German industrial projects in steel, chips, batteries at risk from court ruling -sources

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ThyssenKrupp steel factory in Duisburg

BERLIN (Reuters) – German industrial projects in jeopardy after a court ruling wiped 60 billion euros from the federal budget include chip factories, decarbonised steel production, and expanding the battery supply chain, two government sources said on Monday.

The ruling last week found the government’s move to transfer unused pandemic funds toward climate initiatives and industry support in a so-called Climate and Transformation Fund (KTF) was illegal.

That put numerous projects in key areas for Germany’s industrial competitiveness at risk, the sources, who declined to be named, warned.

Among them were the ramp-up of the hydrogen industry, with around 45 businesses from 35 regions involved in projects that had hoped for support from the fund.

In the steel industry, businesses planned to invest 6 billion euros ($6.54 billion) in decarbonised steel production, directly and indirectly employing around 20,000 people.

Investments in microelectronics were bundled into the KTF, totalling 31 projects relying on an estimated 4 billion euros in government funding. Fifteen of these had already received legally binding confirmations of the funds, the sources said.

Other chip projects that had been expecting state support include the planned TSMC chip plant, an expansion of the Infineon plant in Dresden, and the Intel plant planned for Magdeburg.

Numerous projects along the battery supply chain were submitted as outlines for funding applications, the sources said, with an investment volume of around 20 billion euros.

The German economy ministry had also planned to offer so-called climate protection contracts worth in the mid double-digit billion euros, to protect against unexpected price fluctuations.

Companies were to enter a bidding process for the contracts which, according to initial estimates, could secure around 500,000 jobs throughout Germany.

Funding agreed earlier this month to raise and extend compensation for high electricity prices for 350 firms at risk of relocating out of Germany was also earmarked to come from the KTF fund, the sources said.

($1 = 0.9168 euros)

(Reporting by Markus Wacket; Writing by Victoria Waldersee; Editing by Bill Berkrot)

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