Stegra’s grand plan to build the first large green-steel mill in the world has recently hit a rough patch. Faced with increasing project costs and construction delays, the Swedish startup has been seeking to raise over $1 billion in additional financing since last fall to complete the flagship facility near the Arctic Circle.
A subsidiary of the German conglomerate Thyssenkrupp has agreed to buy a certain type of steel from Stegra’s plant in northern Sweden, which is set to start operations next year. The plant will use green hydrogen — made with renewable energy — and clean electricity to produce iron and steel. The sprawling facility is expected to initially produce 2.5 million metric tons of steel annually and eventually double its production of the metal.
Stegra, formerly H2 Green Steel, estimates that its process will slash carbon dioxide emissions by up to 95% compared with traditional coal-based methods, which account for up to 9% of global emissions.
Thyssenkrupp Materials Services said it would buy tonnages in the “high-six-digit range” of “non-prime” steel — metal that doesn’t meet the high-quality standards required for certain uses but that is still strong and durable enough for other applications. Steel mills typically produce a higher ratio of non-prime metal when they’re starting up, which decreases over time, according to Stegra. The deal should help the firm generate cash flow when the plant first opens.
“A partner for non-prime steel is important for the ramp up of our steel mill,” Stephan Flapper, head of commercial at Stegra, said in a Jan. 12 statement. “Together we can drive an even stronger pull for steel products made via the green hydrogen route.”
The deal is Stegra’s first for non-prime steel, though the startup has already inked agreements for prime steel with automakers such as Mercedes-Benz, Porsche, and Scania, as well as major companies including Cargill, Ikea, and Microsoft. The offtake contracts represent more than half the steel that will be produced during the plant’s first phase.
Notably, Thyssenkrupp Materials Services won’t count the carbon-emission reductions associated with the green steel toward its own climate targets. Instead, Stegra will separately sell the green credentials, in the form of environmental attribute certificates, to other customers in the prime steel market. Stegra previously struck a deal to sell certificates to Microsoft — which is an investor — to help offset emissions from conventionally made steel that the tech giant is using to build data centers outside Europe.
The startup’s announcement with the Thyssenkrupp subsidiary didn’t include details about the financial value or other parameters of the multiyear agreement. Stegra didn’t respond to Canary Media’s requests for comment.
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