Under the multi-year agreement, Stegra will supply non-prime steel to the German steel and aluminium processor for use across multiple European industries.

Non-prime steel is a byproduct of steelmaking that does not meet the highest quality specifications for some applications, but remains suitable for a wide range of industrial uses.

While the exact volume was not disclosed, Stegra said the total tonnage covered by the agreement will be in the “high-six-digit” range.

The steel will be produced at Stegra’s currently under-construction green steel plant in Boden, Sweden. Green hydrogen produced by over 700MW of electrolysers will be used to reduce iron, which will then be processed into various steel grades.

Stegra claims its green hydrogen-based, direct-reduced iron steel will have more than 90% lower emissions than blast furnace-based steel.

However, Thyssenkrupp will not claim environmental benefits from the non-prime steel supplied under the agreement. Stegra said the material cannot be classified as carbon-dioxide-reduced, as Environmental Attribute Certificates are allocated to customers purchasing the plant’s prime steel.

Stegra has inked deals to supply steel to the likes of Volvo, Porsche, ZF, and more.

Stegra’s Head of Commercial, Stephan Flapper, said prime steel offtake was important for the Boden plant’s ramp-up, and hoped to see the deal turn into a long-term partnership.

“Together we can drive an even stronger pull for steel products made via the green hydrogen route,” he said.

Stegra’s Boden development is seen as Europe’s flagship green steel plant, with up to five million tonnes of capacity expected to come online in 2027.

However, in October last year, the company had to launch a €975m ($1.14bn) financing round to finish the construction of the site, as it claimed EU-approved state grants were not fulfilled.

The financing round underscored the high upfront capital requirements of clean steelmaking, as well as its higher production costs compared with conventional steel.