German steelmakers SHS – Stahl-Holding-Saar Group announced the completion of a €1.7 billion (USD$1.7 billion) financing package, aimed at funding its Power4Steel transformation project, a major decarbonization project advancing the company’s pathway towards producing climate-neutral steel.

Steelmaking is one of the biggest emitters of CO2 globally, and one of the more challenging sectors to abate, with total greenhouse gas emissions (GHG) from the sector accounting for 7% – 9% of direct emissions from the global use of fossil fuels.

SHS, holding company for steelmakers Dillinger and Saarstahl, has set a goal to reach fully climate neutral steelmaking by 2045, with an interim target to reduce CO2 emissions by 55% by 2030, supported by the Power4Steel program’s use of hydrogen, electric steel production, and recycling of scrap steel. As part of the Power4Steel project, a new direct reduction plant and two electric arc furnaces are under construction at SHS’ Dillingen and Völklingen production sites, which will gradually replace the existing blast furnaces and converters. According to SHS, the sites expect to begin producing up to 3.5 million tons of CO2-reduced steel annually in 2028/29.

According to the company, the new financing package, secured through a consortium of leading national and international banks, will ensure full funding through the duration of the Power4Steel investment project.

The package included both corporate financing and investment financing – supporting specific projects or assets – elements, with the investment component supported by the export credit agencies OeKB (Austria) and SACE (Italy), and additional funding provided through the substantial equity contributions and direct financial support from the German Federal Government and the Saarland Regional Government.

SHS CEO Stefan Rauber said:

“This marks another key milestone on our path toward a low-carbon future. Building on the funding commitments made by the federal and state governments, the placement of orders for the core plant units and the securing of initial green hydrogen supplies, the successful completion of the overall financing package represents another decisive step towards the advancement of this unique project. We are firmly convinced that climate protection, innovation and competitiveness can – and must – advance in tandem.”