Emirates steel is said to walk away from Thyssenkrupp steel deal

A logo on a sign at the Thyssenkrupp AG metals plant in Duisburg, Germany, on Monday, June 21, 2021. Weaning a low-margin industry off cheap coal and onto more costly green steel technologies will require massive government support and concerted action by steelmakers from Tangshan to Indiana. Photographer: Krisztian Bocsi/Bloomberg

Emirates Steel Arkan is walking away from a potential investment in Thyssenkrupp AG’s steel arm, dealing a fresh blow to the German conglomerate’s plans to offload the struggling operations, people with knowledge of the matter said.

The state-backed Abu Dhabi company has stopped actively pursuing a deal due to concerns over pension liabilities and other complexities of the business, the people said. Emirates Steel was considered the most serious contender to buy a stake in the Thyssenkrupp unit.

Interest from India’s JSW Steel Ltd. has also waned, the people said, asking not to be identified because the information is private.

The development could hamper efforts by Thyssenkrupp’s new chief executive officer, Miguel Angel Lopez Borrego, to turn around the company. His predecessor had struggled to find a solution for the steel unit amid pushback from unions and volatile earnings.

Bloomberg News first revealed in April that Emirates Steel, which has supplied materials for the world’s tallest building, was pursuing a potential investment in Thyssenkrupp’s steel unit. The Abu Dhabi company confirmed at the time it was exploring ways to expand its business with various partners as part of an “ambitious growth strategy.”

A deal with Emirates Steel would have helped boost Thyssenkrupp’s plans to transition to low-carbon steel production. The two firms had discussed Emirates Steel producing energy-intensive products in the United Arab Emirates using renewable power before shipping them to Germany, where Thyssenkrupp could shape them into finished products for the automotive industry, people with knowledge of the matter have said.

Talks could still be revived and other interested parties could emerge. Spokespeople for JSW and Thyssenkrupp declined to comment. A representative for Emirates Steel didn’t immediately respond to a request for comment.