German steelmaker Salzgitter AG could soon be acquired by the construction and waste management group Papenburg and ferrous scrap recycler TSR. In an ad-hoc announcement released on 4 November, the publicly-listed steel producer said it had been notified that Papenburg and Remondis subsidiary TSR were considering making a voluntary public takeover offer to Salzgitter shareholders.
It added it had not yet been informed about the range of the potential offer price. The potential offer would be conditional on the consortium obtaining a stakeholding of at least 45 per cent plus one share, including the 25.1 per cent stake already owned by Papenburg.
Hannover-based group GP Günter Papenburg AG is already the second-largest shareholder in Salzgitter AG and holds a blocking minority. The state of Lower Saxony also holds a blocking minority with its stake of 26.5 per cent in Salzgitter AG.
When Papenburg’s shareholding first exceeded the threshold of 25 per cent of voting rights in Salzgitter AG in May 2022, the waste firm denied it had any plans to significantly increase its stake. However, Papenburg had stressed its long-term strategic interest in the steel producer. In its press release at the time, Papenburg said the transformation process launched by Salzgitter offered great opportunities, which it would like to participate in.
Like other steel producers, Salzgitter aims to decarbonise its production process. As part of its "Salcos” ("Salzgitter Low CO2 Steelmaking”) programme, the group plans to completely transition its integrated steel mill in the city of Salzgitter to low-CO2 crude steel production by 2033.
As part of this transformation, it is installing direct reduction facilities running on hydrogen and electric arc furnace (EAF) mills, which will successively replace the blast furnaces and converters. The company also plans to build a new large-scale shredder.
Ferrous scrap will consequently become a much more important raw material for the steelmaking process, which also explains why TSR is interested in acquiring a stake in Salzgitter AG. The Remondis subsidiary is the largest metals recycler in Germany and has recently ramped up its capacity expansion investments.
Last year, TSR started up a new processing facility with a throughput capacity of 450,000 tonnes per year in Duisburg in northwestern Germany. Its certified recycled output, marketed as "TSR40”, can significantly reduce CO2 emissions when used as feedstock in steel production, according to the group.
In mid-2024, Remondis opened a second TSR40 plant in Amsterdam. It is currently building two more TSR40 facilities in Hamburg and Magdeburg, which are slated to start up in 2025 and 2026, respectively.
TSR also expanding in non-ferrous metals recycling
Remondis has also recently expanded its footprint in the non-ferrous metal recycling segment. TSR has acquired the non-ferrous foundry Siegfried Jost GmbH & Co. KG. Jost, a 100-year-old firm headquartered in Menden in northwestern Germany, operates an electric smelter and specialises in the production of copper-based alloys. It also trades in non-ferrous metals and processes production residues.
TSR Recycling GmbH & Co. KG took over the company in October. The acquisition of an electric smelter would complement the group’s recycling and trading expertise, the Remondis subsidiary said on LinkedIn. "We are expanding our portfolio with extensive know-how about the smelting process and the production of copper alloys from recycled raw materials. We are thus in a position to even more efficiently close loops, enabling resources to be optimally used and reused.”
The copper alloys produced by Jost are mainly used in the sanitary and glass industries, according to the new owner. The company also processes production residues such as bottom ash, dross, sand and swarf. In the smelter, these are transformed into high-value alloys such as brass, special brass, glass bronze, aluminium bronze and gunmetal.
Salzgitter's holding in Aurubis likely of strategic interest
Salzgitter’s stake in Hamburg-based copper producer Aurubis AG is therefore also likely of strategic interest for TSR and the Remondis group. The steelmaker is currently the largest single shareholder in Aurubis, with a stake of 29.99 per cent.
There has recently been a lot of stock market speculation about a possible takeover of Aurubis AG. Dirk Rossmann, founder of the eponymous German drugstore chain, increased his shareholding in Aurubis to 15 per cent in October. In parallel, investment bank Goldman Sachs acquired more than 10 per cent of the shares in the Hamburg-based group.
