Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

H2 Green Steel (H2GS), a Swedish green impact start-up, has raised $105mn through Series A equity finance to accelerate its quest for emission-free steel production.


The company aims to be a largescale steel producer using a fossil-free manufacturing process, catering to major European OEMs. H2GS’s founding investor is Vargas while partners include several investors in the field of sustainability and digitalisation. Automaker Mercedes Benz AG is investing ‘a single-digit million amount’ and will be launching green steel in various vehicle models as early as 2025, the company said. 



Investors of the Series A round include Altor Fund V, Ane & Robert Maersk Uggla, BILSTEIN GROUP, EIT InnoEnergy, Exor, FAM, IMAS Foundation, Kingspan, Marcegaglia, Mercedes-Benz AG, Scania, SMS Group, Stena Metall Finans, Cristina Stenbeck, Daniel Ek, and Vargas. 


Globally, the steel industry is a major CO2 emitter. Steelmaking through blast furnaces mode – basic oxygen furnaces (BF-BOF) requires the burning of coal, a major polluter. In a bid to reduce their carbon footprint, demand for fossil-free steel is like to emanate from sectors such as automotive and construction. 


Steelmaking plans

On Feb 23, H2GS announced its plan to build a greenfield steel plant in Boden in northern Sweden — just below the Arctic Circle — where a fossil-free steel production process will be deployed. The project includes a giga-scale green hydrogen plant as an integrated part of the facility. Its steelmaking process will use the direct reduction method using electric arc furnaces. Production is expected to start in 2024. The unit will have an annual capacity of 5mn mt of high-quality steel by 2030.



H2GS faces competition from another Swedish project, Hybrit, a JV by steelmaker SSAB, iron ore miner LKAB and Vattenfall. The company plans to raise $3.06bn in its B series funding round over the next 12 months, according to media reports.

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