Thyssenkrupp nears deal to safeguard state 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 lock in €2 billion ($2.3 billion) in public funding for its green steel site in Germany, its finance chief said on Thursday, removing a major headache over one of the conglomerate's flagship projects.

Thyssenkrupp initially secured the funds, which account for two-thirds of the total investment volume of the direct reduction plant, in 2023, contingent on the use of hydrogen, a premise that has since become unrealistic.

Lengthy talks ensued to adjust the funding framework and essentially remove the hard condition to use hydrogen, which will likely not be available in Europe at affordable prices any time soon.

"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."

Shares in the company turned positive after the comments, made during a call with journalists to discuss third-quarter results, and traded 3.6% higher at 0944 GMT.

The comments came as Thyssenkrupp raised the lower end of its profit outlook for 2026, boosted by its steel, marine and materials trading units as well as cost cuts related to its ongoing efficiency programme.

The German firm, which makes everything from car parts to fertiliser plants, is currently in the process of radically changing its structure, spinning off all of its individual divisions in a bid to simplify and improve performance.

Thyssenkrupp now 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 came in higher than expected, also driven by the materials division, which is to be spun off this autumn, 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 and Keith Weir)