Decarbonized steel startup H2 Green Steel announced today a series of new funding arrangements, totaling €4.75 billion (USD$5.2 billion), with proceeds to be 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 new funding announcements include project debt financing of €4.2 billion, €300 million in equity, and a €250 million grant from the EU Innovation Fund.
Otto Gernandt, Chief Financial Officer at H2 Green Steel, said:
“We have gone through this process working side-by-side with many different stakeholders. We have worked as one big team, broken new ground and found innovative solutions in structures and ways of working that are normally rigid. The result is a historical milestone for one of the biggest decarbonization ventures globally.”
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.
The company has recently announced a series of supply deals, including several major automotive OEMs and auto suppliers including Volvo, Scania, Mercedes-Benz, BMW and ZF. Overall, H2 Green Steel said that half of its initial yearly volumes of 2.5 million tonnes of steel have already been sold in binding five- to seven-year customer agreements.
The new debt financings include €3.5 billion in senior debt and an up-to-€600 million junior debt facility. New shareholders joining through the equity raise include Microsoft Climate Innovation Fund, Mubea and Siemens Financial Services.
In total, the new announcements bring H2 Green Steel’s funding secured to date to €6.5 billion.
Henrik Henriksson, CEO of H2 Green Steel, said:
“No one has scrutinized our project more thoroughly than those who back our financing. This massive commitment from our lenders, investors and the Innovation Fund is true recognition of the quality of our company. It’s also a big win for the climate as we hope the model will inspire the financing of other decarbonization initiatives in hard-to-abate industries.”