Yves here. The floundering state of the metals industry is yet another window into Europe’s economic tsuris. But one aspect that might surprise some readers is the sense of urgency from industry participants and experts. When plants shutter or cut back, skilled workers move on. Replacing them (as in finding and training good candidates) is not trivial in terms of time and cost.
By Tsvetana Paraskova, a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. Originally published at OilPrice
- High energy costs and new U.S. tariffs plague Europe’s metal industry.
- The EU’s new Steel and Metals Action Plan and critical raw materials strategy could help to protect the industry.
- Without immediate intervention, Europe risks losing industrial competitiveness permanently.
The European Union is looking to prop up Europe’s steel and metals industry with a new action plan. Sector organizations welcome the plan, but say the crisis that began with spiking energy costs at the end of 2021 now needs to be addressed with urgent actions if the EU has a chance to regain at least part of its competitiveness from before the energy crisis.
The high energy costs that have crippled the European metals industry have now combined with the U.S. tariffs to further undermine Europe’s steel and aluminum sectors, which have been in crisis for three years.
The EU needs to move from the action plans to immediate actions to protect what’s left from the European energy-intensive heavy industry, associations say.
The bloc unveiled this month the so-called European Steel and Metals Action Plan to address the challenges the metals industry faces—high energy costs, unfair international competition, decarbonization investment needs, and regulatory burden.
The EU industry remains threatened by global excess capacities and by global distortions from China and other countries that artificially support their domestic industries or circumvent EU trade defense measures and sanctions, the European Commission said.The EU is the only major steelmaking region seeing a decrease in capacity, it added.
The bloc’s executive arm also selected 47 strategic projects to secure and diversify access to critical raw materials in the EU. These include lithium, nickel, cobalt, manganese, and graphite mining, processing, and recycling projects, which are expected to “particularly benefit the EU battery raw material value chain.”
The selected projects will benefit from an accelerated permitting process and facilitated access to finance.
“This is a landmark moment for European sovereignty as an industrial powerhouse,” said Stéphane Séjourné, European Commission Executive Vice-President for Prosperity and Industrial Strategy.
This, and support for the steel and metals industries, could be a landmark moment if the EU acts now to address the challenges, particularly the high energy costs, industry associations say.
European competitiveness has been eroded in recent years by volatile and high energy prices, which are up to five times higher than those in the United States and China. The new tariffs from the U.S. are also hitting European metals industries. Some European facilities face an existential threat after years of trying to cope with the high energy costs.
All the action plans and lists of selected and priority projects aren’t easing the strain on Europe’s metals industry in the immediate future. Some production capacities may not have the time to wait for Europe’s action plans to turn into real action months and years from now.
EUROFER, the European Steel Association, said the EU has correctly diagnosed the industry malaise, but that action is urgently needed to address the issues.
“Despite the positive proposals from the Commission, energy remains the elephant in the room. High energy prices affect not only steel and metals production, but are dragging down entire European industrial value chains. Further work to reduce energy costs is crucial”, said EUROFER President Henrik Adam.
European Aluminium, the sector association, also welcomed the plan but called for urgent action—a need accelerated by the new U.S. tariffs on aluminum.
“There are certainly promising elements in the Plan. But strategy alone won’t keep our operations running,” said Paul Voss, Director General of European Aluminium.
“The situation is moving fast—global competitors are making decisions today that will shape markets for years to come,” Voss added.
“We need immediate, targeted interventions to stabilise the sector now, starting with energy costs and scrap leakage, but we also need long-term structural reforms to ensure aluminium production remains a key pillar of Europe’s industrial base.”
Without immediate action, the EU will lose what little it has left of its competitiveness and its much-hyped decarbonization goals.
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Perhaps what might concentrate minds in the EU is the news that in a few weeks, the UK will lose the last blast furnaces that they have. And that means that they will lose the ability to make steel from scratch. In addition, the UK government is going to let this happen-
https://www.theguardian.com/business/2025/mar/27/british-steel-scunthorpe-blast-furnaces-closure-plans-job-risk
Gunna make it much harder to make things like tanks and ships but are they paying attention to this in the EU?
They are really determined to fix the knife crimes. First they ban zombie knives and ninja swords, and now they ban steel.
The origin of this policy document goes well back to before the Ukraine war – the EU Commission has long had a series of policy documents and statutory objectives on metals and other resources – after all, the EU’s original form was called the European Coal and Steel Community and metals policy has always been a core element of the Commissions portfolio. For a long time the focus was on using trade to defend against the many countries that subsidise steel production – the South Koreans showed unambiguously in the 1960’s and 70’s that maintaining a domestic steel industry, even if it seemed illogical (Korea having little to no coal or steel) was fundamental to achieving industrial take off, and numerous countries have attempted to follow that lead. At the moment, Indonesia is, along with China, the main source of what is in reality subsidised steel (definitions vary). The importance of rare earths and other critical minerals has been recognised for a long time, but getting a coherent policy agreed, especially when many European companies have already tied themselves into Chinese supply chains, is exceptionally difficult.
The problem, as always, with the EU is in trying to reconcile a centralised policy with both competing objectives (like decarbonising industry, and in particular environmental and internal competition directives) along with numerous national and sectoral interests. For the most part, smaller EU countries have given up on trying to maintain small native metals industries (such a specialised steel plants), while the major industrial nations have strongly contrasting views on the approach to maintaining a protected sector. In some respects Brexit made life easier, as this removed the strongest voice for a total free market/deregulated approach.
But as so often, the reality with EU policy is that the hard work at ground level is done by national governments, which follow their own national objectives. The Ukraine crisis and Trumps stick waving has certainly concentrated minds, especially on energy. But there does tend to be a dynamic of critical mass building up when it comes to EU policy making – the process (as with metals policy) can take a decade or more to move through the system, but when sufficient consensus builds up, it can be surprising how fast European policy can move. I suspect we are seeing one of those points of inflection where fundamental strategies change rapidly. It may appear to be a ‘new’ strategy, but in reality these things are being ground out behind the scenes over a long period. The issue of critical metals (and energy costs) has been obvious to those paying attention for at least 3 decades.
PK, the European Coal and Steel Community is indeed the ancestor of the EU but it is not the origin.
The origin is the International Authority for the Ruhr set up in 1948 by France, the US and the UK (with Belgium, Luxembourg and the Netherlands added later as minor partners) to control the reindustrialisation and (de)militarisation of West Germany by regulating its coal and steel industry, mainly located in the Ruhr (the Soviet sector of Germany was not included). “European” coal and steel policy has always been about war and thus about Germany and thus about Russia.
The French then proposed to pool the coal and steel markets more widely among those powers as the European Coal and Steel Community, with the addition of Italy and the refusal of the UK, and the ECSC subsumed the IAftR.
To quote Wikipedia: “The UK Prime Minister Clement Attlee opposed Britain joining the proposed European Coal and Steel Community, saying that he ‘would not accept the [UK] economy being handed over to an authority that is utterly undemocratic and is responsible to nobody.’
Plus ca change….
Indeed, yes, I somewhat simplified. The origin of the EU always reminds me a little of the paternity of the children in the Preston Sturges comedy The Miracle of Morgan’s Creek.
Yes, per Herbert Morrison’s famous quip: “the Durham miners won’t wear it”. Given the huge struggle to achieve coal nationalisation in 1946, and the highly controversial nationalisation of the iron/steel sector in 1949, why would they have subordinated those hard fought gains for the working class to a supranational body committed to the rationalisation of the coal, iron and steel sectors?
If the whole world now has the same 25% tariff on aluminum going to the US, why is Europe in worse shape than it was before the tariffs?
Metal refining is a value adding industry, and struggles to survive in the rent-extraction focused economies of the western world. The investment required to remain competitive is marked for profit extraction long before it can bear fruit. Like trying to grow an orchard from seed in a pig farm.
From outside of Europe, this article suggests to me a connection with the influence of the financial and political domains over industrial policy. European political leaders appear to be intent on maintaining a commitment to the financial economy to the detriment of industrial needs as has been true in the USA for some time. This commitment appears to be driving their unwillingness to understand that the USA is no longer their ally and that the future maybe in aligning with China and Russia economically.
“This commitment appears to be driving their unwillingness to understand that the USA is” a cannibal” as normal.
I guess if one accept’s van der Pijl’s Atlantic Ruling Class of finance capitalists, one could think that the monster has started to devour itself, as the end of neocolonialism is slowly depriving it of other things to feed on.
Hmmm, maybe I should change my moniker to Polar Optimist…
So many mentions of ‘high energy costs’ without any mention of why they are high (and why only in Europe, not the US or China). It’s as though high energy costs were a natural phenomenon, like weather. The article mentions that steel and aluminum sectors have been in a crisis for ‘three years’, but doesn’t draw any links to notable world or energy market events that happened in that timeframe.