(Stockholm / Sweden) – The Swedish company H2 Green Steel AB is receiving fresh capital of around 1,5 billion euros. The money will be used to further finance the world's first large-scale and newly built green steel plant in Swedish soil and the associated giga-scale electrolyser.
Summer 2022: Preparatory construction work begins in Boden on the 240 hectare site of the future steelworks. © H2 Green Steel AB
H2 Green Steel was awarded the contract to build a plant for the direct reduction (DRI) of iron ore October 2022 to the Luxembourg-based Paul Würth SA, part of the plant manufacturer SMS Group GmbH, and its US consortium partner, which awarded Midrex Technologies, Inc., which specializes in DRI technology. Excavation work on the site in Boden has been underway since summer 2022 after the authorities approved the project. Commissioning is scheduled for the end of 2025, followed by a ramp-up phase in 2026. According to the company, the capacity is 2,5 million tons of green steel annually.
Hy24 as a new investor
The investor group was led by the Swedish capital company Altor Equity Partners, which primarily invests in Northern European countries and the DACH region. Hy24 from France is joining as a new investor. This investment platform for clean hydrogen is a 50:50 joint venture between the French private equity investment company Ardian SAS and the Swiss investment house FiveT Hydrogen AG.
In the process called “direct reduction” (DRI), the CO2-intensive coke is replaced by natural gas or hydrogen to produce iron. The process produces a product called “sponge iron” in pellet form from ore with an iron content of 92 to 95 percent. These pellets are pressed into small iron briquettes (HBI, hot briquetted iron) and then further processed into crude steel in an electric arc furnace. The technology itself is not new and has been in use since the 70s. What is new is the use of green hydrogen and green electricity. This results in around 95 percent fewer CO2 emissions than crude steel produced using conventional blast furnace technology and coke. In this case, steel manufacturers proclaim that they produce green steel. © Graphic: Steel Institute VDEh
The new investors Andra AP-Fonden and Temasek Holdings are also participating in the transaction. Andra AP-Fonden is one of five financial pillars of the Swedish pension system. By mandate, the fund is obliged to only invest in low-risk projects worldwide. Temasek is a Singapore government holding company that helps drive the city-state's development.
The existing investors include the Swedish pension fund company AMF Pensionsförsäkring AB, the Swedish investor and major shareholder of the Swedish investment company Kinnevik AB Cristina Stenbeck, Hitachi Energy (Japan), IMAS Foundation (Netherlands), Kinnevik (Sweden), the mechanical engineering and automotive supplier Schaeffler Group ( Germany), the H2 Steel majority shareholder Vargas Holding (Sweden) and the Swedish investment company FAM AB, managed by Wallenberg Investments Holding. The existing investors also include GIC Ltd., also a Singapore government fund, and the British venture capitalist Just Climate LLP.
“The caliber of investors behind us is impressive,” says Henrik Henriksson, CEO of H2 Green Steel. “Some of the most professional institutions, investors and industrial companies worldwide are taking part in this round.” It is the largest private placement in Europe so far this year. Since launching in 2021, H2 Green Steel has raised more than 1,8 billion euros in equity in three financing rounds. On the debt side, H2 Green Steel announced the structure of its debt financing of over 2022 billion euros in 3,5.
Vale pellets and briquettes
A few days before this financing round, the company announced an agreement with Brazil's Vale SA, one of the world's three largest mining companies. Accordingly, they want to investigate “the feasibility of developing green industrial centers in Brazil and North America” in order to enable sustainable steel production.
Iron ore briquettes for DRI steel production. © H2 Green Steel AB
In such industrial centers, Vale is expected to build and operate hot briquetted iron (HBI) plants. The number of industrial centers, locations and production capacities to be built would be determined following feasibility studies. “Both Brazil and parts of North America have great potential due to access to renewable energy sources, high-quality iron ore and political willingness to support decarbonization projects,” explains Kajsa Ryttberg-Wallgren, Executive Vice President Growth and Hydrogen Business of H2 Green Steel.
In July, Vale and H2 Green Steel also signed an agreement to supply direct reduction pellets to the Boden plant. Vale expects to reach a production capacity of 2030 million tonnes of briquettes and pellets after 100. “We see great potential in Brazil as a hub for low-carbon steel products,” says Marcello Spinelli, vice president of Iron Ore Solutions at Vale. The country offers “high-quality iron ore and a wide availability of renewable energy, including wind and solar energy,” which support the production of green hydrogen.
Photos
H2 Green Steel receives new capital for the steelworks in Sweden. © H2 Green Steel AB
