European groups inject money into Swedish ‘green steel’ start-up
A series of leading European companies and funds have invested in a Swedish “green steel” start-up that promises to build the world’s first large plant for emission-free production of the alloy.
The Agnelli, Wallenberg and Maersk families along with Mercedes-Benz, Scania, an Ikea foundation and the CEO of Spotify helped H2 Green Steel raise $ 105 million in its first round of venture capital funding.
Companies, foundations and funds involved in the Series A funding cycle include Agnellis’ Exor, FAM des Wallenbergs, Italian steel company Marcegaglia and Swedish entrepreneur Cristina Stenbeck.
The Swedish group aims to start production just below the Arctic Circle in 2024 and plans to produce 5 million tonnes of emission-free steel by the end of the decade using hydrogen produced with renewable energy to manufacture the alloy rather than the traditional way of burning coke. .
“It’s the perfect mix of investors that we want to have,” Henrik Henriksson, CEO of H2GS and former boss of truck maker Scania, told the Financial Times.
“There is a desire to help this industry transform, and we understand that this is urgent. We cannot wait until 2050, we must act now. “
H2GS is one of two premier green steel projects in Sweden as it faces competition from Hybrit, a collaboration between steel maker SSAB, iron ore miner LKAB and utility Vattenfall , who estimated that he alone will need electricity equivalent to a third of the Swedish current. supply.
Swedish projects are at the forefront of efforts to make a green industry that accounts for 7-9 percent of all direct fossil fuel emissions.
Austria’s Voestalpine and ArcelorMittal are developing similar projects, but the two Swedish efforts are more advanced, while other groups are working on technology to produce steel from molten oxides using electricity. These are also at an earlier stage.
“Yes, there will be enough electricity,” said Henriksson, who said Sweden currently has current overcapacity, new wind projects and will no longer export to Finland when its new nuclear power plant comes on stream.
Other investors in the H2GS fundraising cycle include Ane and Robert Maersk Uggla, the family behind the world’s largest maritime group Maersk, the Imas Foundation which is part of the Ikea flatbed furniture empire, Spotify CEO Daniel Ek and Vargas, the Swedish investment. group behind Northvolt.
Henriksson said it was important to start making the steel industry green now, even though the two Swedish companies would still be eclipsed by traditional production, which was around 158 million tonnes in Europe in 2019, according to the industry association.
The two Swedish groups plan to use the existing direct reduction method for steelmaking, using electric arc furnaces rather than coke-fired blast furnaces.
Some analysts and companies such as BHP believe blast furnaces could still account for half of steel production in 2050 due to problems with access to cheap renewables and the young age of many steel mills in India and China.
Hybrit, which aims to produce 2.7 million tonnes of fossil-free sponge iron for use by SSAB and other steelmakers by 2030, started a pilot plant in August and will use it to supply green steel as soon as possible. this year for vehicles and machinery. from truck manufacturer Volvo Group.
H2GS plans to raise around 2.5 billion euros under its Series B funding cycle over the next 12 months, of which around 1.8 billion euros is from debt and the remainder is equity .
Additional reporting by Neil Hume in London
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