Driving the Capex Procurement of Europe's Largest Steel Decarbonisation Project

Client Challenge

In 2022, SHS Steel Holding Saar began decarbonising its operations by constructing a direct reduction plant (DRI) and electric arc furnaces (EAF) in Dillingen and Völklingen. The €4.6bn project aims to cut emissions by 55% by 2029. Limited experience with export financing, complex tender requirements due to €2.6bn government support, and a strained supplier market made strategic procurement and cash-flow management critical.

H&Z Approach

Since September 2022, H&Z Management Consulting has provided comprehensive support across strategy, structure, and implementation. We developed capacity-securing strategies for key suppliers, including DRI and EAF manufacturers and transformer providers. An overarching project structure (“Bauherrenmodell”) and awarding scenarios tailored to an oligopolistic market were established.

The procurement organisation was restructured, expanding with permanent and interim specialists. H&Z introduced funding-compliant procurement processes via a dedicated tender platform and piloted tenders in Dillingen and Völklingen. Over 14 months, we managed tenders for substations, secondary metallurgy, DRI, and two EAFs, while also optimising ECA financing throughout. 

Results

H&Z delivered the main tenders within just 14 months – significantly faster than industry norms. The contracts included protection against US tariffs and mitigated cost risks. Full cash-flow-positiveness was achieved by extending payment terms and accelerating pro-rata government funding. ECA financing was optimised across all tenders, ensuring competitive conditions. The project is now recognised by suppliers and the German funding agency as a benchmark in the national steel sector.