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Q&A: GravitHy expects policy clarity to shape economics

Q&A: GravitHy expects policy clarity to shape economics

London, 6 February (Argus) — Argus spoke with French direct-reduced iron (DRI) firm GravitHy's chief executive Jose Naldin to explore the company's strategy, cost position and partnership plans in a rapidly shifting competitive landscape. The company is progressing with its Fos-sur-Mer plant, scheduled to begin production in 2030. Edited highlights follow: Some other green steel companies will start with natural gas and gradually introduce H2, mostly because of the price of hydrogen. Does GravitHy plan to use green H2 from the start or have a similar strategy to others? We follow a different approach. While other projects adopt gradual strategies, we are fully committed to energy independence and decarbonisation, and we believe the technology for hydrogen production and its use in DRI is already mature. Our strategy is to start with hydrogen from day one. A key advantage of our site in France is access to baseload electricity, allowing us to produce and use hydrogen on site, which is more cost effective and technically sound. We will still use some natural gas to add carbon to the product, but only for carburisation, and hydrogen will be the reducing agent from the start. This is why we will install significant electrolyser capacity. GravitHy's competitiveness depends heavily on electricity and hydrogen prices in the EU. Which EU policy tools and trade measures support your cost position most? DRI/HBI production has two main costs: energy and cost of capital. Iron ore is a global commodity, so electricity becomes the differentiator. This is why choosing France, with its competitive and decarbonised nuclear-based mix, is essential. But competitiveness also requires a level playing field. Without strong policies ensuring others follow the same decarbonisation rules, European producers are at a disadvantage. Europe must remain committed to the Green Deal and Fit for 55 because decarbonisation is not only about climate, but also about industrial resilience, sovereignty and security. The fundamentals are set out in the Clean Industrial Deal and the Steel and Metals Action Plan. What matters now is implementation. We are waiting for the Industrial Accelerator Act to detail lead market mechanisms and define green steel in a way that incentivises resilient European value chains. North Africa, particularly Algeria, is rapidly scaling low-carbon DRI. Given this growing supply of low cost, hydrogen-ready DRI/HBI in nearby markets, how does GravitHy position itself competitively while producing in a higher cost environment? Competitiveness must be analysed globally and this is where policies matter. Imported material must face the same carbon costs, and safety and quality criteria. Projects outside Europe also face rising cost of capital and natural gas prices. When you add these factors together — plus CBAM payments, transport costs and a strengthened ETS — our projections show that early in the next decade, GravitHy can be competitive against natural gas-based HBI imports. There is confusion because people compare today's HBI prices with future costs for new projects. But the market will change: free allowances will phase out, CBAM becomes financially relevant and carbon prices will likely rise. Under these conditions, our modelling shows competitiveness around 2030. But this depends on EU policy implementation — especially the Industrial Accelerator Act and a strong ETS — to maintain clear decarbonisation incentives. Your current schedule targets commercial production in 2030, with testing beginning in 2029. Is this timeline still valid, given delays at other European decarbonisation projects? For now, yes. As engineering and procurement advance, we will confirm the dates. The timeline depends on permitting and reaching an investment decision, but it remains ambitious and achievable. It will also depend on the progress of our engineering studies and procurement strategy. Europe faces tightness in DR-grade pellet supply. Has GravitHy secured long-term pellets, and how exposed are you to fluctuations? We have already signed a contract with Rio Tinto, one of our shareholders, for high grade pellets covering part of our needs. We are in discussions with other pellet suppliers to complete our strategy. Globally, there is existing pellet capacity and numerous new projects. If all materialise, there could be tightness, but this is a bottom-up situation. For the first wave of DRI projects, supply is sufficient. And if DRI capacity expands significantly, pellet producers will react as it is an attractive market. Mining companies are flexible and investment driven. So I am less concerned than many. Our aim is long-term partnerships across all inputs and we believe our project's value strengthens this position. GravitHy has recently signed an agreement with Marcegaglia, which aligns with Marcegaglia's plan to start electric arc furnace-based flat steel production in Fos around 2028. What does this co-operation entail? Potential supply agreement or infrastructure sharing? These projects are still in development, so the goal is to build strong value chains early. Collaboration is much easier at this stage than after plants are built. GravitHy, Marcegaglia and Nucor are in the same area and there are many potential synergies: logistics, infrastructure, circular economy streams, resource use and environmental co-ordination. If you collaborate too late in heavy industry, it becomes difficult or impossible because of cost and technical constraints. The MoU is not a commercial negotiation, it is about exploring how to make development faster, more efficient, safer and more cost effective through collaboration. Are you exploring partnerships with northern European electric arc furnace/mini-mill projects? No. We remain a small but growing team focused on maximising our project in Fos. We look at northern Europe mainly to understand how we can support their decarbonisation by supplying the iron units they need, rather than forming MoUs similar to the one with Marcegaglia and Nucor. There is only so much we can do with our current size; the focus is on maximising the project in Fos. By Elif Eyuboglu Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.