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H2 Green Steel unveil plans for a large-scale fossil-free steel plant in Sweden

H2 Green Steel AB (H2GS), a newly formed company that plans to develop a large-scale greenfield steel mill for fossil-free steel production in the Boden-Luleå region in northern Sweden, has signed a Letter of Intent (LoI) with the municipality of Boden regarding the acquisition of a 500 ha site in the Norra Svartbyn Industrial Park (SIP). The plan is to develop a giga-scale green hydrogen plant as an integrated part of a 5 million tonne-per-annum green steel production facility.

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H2 Green Steel AB (H2GS), a newly formed company that plans to develop a large-scale greenfield steel mill for fossil-free steel production in the Boden-Luleå region in northern Sweden, has signed a Letter of Intent (LoI) with the municipality of Boden regarding the acquisition of a 500 ha site in the Norra Svartbyn Industrial Park (SIP). The plan is to develop a giga-scale green hydrogen plant as an integrated part of a 5 million tonne-per-annum steel production facility (photo courtesy Boden municipality).

In a joint-presentation current landowner, Boden municipality, and H2GS unveiled plans for the development of the area just north of Boden. The project means that Boden, together with Luleå, will now be a highly active and driving party in one of the largest investments and changes in Sweden’s industrial history.

In Boden we very happy that H2 Green Steel’s establishment is now becoming a reality. We have worked with them for a long time around the establishment and it is a very good collaboration. Now together we show the way into a new phase of the green industrial revolution and what will take shape here in Boden will be completely unique. Through the investment in fossil-free green steel, we create a more sustainable society and contribute to the development of our region and we will now gather strength with the expertise that exists in the local area. That we, together with Luleå, can be involved and contribute to revolutionizing Swedish steel production feels very exciting, said Claes Nordmark, Chair Boden Council.

Meet global demand

The global steel industry is one of the world’s largest emitters of carbon dioxide (CO2), representing approximately seven percent of global CO2 emissions. Demand for fossil-free steel is growing substantially with strong interest from global market leaders in various sectors such as automotive, commercial vehicles, and white goods, yet the steel industry is struggling to accelerate the transition to fossil-free steel manufacturing at scale.

A Scania truck weighs about six tonnes and five of those are steel, which today, unfortunately, is produced with a substantial carbon footprint. By investing in and partnering with H2 Green Steel we are now further accelerating the journey towards emission-free products across the whole value chain. It’s a significant increase in ambition, which will not only contribute to Scania delivering on the goal of Paris Climate Agreement but also raising the bar even further, said Anders Williamsson, EVP, Head of Purchasing, Scania.

Targeting large European OEMs, H2GS plans to build a large-scale, greenfield steel manufacturing facility in Boden to enable the production of fossil-free steel at a leading cost position. The fully integrated production process includes one of Europe’s largest green hydrogen plants, which will pave the way for the possibility of producing green quality steel.

Green hydrogen technology is part of the climate-smart production solution that in Boden will replace the traditional blast furnace technology with, among other things, large emissions of CO2 as a result. The establishment at Svartbyn Industrial Park will create completely new conditions for meeting and accelerating the necessary global change.

This is the biggest thing that has happened to Boden since Boden’s fortress was built in the early 20th century and it will change Boden, Luleå, and Norrbotten forever, remarked  Claes Nordmark.

Unique conditions

The Boden-Luleå region in northern Sweden offers unique conditions for fossil-free steel production with access to abundant energy from renewable energy sources, high-quality iron ore, and a large port in Luleå. Furthermore, it already hosts a number of world-class companies and research institutions within the metals and mining industry.

Not least the groundbreaking HYBRIT project and its founders SSAB, LKAB, and Vattenfall that H2GS says serves as a “source of inspiration” and it looks forward to a close collaboration with the HYBRIT-founders, sharing the vision to position Sweden at the forefront of fossil-free steel production.

H2GS will also contribute to building a knowledge cluster in Norrbotten – where industry, suppliers, municipalities, authorities, and academia work together to accelerate efforts to battle climate change, create new jobs, and strengthen Sweden’s competitiveness.

Entrepreneurial investors

The H2GS initiative is being developed in close collaboration between entrepreneurial investment company Vargas Holding AB (Vargas), and several strategic and financial investors that are global leaders in sustainability and digitalization.

Founded in 2014, Vargas is focused on “building companies that develop smart ideas, that are value-creating both financially and from a societal point of view, and that contribute to sustainable future”.

According to H2GS, the project is being developed on the experience and lessons learned from the establishment of the battery manufacturer Northvolt in Skellefteå, another Vargas portfolio company. The business model is based on a close partnership with strategic customers, including a deep collaboration on product development, process technology, recycling strategies, and logistics.

We want to accelerate the transformation of the European steel industry. Electrification was the first step in reducing carbon dioxide emissions from the transportation industry. The next step is to build vehicles from high-quality fossil-free steel, said Carl-Erik Lagercrantz, CEO of Vargas Holding and Chairman of the Board of H2GS and Northvolt.

H2GS is in the process of closing its Series A equity financing of EUR 50 million from a select group of investors, including Vargas, Scania, SMS Group, BILSTEIN GROUP, EIT InnoEnergy, Cristina Stenbeck, Daniel Ek, Altor Fund V, and IMAS Foundation.

To be able to partner with the entrepreneurial investors behind Northvolt as they execute on their next bold vision to accelerate the introduction of green steel is a rare opportunity. It reminds me of the role long-term capital has played in building leading global companies more than half a century ago in Sweden. We all have a responsibility to help enable the creation of more efficient and sustainable alternatives for future generations. I am very proud to be a part of the H2 Green Steel initiative, commented Cristina Stenbeck, an early supporter, and H2 Green Steel investor.

Five million tonnes of green steel per annum by 2030

The total financing for the first phase of the project amounts to approximately EUR 2.5 billion, which will be raised through a combination of equity and green project financing. Morgan Stanley, Societe Generale, and KfW IPEX-Bank are acting as financial advisors to H2GS. Sweco is advising in the engineering and permit process.

H2GS is forming a strong management team with complementary backgrounds and global experience from the steel industry, key customer segments, R&D, digitalization, financing, and public affairs.

We’re delighted that Henrik Henriksson will spearhead this pioneering venture. As CEO of Scania, Henrik has been one of the most visionary and active leaders for the business community in leading action on climate change and making progress towards a world without fossil emissions. We now begin an incredibly exciting journey together, revealed Harald Mix, Chairman of the Board of Vargas.

Subject to achieving financial close and permitting approval, production could begin as early as 2024 and by 2030, the goal is that H2GS will have an annual production capacity of 5 million tonnes of high-quality green fossil-free steel. H2GS is expected to create 1 500 direct jobs in the Norrbotten region, and the project will increase Swedish net export value by around SEK 30 billion (≈EUR 2.98 billion).

The climate crisis is the biggest challenge of our time – and given the steel’s impact on other industries’ sustainable development, a rapid change of the steel industry is extremely important. H2 Green Steel will accelerate this change and make Swedish steel world-famous, not only for its quality but also as the world’s greenest steel. I look forward to joining this journey from the start, building Sweden’s next export success, ended Henrik Henriksson, incoming CEO of H2 Green Steel.

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