FRANKFURT - Germany's Thyssenkrupp said it is reviewing its plans for the production of green steel following a report on Sunday that it was considering halting a major decarbonisation project.

The crisis-ridden conglomerate said it is reviewing the plan for its steel division, including its "green transformation", which refers to the carbon-neutral production of steel, one of the most polluting industrial processes.

"We are continuously examining the best and most economically viable solutions under the given conditions in terms of technology and results in order to make Thyssenkrupp's steel business climate-neutral in the long term," it said.

Shares in Thyssenkrupp were down 3.2% at 0826 GMT, after the release of its statement late on Sunday.

Thyssenkrupp was considering scenarios ranging from using different technology to halting the hydrogen-based direct reduction project, German newspaper Handelsblatt reported on Sunday, citing internal documents.

Thyssenkrupp Steel Europe (TKSE), in which Czech billionaire Daniel Kretinsky owns a 20% stake, last month warned that the planned direct reduction site in Duisburg could cost more than the initial estimates of 3 billion euros ($3.29 billion).

Around 2 billion euros of the project's funding is from the German government and the state of North Rhine-Westphalia, where Thyssenkrupp is based, and TKSE said possible cost increases had no impact on the subsidies.

Thyssenkrupp confirmed earlier statements saying that the project was being reviewed in light of the new cost estimates, adding that it currently assumed the site would be built.

TKSE is at loggerheads with Thyssenkrupp over how much money the business needs to survive on its own, a dispute that caused the steel division's leadership to resign at the end of August. ($1 = 0.9117 euros)

(Reporting by Ludwig Burger and Christoph Steitz; Editing by Sherry Jacob-Phillips and Alexander Smith)