Steel decarbonisation company H2 Green Steel has raised €1.5 billion ($1.6bn) in equity from an investor group to finance the world’s first large-scale green steel plant and Europe’s first giga-scale electrolyser.
Co-led by new investor Hy24 along with existing investors Altor, GIC and Just Climate, the transaction includes a number of new investor and several other existing investors.
According to H2GS, the proceeds will finance the construction and development of its flagship large-scale green steel plant in Boden, Swede.
The plant will be capable of producing steel with up to 95% less carbon dioxide (CO2) emissions compared to conventionally produced steel.
To do this, coal is replaced in the production process with green hydrogen – hydrogen produced on-site through renewably-generated electrolysis.
Commenting on the calibre of its backers, Henrik Henriksson, CEO of H2GS, said, “Some of the most professional institutions, investors and industrial companies globally are part of this round and we are proud that they all share our commitment to sustainability as their true north.”
He adds that, the deal – which is the largest private placement in Europe this year – proves the growing appetite for green steel.
Steel manufacturing is a significant contributor to global carbon emissions, accounting for approximately 7-9% of the world’s total greenhouse gas output.
This high carbon footprint primarily stems from the reliance on coal in the traditional blast furnace process, where iron ore is smelted into steel. During this method, carbon dioxide (CO2) is released from both the combustion of coal and the chemical reduction of iron ore.
Having raised nearly €2bn of equity across three financing rounds since its launch in 2021, the company closed its series A equity round of €86m ($92m) in May 2021 and announced the close of its series B1 round of €260m ($278m) in October 2022.
Klas Johansson, Co-Managing Partner at Altor, enthused about the deal, saying, “We are excited to take a role as one of the lead investors and significantly increase our engagement in H2GS in this next important phase when the company is set to build the world’s first large-scale green steel plant.”
Altor also stated its intentions to commit to providing capital to develop solutions that help decarbonise the economy.
Calling the project a ‘trailblazer in decarbonisation’ of the steel sector, Pierre-Etienne Franc, CEO of Hy24 said that invest will not only reshape steel markets but also represents ‘Hy24’s commitment to help industry get to Net Zero.
With groundworks at the Boden site having been ongoing since Summer 2022, H2GS aims for operations to begin at the end of 2025.