H2 Green Steel aims to raise €1.5B to build net-zero steel plants
H2 Green Steel (H2GS) plans to raise over €1.5 billion of equity funding to build net-zero steel plants.
According to the startup, it is working with US bank Morgan Stanley for the new funding rounding. The move will be one of the largest deals in Europe this year amid falling tech startup valuations due to macroeconomic pressures.
The €1.5 billion funding is the final part of its financing strategy to raise more than €5 billion in funding, with €3.5 billion coming from debt obtained from European financial institutions.
As of today, the company has raised €350 million in equity funding. Automaker Mercedes and truck producer Scania were among H2GS’ past investors.
H2GS plans to use the extra funding to build its first hydrogen-powered factory in Boden, northern Sweden. The firm also aims to begin full-scale production in 2025 or 2026, about a year later than its initial plan. The plant requires 10 TWh of electricity per year to produce 2.5 million tonnes of steel.
The company has entered a long-term partnership with Finnish energy firm Fortum for electricity supply in its facilities, given that Sweden’s domestic electricity production is around 169 TWh per year.
H2 Green Steel aims to develop green steel
H2GS is among the emerging startups that aim to develop green steel. Its production utilises electric power instead of coal-fueled furnaces. The startup targets several industrial segments, including construction, automotive and renewable energy.
The company maintains that its business transforms the steel industry and other industries that use steel in their daily operations.
Using innovative technology in steel manufacturing allows H2GS to cut costs, streamline its production flow and utilise energy from renewable sources.
Data showed that steelmaking contributed eight percent to global emissions annually. However, unlike conventional steel manufacturers, the by-product of the H2GS manufacturing process is water vapour, allowing the startup to reduce carbon emissions in its production by nearly 90 percent.
In the near future, H2GS also aims to recycle scraps from customers to cut its demand for raw materials.
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