A seemingly – in legal terms – unconnected event that took place in 1937 was to bring permanent changes for Ilseder Hütte. The National Socialist government founded the Reichswerke AG für Erzbergbau und Eisenhütten “Hermann Göring” for the purpose of setting up and operating a state-owned iron and steel works in the Salzgitter region just a few kilometers from Ilsede and Peine. The project was intended to exploit domestic ore deposits to support the NS regime’s goal of self-sufficiency, as well as its armaments policy.
The private coal and steel companies that held ore concessions in the Salzgitter area were forced to relinquish these in return for shares in the new company. In addition to some concerns based in the Ruhr area, the company most strongly affected was Ilseder Hütte. Additionally it now found itself facing an unequal contest with a larger neighbor to whom the state gave unrestricted preference.
For Ilseder Hütte the following years through to the end of World War II were overshadowed by armaments and the wartime economy. In order to largely maintain production despite the increasing shortage of German workers, from 1941 the company also employed prisoners of war and forced labor. Not until the war ended did the works come to a complete standstill – due mainly to the lack of coal. The production plant had suffered comparatively little war damage.
Starting from the end of 1945 the military government permitted Ilseder Hütte to gradually resume production. In the following year the Allied High Commission reversed its previous plans to dismantle the production plant and permanently unwind the structure of the Group. It was finally decided in 1951/52 that Ilseder Hütte did not represent an excessive concentration of economic power, and the company was released from Allied control. The ore holdings compulsorily handed over to the Reichswerke were in large part returned to the company.