Energy Efficiency, GHG Emissions, Industrial - January 23, 2024
H2 Green Steel Raises €4 Billion for First-of-Its-Kind Plant
H2 Green Steel has signed definitive debt financing agreements for €4.2 billion in project financing for the world's first large-scale green steel plant in northern Sweden.
The latest debt financing agreement is a €300 million addition to the previously announced equity the company had raised; the total equity funding to date amounts to €2.1 billion. The company has also been awarded a €250 million grant from the EU Innovation Fund; H2 Green Steel has now secured funding of close to €6.5 billion.
H2 Green Steel seeks to decarbonize hard-to-abate industries, starting by producing steel with up to 95% lower CO2 emissions than steel made with coke-fired blast furnaces.
The construction of the flagship green steel plant in Boden, with integrated green hydrogen and green iron production, has already begun.
In addition, the supply contracts for hydrogen, iron, and steel equipment are in place. A large portion of the electricity needed has been secured in long-term power purchase agreements. Half of the initial yearly volumes of 2.5 million tons of near-zero steel have been sold in binding five- to seven-year customer agreements.
The group of over 20 lenders includes Svensk Exportkredit (SEK) and the European Investment Bank, together with commercial banks, led by BNP Paribas, ING, KfW IPEX-Bank, Societe Generale, and UniCredit.
H2 Green Steel has also raised nearly €300 million more from investors, bringing the equity in the project to a total of €2.1 billion. New shareholders include Microsoft Climate Innovation Fund, Mubea, and Siemens Financial Services. Additionally, IMAS Foundation and Just Climate are a few of the existing shareholders who increased their investments in H2 Green Steel.
"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," said Henrik Henriksson, CEO of H2 Green Steel, in a statement.
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