H2 Green Steel, the newly established steel company, has secured a significant new order. ZF, a major supplier to the automotive industry, has committed to purchasing steel worth approximately 18 billion SEK over a seven-year period. Henrik Henriksson, CEO of H2 Green Steel, emphasizes the importance of this deal for the company.
This order, although not the first or the largest, holds significant value. ZF has already started buying the steel, even though the factory is not yet constructed. The demand for green steel exists here and now, and consumers are willing to pay a premium for products manufactured without fossil fuels.
The steel supplied to ZF will be used in the company’s European division, but ZF is also a significant global player. Henriksson considers this partnership to be crucial for H2 Green Steel.
Deliveries to ZF are scheduled to commence in 2026, initially on a smaller scale, and gradually increasing over time.
H2 Green Steel is currently securing binding orders for steel from various customers. These contracts are essential because H2 Green Steel does not have a balance sheet or financial results to rely on during discussions with banks regarding financing for the new factory in Boden.
Henriksson mentions that the banks have been involved in the negotiations while the contract was being developed. This provides security for the banks.
This is not the first contract for H2 Green Steel. The company has previously signed agreements with Scania, Mercedes, BMW, and the Italian steel conglomerate Marcegaglia, which was of similar magnitude to the current contract.
Henriksson envisions that carbon dioxide emissions will become increasingly expensive in the future, and customers will benefit from purchasing steel now through future contracts.
The Boden factory has not been built yet. Construction will begin once the ongoing groundworks are completed. The plan is for the factory to be ready in 2025, with production starting by the end of the year.
However, it has not yet been communicated where the ore will come from, whether there will be sufficient electricity supply, or if there will be enough skilled workers to manufacture the steel in Boden.
When asked if they will be able to meet the delivery commitments outlined in the contracts, Henriksson confidently responds that they have obtained environmental permits quickly and have already sold over 40% of their total production through long-term contracts. He expresses confidence in being able to start production in 2025.
