H2 Green Steel: KfW IPEX-Bank participates in financing for sustainable steel production in Sweden

• Innovative steelmaking using green hydrogen
• Flagship project to decarbonise the steel industry
• Supply of cutting-edge technology from Germany

As part of an international banking consortium, KfW IPEX-Bank is participating with a loan of EUR 187.5 million in the financing of a state-of-the-art integrated flat steel plant currently under construction in Boden, Northern Sweden. The plant, to be built by H2 Green Steel, uses an innovative process based on in-house-produced green hydrogen and electricity from renewable energies. This allows the production of steel with up to 95% fewer emissions than conventional steel production.

A large part of the overall financing will be used to finance equipment and services from SMS group, which will supply significant portions of the innovative low-emission steelworks technology, and thyssenkrupp nucera, a supplier of world-leading electrolysis technology to produce green hydrogen. Both firms have a high share of value added from Germany. This part of the financing is covered by the German export credit insurance company Euler Hermes.

“The sustainable production of steel plays a key role in global decarbonisation,” states Dr Velibor Marjanovic, Member of the Management Board of KfW IPEX-Bank. “We’re delighted to support our new customer H2 Green Steel in this flagship project by financing cutting-edge German technology, thereby highlighting our aspiration to further advance global energy transition projects through the export of European technologies.”

KfW IPEX-Bank has acted as financial advisor to H2 Green Steel from the outset and has taken a leading role within the international banking consortium in the context of the financing: It acts as Euler Hermes Advisor, Covered Facility Agent and ECA Agent, as well as Riskgälden Advisor and Covered Facility Agent.

At commissioning, the steelworks will have a production capacity of 2.5 million tons per year in the first phase. A production capacity of 5 million tons per year by 2030 is planned for the second phase. In the still emerging market for green steel production, this project is the first to adopt this technological configuration and to be rolled out on this scale.

The plant has relatively low production costs in a Europe-wide comparison thanks to the almost complete electrification of its steel production and the steel rolling process, combined with access to low-cost “green” electricity and the plant’s own production of green hydrogen. At the same time, the CO2 emissions generated are very low. As a result, the company has been able to conclude buyer agreements with numerous prominent companies that are primarily active in the automotive industry.

The steel industry accounts for 8% of global and 25% of European CO2 emissions, making it one of the largest CO2 emitters. The project is thus one of the pioneers of decarbonisation in the steel industry.

About H2 Green steel
H2 Green Steel (H2GS AB) was founded in 2020 with the ambition to accelerate the decarbonisation of the steel industry using green hydrogen. Steel, one of the world’s largest carbon dioxide emitters, is the company’s first business vertical. The founder and largest shareholder of H2 Green Steel is Vargas, which is also the co-founder and one of the key shareholders in Swedish battery manufacturer Northvolt. H2 Green Steel is headquartered in Stockholm, Sweden, with its first green steel plant under development in Boden, northern Sweden. https://www.h2greensteel.com/