H2GS raises €1.5B to build world’s first large-scale green steel plant

H2 Green Steel has raised €1.5 billion ($1.6 billion) in equity funding to establish the world’s first large-scale green steel plant and a giga-scale electrolyzer for the site’s hydrogen supply.

The fundraising was co-led by French hydrogen investor Hy24, along with participation from existing investors such as Altor Equity Partners AB and Just Climate. Eminent entities, including Kinnevik AB, Vargas Holding AB, the Wallenberg family and Swedish pension funds, also joined in acquiring shares.

“This is one of the last pieces in the puzzle,” said chief executive officer Henrik Henriksson. “There might be a few more investors coming in which need a little bit more time, but this is the backbone.”

H2 Green Steel has been raising equity since its inception in 2021. In the three financing rounds conducted so far, the company has amassed over €1.8 billion. This journey began with a series A round raising €86 million in May 2021, followed by a series B1 round of €260 million in October 2022.

In terms of debt financing, the company disclosed its debt structure exceeding €3.5 billion in 2022 and renewed commitment letters in July 2023.

The company anticipates a final investment decision within the next two to three months, pending the completion of the necessary paperwork with the banks responsible for providing debt funding.

H2GS’s green technology initiative

H2 Green Steel aims to transform the steel production industry, known for its substantial carbon emissions. This sector, which has relied on traditional production methods for over a century, is responsible for approximately seven percent of global carbon emissions.

According to Henriksson, H2GS is set to begin operations at its Boden-based plant in northern Sweden by late 2025, with groundwork already completed and vertical construction set to begin shortly.

This project is part of a broader trend of green technology initiatives in northern Sweden, which will require a significant amount of electricity in the coming decades as the economy shifts toward electrification.

While the cost for the project has gone up due to rising inflation and construction costs, Henriksson said 70 percent of the expenses were already secured. Although he didn’t provide an exact figure, about three-quarters of the funding will support the entire project.

The core of this green production technology lies in replacing coal with hydrogen, generated on-site through Europe’s largest electrolyzer, which is powered by renewable energy sources.