In the 1950s and 1960s the development of Ilseder Hütte was a story of post-war reconstruction, general economic upturn and rising output accompanied by similarly rising costs, a substantial need for investment and a lack of capital. The Group invested in large-scale, cost-intensive modernization programs at all of its plants.
In Ilsede the blast furnaces and ancillary plant were extended, while in Peine new rolling mills were erected and a modern oxygen steel plant entered service in 1964. The by now out-dated Thomas-method steelworks was shut down. The iron ore mining activities were gradually concentrated on high-performance facilities. In 1969 Ilseder Hütte also relinquished its own coal mining operation with the absorption of the Friedrich der Große pit within the newly-established Ruhrkohle AG. The small Minden mine was closed down in 1958.
As these developments progressed, it became increasingly clear that Ilseder Hütte – in common with the entire coal and steel industry – could no longer compensate for the growing international competitive pressure in the long term through modernization and rationalization alone. Throughout the industry there began a trend towards cooperation and mergers.
As far back as the 1950s, Ilseder Hütte had entered into agreements with the neighboring smelting plant in Salzgitter, mainly covering ore supplies and the exploitation of deposits. Now, in the 1960s, this relationship was intensified with coordinated production and investment that reduced costs.
As part of the German portfolio of the former Reichswerke undertaking, the neighboring company had meanwhile become the property of the Federal Republic of Germany and was part of the state-owned AG für Berg- und Hüttenbetriebe, which, in 1961, was renamed Salzgitter AG. Its continued existence had been approved only after lengthy political and public argument. Since most of the production plant had been dismantled, the smelting works had to be largely rebuilt.
From 1953 the company traded as Hüttenwerk Salzgitter AG, changing its name in 1964 to Salzgitter Hüttenwerk AG.
From the mid 1960s onwards, the lengthy cooperation between Ilseder Hütte and Salzgitter led to intensive discussions regarding a possible merger in which other companies were also involved from time to time. Ultimately, the Salzgitter Group, as it was, then folded its Steel Division – amalgamated within Salzgitter Hüttenwerk AG – along with certain other related interests into Ilseder Hütte as part of an increase in capital.
Simultaneously, Salzgitter AG acquired a majority stake in the new joint undertaking which thus reverted to state ownership. On October 1, 1970, Ilseder Hütte changed its name to Stahlwerke Peine-Salzgitter AG.