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H2 Green Steel sews up €4.2 billion in financing for green steel plant

Image: H2 Green Steel

Swedish steelmaker H2 Green Steel announced the company had signed definitive debt financing agreements for up to €4.2 billion in project financing for the company's upcoming green steel plant in Boden, Sweden.

H2 Green Steel, founded in 2020 to decarbonize the hard-to-abate steelmaking sector, will produce steel with up to 95 percent lower CO2 emissions than steel made with coke-fired blast furnaces once its under-construction plant turns operational.

The company says it has placed supply contracts for the hydrogen-, iron- and steel equipment, and secured a large portion of its electricity requirement through long-term power purchase agreements. It has also tied up customers (including Germany's BMW Group and Japan's Hitachi) for half its initial yearly output of 2.5 million tonnes in binding five- to seven-year agreements. 

H2 Green Steel's financing agreement includes €3.5 billion in senior debt from over 20 lenders including Svensk Exportkredit (SEK) and the European Investment Bank, together with commercial banks led by BNP Paribas, ING, KfW IPEX-Bank, Societe Generale and UniCredit. The company has also availed up to €600 million in junior debt from a consortium comprising European and international investment banks and funds led by AIP Management.

With this, the company has secured close to €6.5 billion of funding for the world's first large-scale green steel plant, of which €2.1 billion is equity funding. The company has also received a grant of €250 million from the EU Innovation Fund.

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