Voestalpine's Green Steel Transition Nears Completion

Austria's Voestalpine reports strong profits amid a historic €1.5B green steel transformation. New electric arc furnaces aim to cut CO2 by 30% by 2029, leveraging EU carbon tariffs.

Austria's premier steelmaker, Voestalpine, is advancing through the most capital-intensive strategic overhaul in its corporate history. The core of this shift involves replacing two traditional blast furnaces with electric arc furnace (EAF) technology, a move designed to fundamentally reshape the company's cost profile and competitive standing in the global market.

Financial Foundation Supports Ambitious Plans

The massive transformation program is underpinned by robust operational performance. For the first three quarters of the fiscal year 2025/26 (covering April to December 2025), Voestalpine reported a 20.9% increase in EBIT, reaching €473 million. Pre-tax profit surged by 46.5%. Concurrently, net debt was reduced by 27.4% to €1.4 billion. Management has reaffirmed its full-year guidance, anticipating an EBITDA in the range of €1.4 to €1.55 billion for 2025/26.

A revised dividend policy has also been established, effective this fiscal year. The company intends to distribute 30% of earnings per share, with a guaranteed minimum dividend of €0.40, provided the leverage ratio remains below 2.0 following the payout.

Physical Progress on Greentec Steel Initiative

The €1.5 billion "Greentec Steel" project is now visibly taking shape. Construction of the new EAF steel plant building in Linz, which will house the first electric arc furnace, is underway. The main hall structure is scheduled for completion in April 2026, with the first furnace expected to be commissioned in February 2027.

Once fully operational, the two EAFs in Linz and Donawitz are projected to have a combined annual production capacity of approximately 2.5 million tonnes of CO?-reduced steel. The company aims to cut its carbon emissions by around 30% compared to 2019 levels by 2029—a reduction of nearly four million tonnes per year. This initiative stands as Austria's largest climate protection program in the industrial sector.

Parallel Innovation with Hy4Smelt

Running in parallel is the "Hy4Smelt" project. In a joint venture with Primetals Technologies and Rio Tinto, Voestalpine is constructing the world's first industrial-scale demonstration plant that integrates hydrogen-based direct reduction with an electric smelting process. Total investment for this pioneering effort is approximately €170 million. Initial production is targeted for the end of 2027, with the research project slated to conclude in 2030.

Regulatory Tailwinds Provide Strategic Advantage

The company's green transition is well-timed to capitalize on evolving European Union regulations. The EU's Carbon Border Adjustment Mechanism (CBAM) became fully effective in January 2026, requiring steel importers to purchase CO? certificates at European price levels. Further measures are planned for July 2026, including a halving of import quotas and a doubling of tariffs for volumes that exceed them. These policies are set to gradually create a structural advantage for early movers like Voestalpine over competitors from regions like Asia, which may face higher costs to access the EU market.

With the main construction phase ending in April 2026 and furnace commissioning targeted for February 2027, the program is entering its final stretch. Voestalpine's share price currently trades approximately 19% below its 52-week high of €49.10. Whether operational progress can bridge this valuation gap in the medium term will largely depend on how swiftly the new, greener production capacities translate into improved cost efficiency and profitability.