Decarbonized steel startup H2 Green Steel announced today that it has raised €1.5 billion in equity, with proceeds used to finance the construction of the world’s first large-scale green steel plant, capable of producing steel with 95% lower emissions than traditional blast furnace technology.
The deal marks the largest private placement in Europe this year, and comes as demand for low carbon steel is expected to increase significantly, over the next several years, as manufacturers globally aim to decarbonize their supply chains.
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.
Founded in 2020, H2 Green Steel is developing its flagship green steel plant in Boden, Sweden, with the project including a giga-scale green hydrogen plant as an integrated part of the steel production facility. The company employs hydrogen produced using green power to remove the oxygen from iron oxide, avoiding most of the CO2 emissions normally produced, and uses electricity from 100% renewable sources for the energy requirements generated in the manufacturing process. H2 Green Steel aims to begin production in 2025, with plans to produce 5 million tons of nearly fossil-free steel by 2030.
Otto Gernandt, CFO of H2 Green Steel, said:
“This marks the start of industrial scale decarbonization of basic materials production. The sector will require substantial investments over the coming decades to enable our customers to produce green end products and, thereby meet their climate targets. We hope this financing will contribute towards accelerating the much needed, broad participation of capital markets in the transformation of hard-to-abate industries.”
The private placement was led by new investor Hy24, together with existing investors Altor, GIC and Just Climate, and included participation from new investors Andra AP - fonden and Temasek, and existing investors including AMF, Cristina Stenbeck, Hitachi Energy, IMAS Foundation, Kinnevik, Schaeffler, Vargas and Wallenberg Investments holding company FAM.
Hy24 recently raised €2 billion for its hydrogen impact fund, Clean H2 Infra Fund, making it the world’s largest infrastructure fund to exclusively invest in the clean hydrogen value chain. The company’s investment in H2 Green Steel is the largest by its hydrogen infrastructure fund so far.
Pierre-Etienne Franc, CEO of Hy24, said:
”H2 Green Steel Boden is the most advanced large-scale, green industrial project in the world. It is a trailblazer in decarbonization of hard-to-abate industrial sectors like steel. The investment by Hy24’s clean hydrogen infrastructure fund will support the H2 Green Steel’s ambition to materially reshape steel markets, providing a green alternative to its off-takers and partners. This is part of Hy24’s commitment to help industry get to net zero.”
Morgan Stanley acted as sole financial advisor to H2 Green Steel in the private placement.