H2 Green Steel has executed conditional commitment letters for €3.3bn in senior debt with AB Svensk Exportkredit (SEK) and the commercial banks BNP Paribas, ING, UniCredit, Societe Generale and KfW IPEX-Bank.

The European Investment Bank has received board approval for €750 million of senior debt funding for the H2 Green Steel project.

Leading export credit agencies, including Euler Hermes, have issued letters of intent to provide export credit-linked guarantees of €1.5bn of H2 Green Steel’s intended senior debt, while the Swedish National Debt Office has issued a letter of intent to provide a green credit guarantee of €1bn of H2 Green Steel’s senior debt.

H2 Green Steel has executed a conditional commitment letter with a leading infrastructure fund comprising large Nordic investors in connection with their lead participation in a circa €500 million junior debt facility. H2 Green Steel will finance the Boden plant through a combination of equity and debt financing.

The latest announcement follows last week’s news that H2 Green Steel received €260 million in series B equity funding. The final close of the private placement adds €70 million in new investments from investors such as Hitachi Energy, Kobe Steel and Kinnevik.

It closed its series A equity round of €86 million in May 2021 and announced the first close of its series B round of €190 million in August.

Henrik Henriksson, H2 Green Steel’s CEO, said the commitments to its debt financing shows ‘how far it has come in a short time’.

He said the banks’ support not only underlines its business case and debt carrying capacity, but also highlights the willingness to support initiatives that will help fulfil the target of the Paris agreement.

The commitment letters and approvals remain subject to completion of final due diligence and documentation, with a further round of syndication anticipated given the substantive interest in the financing from a wide range of other commercial banks and investors.

Societe Generale is acting as lead financial advisor on the senior and junior debt facilities, and KfW IPEX-Bank is acting as joint financial advisor on the senior debt facility. BNP Paribas, ING and UniCredit are acting as Pathfinders for the financing as respectively market, documentation and technical banks.

H2 Green Steel recently selected SMS group, a German company acknowledged for its technologies and services for the metals industry, to supply process technology for its green steel plant.

SMS group will deliver process equipment from the melt shop down to the finished steel products, and also contribute with its competence and experience.

H2 Green Steel has also signed an agreement with Hydro Havrand to explore opportunities for developing new large-scale green hydrogen production facilities, for off-takers in the Nordics and Brazil, and partnering with Midrex, which specialises in direct reduction ironmaking technology for the steel industry (and owned by Kobe Steel).

Steel is responsible for more than 7% of global carbon dioxide (CO2) emissions.