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. In total, 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 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.
A milestone in the future of decarbonization of hard-to-abate industries
"The most rigorous examination of H2 Green Steel's project has come from our own backers, which stands as a resounding affirmation of the quality of our project. This substantial backing represents not just a win for our company but heralds a new era for decarbonization initiatives in hard-to-abate industries. We have united diverse stakeholders, challenging and reshaping traditional methods, to set a historic precedent in global decarbonization efforts", says Carl-Erik Lagercrantz, vice chairman of H2 Green Steel.