Decarbonized steel startup H2 Green Steel announced today the completion of a €190 million funding round, as the company begins construction of its 5 million tonne steel plant in Boden in northern Sweden.

As manufacturers globally aim to decarbonize their supply chains, demand for fossil-free steel is expected to increase significantly. 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. The use of green hydrogen to fuel the production process is seen as one of the key potential solutions to help decarbonize the sector.

Founded in 2020, H2GS is building the world’s first large-scale fossil-free steel plant, 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 95% of the CO2 emissions normally produced. Using electricity from 100% renewable sources for the energy requirements generated in the manufacturing process, H2GS aims to produce 5 million tons of fossil-free steel by 2030.

H2 Green Steel stated that it has already pre-sold about 60% of its initial volumes. The company recently announced an agreement with global energy and electricity provider Iberdrola to build a 1,000 MW plant for the production of green hydrogen, with an estimated investment of €2.3 billion, on the Iberian Peninsula, with the possibility of locating a steelmaking facility capable of producing between 2.5 and 5 million tonnes of green steel plate per year on the same site.

Henrik Henriksson, CEO of H2 Green Steel, said:

“This financing milestone is a real statement of confidence in H2 Green Steel. Despite the uncertainty in global markets, a venture like ours, with both a strong business case and a strong sustainable purpose, is clearly attractive to investors. This financing round has allowed us to combine leading industrial companies and global financial institutions, with investors with a strong Swedish participation, creating the investor-base that will set us up for success.”

The new financing follows a $105 million series A round last year. Today’s series B funding round was led by new investors AMF, GIC and automotive and industrial supplier Schaeffler, alongside existing investor Altor Fund V. Schaeffler already has a commercial partnership with H2 Green Steel, and now adds a new technical partnership and an equity investment.

Andreas Schick, Chief Operating Officer of Schaeffler AG, said:

“Securing supply chains and making them more sustainable is a top priority for Schaeffler. We are proud to be an investor and a strategic technology partner for H2 Green Steel. Together we will contribute to decarbonizing supply chains. Through its participation, Schaeffler secures its long-term supply of green strip steel and significantly strengthens its network in this crucial material area.”

Additional investors participating in the financing include new investor Swedbank Robur Alternative Equity, and existing shareholders Vargas, Kingspan, FAM, Marcegaglia, IMAS Foundation, Cristina Stenbeck and Daniel Ek.

Henrik Lundh, Head of Alternative Investments at Swedbank Robur, said:

“By investing in H2 Green Steel, we support an efficient production of green hydrogen and green steel and thereby support a cost-competitive decarbonized industry development. The company’s ambition to take a driving role in the European green hydrogen transformation to decarbonize hard-to-abate industries, is well aligned with our mission to support disruptive, transformational companies with strong management and customer propositions, and long-term sustainable competitive advantage.”

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