Germany expects Brussels to approve $2.2 billion Thyssenkrupp steel subsidies - source

BERLIN (Reuters) -The European Commission is expected to approve 2 billion euros ($2.2 billion) worth of German state subsidies for Thyssenkrupp's planned green steel plant in Duisburg, a German economy ministry source said on Tuesday.

Approval is expected within the coming weeks, the source said, adding agreement had been reached on how the project is eligible for state funding.

Thyssenkrupp declined to comment.

The European Commission said it was in close and constructive discussions with Germany on the planned aid for Thyssenkrupp's green steel project.

"Recently, good progress has been made on the measure’s key parameters, with a view to ensuring the compatibility with the EU Treaties, while avoiding undue distortions of competition," a spokesperson for Commission told Reuters.

The Commission's main objective is to come to a legally solid decision as soon as possible, the spokesperson added.

The news comes a day ahead of protests planned by workers over what they fear could be lower than anticipated government subsidies for the plant. Economy Minister Robert Habeck is due to speak to workers who have expressed doubts over whether the funds will materialise.

Thyssenkrupp needs financial support to fund the so-called direct reduction iron (DRI) facility, which is key to lowering emissions in steelmaking, one of the most polluting industrial production techniques.

The DRI site is due to start operation at the end of 2026 and forms the centre of Thyssenkrupp's effort to decarbonise production at its steel division, which is currently looking for a strategic partner.

($1 = 0.9268 euro)

(Reporting by Christian Kraemer, Tom Kaeckenhoff and Christoph Steitz; Editing by Hans Seidenstuecker, Riham Alkousaa, Alexandra Hudson)