Sweden’s H2 Green Steel bags €3.5B debt funding for its hydrogen-powered green steel mill

Stockholm-based H2 Green Steel, a company that aims to decarbonise the steel industry using green hydrogen, announced on Monday that it has received support from leading European financial institutions for €3.5B debt financing.

These institutions want to assist H2 Green Steel and its hydrogen-powered green steel mill in Northern Sweden through financing and credit guarantees.

Investors in this round

H2 Green Steel has signed conditional commitment letters for €3.3B in senior debt funding from commercial banks BNP Paribas, ING, UniCredit, Societe Generale, and KfW IPEX-Bank, as well as AB Svensk Exportkredit (SEK).

The European Investment Bank has received board approval for €750M of senior debt funding for the H2 Green Steel project.

Export credit agencies, including Euler Hermes, have issued letters of intent to provide export credit-linked guarantees of €1.5B of H2 Green Steel’s intended senior debt. The Swedish National Debt Office has also issued a letter of intent to provide a green credit guarantee of €1B of H2 Green Steel’s senior debt.

The company has also signed a conditional commitment letter with a top infrastructure fund that is made up of significant Nordic investors about their lead participation in a junior loan facility of about €500M.

Henrik Henriksson, CEO of H2 Green Steel, says, “The support from the European Investment Bank, Swedish National Debt Office and some of the world’s leading export credit agencies and banks, not only underlines our business case and debt-carrying capacity but also highlights the willingness to support initiatives that will help fulfil the target of the Paris agreement.”

“Powering a new, clean industrial revolution”

Founded in 2020 by Vargas Holding, who co-founded battery maker Northvolt, H2 Green Steel produces green steel in a fully integrated production process using end-to-end digitalisation, electricity from fossil-free sources, and green hydrogen instead of coal.

After launching in February 2021, and raising Series A funding in May, the company claims to have obtained a permissibility permit for its operations in Boden at a record pace, securing a 14 TWh renewable electricity agreement, and starting groundwork and construction.

In July, the company obtained a permissibility permit for its operations in Boden, followed by steady progress in the construction of its steel plant. Also, the company has pre-sold about 60 per cent of its initial volumes to a range of European customers in a broad range of sectors.

H2 Green Steel says that it will create green steel at its factory in Boden, northern Sweden, lowering CO2 emissions by up to 95 per cent in comparison to conventional steelmaking. With green hydrogen in place of coal and energy generated without the use of fossil fuels, the company’s main emissions are heat and water.

The company’s customers come from diverse industries, including steel service centres, pipe and tube, passenger vehicles and heavy commercial vehicles, whitegoods, and construction products.

Recent funding

In September 2022, H2 Green Steel raised €190M in the first close of a series B equity round of funding. The round was co-led by new investors AMF, GIC and Schaeffler, alongside existing investor Altor Fund V.

And earlier this month, the company secured €260M in the final close of its Series B round of equity funding. The additional €70M in the final close came from new investors such as Hitachi Energy, Kobe Steel, and Kinnevik.