ($3.5 billion) green steel site in Germany can go ahead despite changed conditions, its finance chief said on Thursday, easing uncertainty over the mostly grant-funded project.

The conglomerate in 2023 secured €2 billion in public funds for the direct reduction plant in 2023, contingent on the use of hydrogen produced using renewable energy, a premise that has since become unrealistic.

Lengthy talks ensued to adjust the funding framework and to try to remove the obligation to use hydrogen, which is unlikely to be available in Europe at affordable prices in the near future, while keeping the grants.

Thyssenkrupp has said the plant could also run on natural gas, which, unlike green hydrogen, is not CO2 neutral.

Shares in Thyssenkrupp rose as much as 7.5% to their highest level since November 2018 on Thursday, although analysts and traders also cited the company raising the lower end of its profit outlook for 2026, boosted by its steel, marine and materials trading units.

"We are very pleased that the European Commission has approved the planned amendment to the funding rules currently in force and has already confirmed that they are fully compliant with EU state aid law," Axel Hamann said.

"This means that the Federal Government can implement this amendment promptly and, consequently, adjust the funding decisions accordingly. The new funding rules will then come into effect."

The German company, whose products range from car parts to fertilisers, is radically changing its structure and spinning off all of its individual divisions to try to simplify and improve performance.

Thyssenkrupp said on Thursday it expects adjusted annual operating profit of €600 million to €900 million, up from €500 million to €900 million.

At €8.79 billion, third-quarter sales were higher than expected, also driven by the materials division, which is to be spun off in the coming months, as well as its steel division, which will hold a capital markets day in September.

($1 = 0.8677 euros)

(Reporting by Christoph Steitz and Tom Kaeckenhoff, editing by Kirsten Donovan, Thomas Seythal, Keith Weir and Barbara Lewis)