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 for the world’s first large-scale green steel plant in Northern Sweden.
H2 Green Steel was founded in 2020 with the purpose 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, is well under way. The supply contracts for the hydrogen-, iron- and steel equipment are in place. A large portion of the electricity needed has been secured in long-term power purchase agreements, and half of the initial yearly volumes of 2.5 million tonnes of near zero steel have been sold in binding five- to seven-year customer agreements.
Today H2 Green Steel announces a massive milestone on its journey to accelerate the decarbonization of the steel industry, which is still one of the world’s dirtiest. The company has signed debt financing of €4.2 billion, added equity of close to €300 million and been awarded a €250 million grant from the Innovation Fund. Funding amounts to €6.5 billion in total.
H2 Green Steel has signed definitive financing documentation for €3.5 billion in senior debt and an up-to-€600 million junior debt facility:
- Consistent with project financings, international banks providing the senior debt will be lending in part under cover provided by Riksgälden (Swedish National Debt Office), as a green credit guarantee and Euler Hermes as an export credit cover for €1.2 billion each. The guarantees cover 80% and 95% of the loan amount respectively, and are provided in accordance with market pricing.
- 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.
- The junior debt consortium is led by AIP Management and comprises European and international investment banks and funds.
H2 Green Steel has also raised close to €300 million more in equity, bringing the private placement 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 some of the existing shareholders which are increasing their investments in H2 Green Steel.
In September 2023, H2 Green Steel announced it had raised €1.5 billion in equity, making it the largest private placement round in 2023 in Europe. Before that, the company closed its series A equity round of €86 million in May 2021 and announced the close of its series B1 round of €260 million in October 2022.
H2 Green Steel has also signed a €250 million grant agreement under the Innovation Fund through the European Climate, Infrastructure and Environment Executive Agency (CINEA). The Innovation Fund is financed by the European Union’s Emissions Trading System and supports innovative projects that aim to speed up decarbonization of European industry and accelerate the green transition.
“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,” says Henrik Henriksson, CEO of H2 Green Steel.
“We have gone through this process working side-by-side with many different stakeholders. We have worked as one big team, broken new ground and found innovative solutions in structures and ways of working that are normally rigid. The result is a historical milestone for one of the biggest decarbonization ventures globally,” Otto Gernandt, Chief Financial Officer, H2 Green Steel.
“H2 Green Steel is an excellent example of the kind of breakthrough projects that the EU Innovation Fund is supporting. The EU is proud to support these solutions to decarbonize the European steel industry and keep it competitive in a challenging global environment. We congratulate the H2 Green Steel team on their dedication and hard work, and look forward to supporting similar initiatives all over Europe,” said Kurt Vandeberghe, Director General for Climate Action, European Commission.