H2 Green Steel to build hydrogen-powered plant with €3.5bn debt financing

A hydrogen-powered steel mill in northern Sweden may now be built thanks to helping from the €3.5 billion in debt finance that Stockholm-based startup H2 Green Steel has obtained. When everything is said and done, the company will rank among the best-capitalized climate technology initiatives in Europe.

The business said that it has inked conditional senior debt agreements with the Swedish Export Credit Corporation, BNP Paribas, ING, UniCredit, Societe Generale, and KfW IPEX-Bank. The contracts have been valued at a total of €3.3 billion.

Additionally, it has a letter of intent for a €500 million junior debt facility from a Nordic infrastructure fund and board clearance from the European Investment Bank for an additional €750 million in senior debt financing. Credit guarantees of €2.5 billion from credit rating agencies and the Swedish National Debt Office cover the senior debt.

The total obligations exceed the €3.5 billion in debt the firm has stated it requires by €4.55 billion. The facility will cost €5 billion in total, and the remaining money will be raised through equity raising, which should be finished by the end of the year, the company informed Sifted.

Coking coal, which is used in furnaces to make steel, is replaced by hydrogen and renewable energy in H2 Green Steel. According to McKinsey, the use of coal in the manufacturing of steel is responsible for about 8% of the world’s greenhouse gas emissions.

The problem of decarbonization is particularly tough for the steelmaking sector. Although there are businesses working on it, it is currently difficult to directly electrify the process, therefore hydrogen is seen to be the most straightforward option to green the industry.

From 2025 on, the H2 Green Steel facility in Boden, in northern Sweden, will utilize green hydrogen. With the most recent loan infusion, the business now has comparable funding to Northvolt, the best-funded climate startup in Europe, which has raised $5.5 billion from investors.

The deal, according to Henrik Henriksson, CEO of H2 Green Steel, highlights the company’s economic case, its ability to handle debt, and the readiness of banks and credit agencies to assist climate initiatives.

Additionally, the business disclosed last week that it had collected €260 million in stock from backers such as Kinnevik, Hitachi Energy, and Kobe Steel.